Exacompta Clairefontaine — Proxy Solicitation & Information Statement 2014

Jun 2, 2014

ORDINARY SHAREHOLDERS' MEETING

OF 27 MAY 2014

FISCAL YEAR 2013

REPORTS OF THE BOARD OF DIRECTORS PARENT COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS REPORTS OF THE STATUTORY AUDITORS PROPOSED RESOLUTIONS

Board of Directors

François Nusse, Chairman and Chief Executive Officer Chairman of the Executive Board of Ets Charles Nusse Chairman, Exacompta Dominique Daridan Charles Nusse Chairman, Exaclair Ltd (GB) Manager, Ernst Stadelmann (AT) Managing Director, Exaclair GmbH (DE) Christine Nusse Chairwoman of the Supervisory Board of Ets Charles Nusse Chairwoman, Exaclair Inc. (US) Frédéric Nusse Chairman, Papeteries de Clairefontaine Chairman, Papeterie de Mandeure Chairman, Everbal Guillaume Nusse Chairman, Clairefontaine Rhodia Chairman, Madly Managing Director, Publiday Multidia (MA) Jean-Claude Gilles Nusse, Executive Vice President Member of the Ets Charles Nusse Executive Board Manager, AFA Jean-Marie Nusse, Executive Vice President Member of the Ets Charles Nusse Executive Board Jérôme Nusse Chairman, Editions Quo Vadis Monique Prissard, permanent representative of Ets Charles Nusse Member of the Ets Charles Nusse Executive Board

Statutory Auditors

BATT AUDIT, 54500 Vandœuvre–lès–Nancy, France Pascal François

SEREC AUDIT, 75015 Paris, France Benoît Grenier

Contents: page

Agenda: Ordinary Shareholders' Meeting	4
Certification of the annual report	4
Report of the Board to the Ordinary Shareholders' Meeting	5
Group Organisational Chart	15
Report of the Chairman of the Board of Directors on the operations of the Board and internal control	16
Exacompta Clairefontaine – Parent company financial statements	24
Report of the Statutory Auditors on the parent company financial statements	38
Special report of the Statutory Auditors on regulated agreements and commitments	41
Report of the Statutory Auditors on the report of the Chairman on the operations of the Board and internal control	44
Exacompta Clairefontaine Group – Consolidated financial statements	48
Report of the Statutory Auditors on the consolidated financial statements	84
Resolutions submitted to the Ordinary Shareholders' Meeting	87

ORDINARY SHAREHOLDERS' MEETING

Agenda:

• ¾ Report of the Board of Directors on operations and the parent company financial statements for fiscal year 2013;
• ¾ Report of the Board of Directors on operations and the consolidated financial statements for fiscal year 2013;
• ¾ Reports of the Statutory Auditors on the financial statements for this fiscal year and on regulated agreements and report drawn up pursuant to Article L.225-235 of the French Commercial Code;
• ¾ Approval of the parent company financial statements for the year ended 31 December 2013;
• ¾ Approval of the consolidated financial statements for the year ended 31 December 2013;
• ¾ Appropriation of earnings;
• ¾ Agreements governed by Article L.225-38 of the French Commercial Code;
• ¾ Discharge of the Directors. Approval of the directors' fees allocated to the members of the Board of Directors;
• ¾ Election and appointment of a director;
• ¾ Terms of office of the Statutory Auditors.

THE BOARD OF DIRECTORS

Certification of the annual report:

I hereby certify that to the best of my knowledge the financial statements have been prepared in accordance with applicable accounting standards and present a true and fair view of the assets and liabilities, financial position and earnings of the company and all the companies included in the consolidation and that the management report enclosed herein presents a true and fair view of the operations, earnings and financial positions of the company and all the companies included in the consolidation, as well as a description of the main risks and uncertainties facing them.

Jean-Marie Nusse Executive Vice President

REPORT OF THE BOARD OF DIRECTORS

TO THE ORDINARY SHAREHOLDERS' MEETING

OF 27 MAY 2014

To the Shareholders,

1. REVIEW AND APPROVAL OF THE PARENT COMPANY FINANCIAL STATEMENTS

(€000)	2013	2012
Operating revenue	9,233	9,040
Operating profit	258	-181
Net financial items	-23,517	1,739
Net income	-22,901	2,406

EXACOMPTA CLAIREFONTAINE, a holding company, serves the Group companies, for which it manages the sales force and certain property assets.

It is also responsible for the Group's financial management, consolidation, legal and tax services, communications and relations with shareholders. It coordinates actions taken relating to environmental certification.

Since January 2003, the subsidiaries have paid EXACOMPTA CLAIREFONTAINE a royalty equal to 0.2% of their added value for the previous year.

The companies which head sub-groups (Exacompta, Papeteries de Clairefontaine, Clairefontaine Rhodia, AFA) guarantee all repayments of their subsidiaries which borrow from their parent company.

The 2013 financial statements include a €25 million investment write-down.

The amount of non-tax deductible expenses was €10,090.

INCOME FOR THE LAST FIVE YEARS (€)

				31/12/2009
12	12	12	12	12
				4,525,920
				1,131,480
				2,075,703
				14,346,176
				(2,406,456)
				917,296
				15,835,336
565,740	565,740	1,131,480	1,131,480	2,036,664
				15
				14
				1.80
				57
				4,237,840
				1,620,311
	31/12/2013 4,525,920 1,131,480 2,259,071 2,567,292 (584,550) 26,052,984 -22,901,142 3 -20 *0.50 49 3,903,372 1,495,369	31/12/2012 4,525,920 1,131,480 2,132,810 2,497,325 (922,893) 1,014,212 2,406,006 3 2 0.50 46 3,811,684 1,494,364	31/12/2011 4,525,920 1,131,480 2,074,928 2,961,870 (1,996,455) 878,582 4,079,743 4 4 1 46 3,853,255 1,522,838	31/12/2010 4,525,920 1,131,480 2,126,168 4,157,908 (174,881) 1,071,636 3,261,153 4 3 1 48 3,900,675 1,480,837

* Dividend proposed

SCHEDULE OF TRADE PAYABLES

Schedule in days
	Payables Total payables Payables not yet due due
31/12/2013			1 to 30 days	31 to 60 days	Over 60 days
Trade payables	721	7	580	134	–
Suppliers - fixed assets	13	–	–	13	–
Total	734	7	580	147	–
31/12/2012
Trade payables	671	5	547	119	–
Suppliers - fixed assets	8	–	–	8	–
Total	679	5	547	127	–

SHARE AND SHAREHOLDER INFORMATION

The share listed at €49.80 on 4 January 2013 and closed the year at €52.49 (up 5.4%). The number of shares traded during the year was 12,161.

The parent company does not have a share buyback programme and there are no employee shareholders.

The capital of the parent company is composed of 1,131,480 shares, and did not change during the year. A double voting right is granted to each fully paid-up share which has been registered for at least two years in the name of the same shareholder.

Our principal shareholder, Ets Charles Nusse, holds 910,395 shares with double voting rights, representing 80.46% of the capital at 31 December 2013.

Financière de l'Echiquier, a minority shareholder, crossed the 5% ownership threshold in 2005.

2. REVIEW AND APPROVAL OF THE 2012 CONSOLIDATED FINANCIAL STATEMENTS

2.1 RESULTS

(€000)	2013	2012
Income from continuing activities (Revenue)	524,635	525,742
Operating profit/(loss)	5,092	971
Net income before income tax	4,398	222
Net income after income tax	4,278	-267
Minority interests	1	-1
Group share	4,277	-266

The comparative results for 2012 have been adjusted in accordance with changes to IAS 19 – Employee benefits that are mandatory as of 2013.

After this adjustment, 2012 consolidated net loss came to €267,000, a €326,000 improvement on the €593,000 loss initially published in the 2012 annual report.

2013 Group consolidated cash flow amounted to €29,385,000 and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) was €30,609,000, compared to €26,748,000 and €27,589,000 respectively in 2012.

2.2 PRINTING AND WRITING PAPERS

In Europe, consumption of printing and writing papers continued to decline. Consumption of the types of paper intended primarily for office use has fallen by 14% over five years, entailing an average annual decline of 3% (source: Eurograph).

Production needs to adapt to this economic climate and several sites have had to discontinue their operations. However, the "artificial" resumption of production across some of these sites is weighing on margins and endangering other sites whose continued operation is more justified.

Our marketing and research drives have enabled us to operate our machinery more profitably. Production rose by 6% and amounted to a combined total of 214,000 tonnes of paper reels from our four production facilities. Given the recent installation of a new waste paper processing chain in Everbal, our current estimated capacity is 240,000 tonnes.

European production of uncoated free-sheet paper is around nine million tonnes, with the vast majority coming from sites that produce both pulp and paper, i.e. suppliers of mass market goods. We operate in the premium and specialised paper market, in which we have a significant market share. Prices are higher in this market but are nonetheless influenced by standard paper prices.

2.3 STATIONERY

Paper-based stationery consumption, which experienced strong competition from digital applications, fell once again, by around 3% compared to last year (source: I+C). Sales to general customers have decreased by 5% for retail stationery stores and by 3% for supermarkets. Sales to businesses and professionals are down by 2% for office suppliers and 7% for online and mail-order vendors, whereas superstores experienced a 2% increase.

A certain change of direction on the part of the competition, combined with the renewal of our product ranges, has helped us to keep our revenues steady. The quality of our products and the service provided by our four logistics centres are key advantages in this sector.

According to our estimates, we believe that in terms of production we are among the top three European manufacturers of exercise books, prints, filing items and diaries. However we do not have precise figures in relation to this point. The quality of our workshop equipment makes us strong competitors in the European market.

2.4 FINANCIAL POSITION

2.4.1 Debt

As at 31 December 2013, with revenues of €524,635,000, Group borrowings amounted to €60,889,000 and shareholders' equity totalled €367,270,000.

In order to provide for its growth, the Group has negotiated several lines of credit with its banks. The Group also issued commercial paper, which amounted to €46 million at year-end out of a global programme of €125 million.

Group cash and cash equivalents amounted to €58,310,000. Its cash flow before change in working capital enabled it to fund its capital expenditure programme without resorting to borrowing. Group net borrowings amounted to €2,579,000 at 31 December 2013.

2.4.2 Financial instruments

The Group uses derivative financial instruments to hedge its exposure to interest rate risks resulting from its operating, financing and investing activities. Under its cash management policy, the Group does not hold or issue financial derivatives for transaction purposes.

2.5 RISK MANAGEMENT

The Group has conducted an analysis of the risks that may have a material adverse impact on its business, financial position and earnings. The results of this analysis indicate that there are no significant risks other than those listed below.

2.5.1 Risks related to economic activity

The majority of our assets are located in France (93%). Our sales are generated primarily in France (64.8%) and in Europe (30.2%), largely in Western Europe. We are not directly affected by unfavourable economic developments that may affect the various continents.

However, the purchase price of our primary raw material, paper pulp, is influenced by the world market. Market quotations are generally in US dollars. With the majority of papers produced by companies that also make their own pulp, the average market price for pulp and paper in Europe has been known to vary by as much as 200 euros per ton over relatively short periods. It is important to note that each euro difference in the price of pulp, when applied to the amount of pulp we use (around 140,000 tonnes), has a €140,000 impact on our operating profit.

Consumption of papers for office use and stationery items changes regularly according to the needs of businesses and households. It is relatively unaffected by economic conditions.

However, data transmission, note-taking, information exchange and training are increasingly carried out via digital means. This has resulted in a continual decline in consumption of printing and writing papers, which have fallen by 3% to 4% per year since 2008. The same average trend has also affected consumption of the various categories of stationery items.

The quality of our products, our sales presence, customer brand recognition and our research and diversification efforts are key advantages in helping us to adapt to this changing environment.

2.5.2 Financial risks

Generally, the Exacompta Clairefontaine Group does not engage in any complex financial transactions. However, it is exposed to certain risks related to the use of financial instruments in the context of its activities.

Risk management is performed by the operating units, in accordance with the policy established by Senior Management.

Credit risk

Credit risks represent the risk of financial loss for the Group if a third party fails to meet its contractual obligations.

→ Trade and other receivables

The concentration of credit risk is not significant. It is divided among a large number of clients. The risk of default by business sector and country in which the clients engage in their activities does not have a significant influence on credit risk.

The Group has implemented tools to monitor outstandings that enable it to ensure that its clients have an appropriate credit history. Clients that do not satisfy solvency requirements cannot carry out transactions with the Group without making advance payments. In addition, credit risk is limited by taking out credit insurance contracts.

The Group determines a level of write-downs that represent its estimate of losses that will be incurred in respect of trade and other receivables. Impairment charges correspond to specific losses related to individual risks.

→ Investments

The Group limits its exposure to credit risk from investments, short-term deposits and other cash instruments, by investing only in liquid securities.

As the counterparties are leading banks, the Group does not expect that any of them will default.

Liquidity risk

The Group's approach to managing this risk is to ensure that it always has sufficient liquid assets to meet its liabilities as they fall due without incurring unacceptable losses or damaging its reputation.

To this effect, short-term financing (maturities of less than one year) is provided by commercial paper on which a fixed rate is paid.

The Group also has lines of credit to cover medium-term maturities with related covenants that are respected.

The Group has conducted a specific review of its liquidity risk and deems that it will be able to meet future maturities.

Exchange rate and price risk

The Group operates internationally. Risks related to commercial transactions denominated in a currency other than the respective functional currencies of Group entities are related mainly to purchases of raw materials denominated in US dollars.

In order to manage exchange rate risk, the Group hedges approximately 50% of its anticipated future transactions in this currency for the coming three months using options contracts.

Exchange rate variations do not have a material impact on the financial statements for the year.

2.5.3 Risks related to proceedings, tax audits and litigation

To the best of the Group's knowledge, there are no pending or threatened government, judicial or arbitration proceedings that may have, or have had over the past 12 months, a significant impact on the Group's financial position or profitability.

2.6 RELATED PARTIES

The consolidated financial statements include transactions performed by the Group with Etablissements Charles Nusse. The Group's companies benefit from the leadership provided by Ets Charles Nusse and pay a fee equal to 0.6% of the added value for the previous year.

2.7 CORPORATE OFFICERS

List of the principal offices held by the members of the Board

François Nusse, Chairman and Chief Executive Officer Chairman of the Executive Board of Ets Charles Nusse Chairman, Exacompta

Charles Nusse

Chairman, Exaclair Ltd (GB) Manager, Ernst Stadelmann (AT) Managing Director, Exaclair GmbH (DE)

Christine Nusse

Chairwoman of the Supervisory Board of Ets Charles Nusse Chairwoman, Exaclair Inc. (US)

Frédéric Nusse

Chairman, Papeteries de Clairefontaine Chairman, Papeterie de Mandeure Chairman, Everbal

Guillaume Nusse

Chairman, Clairefontaine Rhodia Chairman, Madly Managing Director, Publiday Multidia (MA)

• Jean-Claude Gilles Nusse, Executive Vice President Member of the Ets Charles Nusse Executive Board Manager, AFA
• Jean-Marie Nusse, Executive Vice President Member of the Ets Charles Nusse Executive Board

Jérôme Nusse Chairman, Editions Quo Vadis

Monique Prissard, permanent representative of Ets Charles Nusse Member of the Ets Charles Nusse Executive Board

3. PROPOSED RESOLUTIONS

3.1 APPROPRIATION OF EARNINGS

Earnings (€):
2013 loss	-€22,901,141.51
Retained earnings	€418,203.07
	-€22,482,938.44

We propose the following appropriation: Deduction from other reserves.....-€22,482,938.44

We propose the payment of a €565,740.00 dividend drawn from other reserves.

Given that the company's share capital is divided into 1,131,480 shares, each of these shares will receive a total dividend of €0.50.

The following table shows the dividends paid for the last three years:

Year	Dividend	Number of shares
2010	1.00	1,131,480
2011	1.00	1,131,480
2012	0.50	1,131,480

3.2 DIRECTORS' FEES

Your Board proposes that you approve directors' fees in the amount of €60,000 to be paid to the directors of the company in 2014.

3.3 DIRECTORS

Your Board proposes that you renew the appointment of François Nusse, residing at 105 rue de Lille, Paris, 7th arrondissement, as director. This appointment, which is valid for six years, will terminate at the close of the Shareholders' Meeting called to approve the financial statements for fiscal year 2019.

3.4 REPORTS OF THE STATUTORY AUDITORS

Your Board proposes that you renew the appointment of the statutory auditors and one of the alternate auditors, in addition to appointing a new alternate auditor. These appointments, which are valid for six years, will terminate at the close of the Shareholders' Meeting called to approve the financial statements for fiscal year 2019.

• SEREC AUDIT, with registered offices at 21, rue Leriche 75015 Paris, registered in the Paris Trade Register under No. 324 834 399, as the regular auditor.
• G.B.A. Audit et Finance, with registered offices at 10, rue du Docteur Finlay 75015 Paris, registered in the Paris Trade Register under No. 342 775 137, as the alternate auditor.
• BATT AUDIT, with registered offices at 25, rue du Bois de la Champelle 54500 Vandœuvre-lès-Nancy, registered in the Nancy Trade Register under No. 414 570 622, as the regular auditor;
• REVILEC AUDIT & ASSOCIES, with registered offices at 25, rue du Bois de la Champelle 54500 Vandœuvre-lès-Nancy, registered in the Nancy Trade Register under No. 484 943 626 is appointed as regular auditor, replacing SOVEC whose appointment has not been renewed.

4. POST-BALANCE SHEET EVENTS

Our desire to keep up with changes in consumption in favour of digital technology and to customise certain of our products has led us to purchase a majority shareholding in PHOTOWEB, a photo development specialist.

5. RESEARCH AND DEVELOPMENT

Group paper production companies participate in various research programmes in cooperation with the Grenoble Paper Technical Centre and a number of university laboratories. Internally, we have successfully developed new levels of quality for offset and inkjet printing, in addition to similar developments for Indigo or heat-resistant printer cards. Our new facilities in Everbal enable the production of extremely white recycled paper that does not require deinking.

In terms of stationery items, over the past few years the three departments have created entire teams of product design professionals and graphic designers. This has allowed us to extend our collections, in particular those for the export market.

6. SOCIAL AND ENVIRONMENTAL REPORT

Article L.225-102-1 of the French Commercial Code requires the Exacompta Clairefontaine Group to provide information on the manner in which it "takes into account the social and environmental consequences of its activity as well as its commitments to society in favour of sustainable development, combating discrimination and promoting diversity".

This information, which is listed in French Decree No. 2012-557 of 24 April 2012, is included in a separate document entitled "Social and Environmental Responsibility", which is an integral part of this management report.

7. EMPLOYMENT INFORMATION

The Exacompta Clairefontaine Group had 3,091 employees at 31 December 2013, compared to 3,137 at the end of 2012.

The companies apply the collective agreement for the production of papers, cardboard and cellulose, or the collective agreement for cardboard packaging.

The Group Committee, which met on 12 June 2013, commented on the Group's business and the economic and social outlook for the year.

8. OUTLOOK

8.1 PAPER:

Group management does not anticipate any significant upheavals in this industry in 2014.

The decline in the consumption of printing and writing paper is set to continue and our concern remains that production capacity will not adapt quickly enough in response to this trend.

In terms of raw materials, new paper pulp factories will begin operations in South America, which should tend to bring down the prices of short-fibre pulp. The price of mineral fillers remains constant, whereas starch prices are variable. There has been a slight reduction in the price that we currently pay for gas and electricity.

8.2 STATIONERY ITEMS – PROCESSING

Similarly, we do not foresee any changes in consumer trends for this sector.

However, it is important to note that there has been a certain change in the competition, some key companies having withdrawn slightly from the production of filing items in order to concentrate operations on imports from countries with cheap labour. The fact that we actually produce our card and paper products in France should reassure customers seeking high quality products and efficient service.

ORGANIGRAMME DU GROUPE au 26 mars 2014

EXACLAIR et RODECO ( DE ) EXACLAIR (ES) EXACLAIR (BE) EXACLAIR (US) CLAIR MAROC QUO VADIS : Canada - Italie - Japon - Pologne - USA

REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS ON THE BOARD'S OPERATION AND INTERNAL CONTROL "REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS ON THE OPERATION OF THE BOARD AND ON INTERNAL CONTROL"

To the Shareholders,

The Financial Security Act of 1 August 2003 requires that the Chairman of the Board provide a report on the conditions for the preparation and organisation of the work of the Board of Directors, the scope of the powers of the executive officers, and the internal control and risk management procedures established by the company.

I hereby provide you with the following information, pursuant to the provisions of Article L.225-37 of the French Commercial Code:

1. Preparation and organisation of the work of the Board of Directors

The composition of the Board is optimised to bring together members with operational responsibilities from the various areas of the Group's business and specialists in financial and social matters.

The Board has ten members, whose terms of office expire at the end of the year stated in brackets:

François Nusse (2013)

Jean-Claude Gilles Nusse (2014)

• Jean-Marie Nusse (2016)
• Christine Nusse (2018)
• Guillaume Nusse (2015)
• Jérôme Nusse (2015)

Frédéric Nusse (2015)

Charles Nusse (2017)

Dominique Daridan (2016)

Ets Charles Nusse, represented by Monique Prissard (2015)

The Chairman and Chief Executive Officer, who is the Chairman of the holding company Etablissements Charles Nusse, which manages the Group, and of SAS Exacompta and its subsidiaries, is backed by three Executive Vice Presidents, including two directors and one non-director.

They assist the Chairman in the following areas:

• Jean-Claude Gilles Nusse Executive Vice President: Exacompta and AFA departments
• Jean-Marie Nusse Executive Vice President: Papeteries de Clairefontaine and Clairefontaine Rhodia departments
• Jean-Olivier Roussat non-director Executive Vice President: administration and finance division. Following the death of Jean-Olivier Roussat on 18 February 2014, Jean-Marie Nusse has taken on this role for the rest of the year.

The Board has placed no limitations on the powers of the Chairman and Chief Executive Officer or on those of the Executive Vice Presidents.

Notices are given in writing at least eight days in advance. Meetings are held at the registered office or at the offices of a subsidiary in Paris.

The statutory auditors are called to the meetings of the Board of Directors that draw up the annual and interim financial statements and to all meetings that review the financial statements.

The Board has met four times since 1 January 2013.

• The 26 March Board meeting approved the financial statements for the previous year and prepared the Shareholders' Meeting.
• The 30 August meeting reviewed the interim position, particularly the economic environment at the beginning of the year, the interim operating statements and other specific items.
• The March and August Board meetings were followed by an announcement to all shareholders.

One or more additional Board meetings are held if circumstances require, particularly if there are significant acquisition opportunities. Under these circumstances, decisions are made by consensus, even if this procedure is not explicitly provided for in the Articles of Association. The same applies to decisions on major industrial capital expenditure.

Board members must be physically present at Board meetings, as there is no provision for video conferencing. Board members had a very high attendance rate, without missing any meeting. No meetings were called at the initiative of the directors or senior executives.

To allow Board members to make the necessary preparations for meetings, the Chairman provides them with all necessary information or documents prior to the meeting.

At the Board meetings called to approve the half-year and annual financial statements, each Group company is required to submit a management report, which, in addition to its balance sheet, must contain an analysis of the following items:

• → raw materials (pulp in particular)
• → sales results
• → finishing and logistics
• → technical services
• → manufacturing results
• → accounting and financial management
• → capital expenditure
• → outlook and risks

The directors review the consolidated financial statements of the Group and those of the subgroups.

These consolidated statements contain a number of analyses:

• → changes in shareholders' equity;
• → contribution to consolidated income by company;
• → contribution to consolidated reserves by company;
• → contribution to shareholders' equity by company;
• → consolidated interim operating statements.

The drafts of the parent company and consolidated financial statements are submitted to Board members at least eight days before the Board meeting called to approve the final financial statements.

Whenever a member of the Board so requests, the Chairman shall immediately or promptly provide any additional information or documents to said party.

2. Shareholder attendance at Shareholders' Meetings

Excerpt from the Articles of Association (Article 8.2): "The shares are indivisible vis-à-vis the company. Joint shareholders must be represented at Shareholders' Meetings by one of those shareholders or a single representative of their choosing. If the shareholders are unable to agree on a representative, the latter shall be appointed pursuant to an order of the Presiding Judge of the Commercial Court ruling in summary proceedings upon the request of the first joint shareholder to seek legal intervention.

The voting rights attached to shares that have been pledged are exercised by the owner of the shares. If the ownership of a share is divided, said share belongs to the beneficial owner at Ordinary Shareholders' Meetings and to the legal owner at Extraordinary Shareholders' Meetings."

Excerpt from the Articles of Association (Article 8.3.2): "Registered, fully paid-up shares in the name of the same shareholder for at least two (2) years shall have double voting rights in proportion to the fraction of share capital represented".

Excerpt from the Articles of Association (Article 15.2): "Shareholders' Meetings are held at the registered office or any other location indicated in the notice, pursuant to the procedures and deadlines set forth in the regulatory provisions".

• ) The Group uses the following accounting software or applications:
• ETAFI (tax management)
• REFLEX (consolidation)
• IWS (intercompany reconciliations)
• SAP, NAVISION (accounting & finance)
• ZADIG (personnel management)
• EXCALIBUR (intranet).
• ) The Group companies have taken out the following insurance policies:
• Comprehensive industrial
• Insurance for machine breakdowns, costs and financial losses on co-generation
• Comprehensive real property
• General civil liability
• Environmental damage liability
• Car fleet and truck insurance

Chairman of the Board of Directors

Excerpt from the Articles of Association (Article 16.2): "Shareholders may arrange to be represented by another shareholder or their spouse. Representatives are appointed for one Shareholders' Meeting only: said appointment shall be valid for two sessions, an ordinary and an extraordinary session, provided said sessions are held on the same day or within fifteen days of each other. Said appointment shall also be valid for successive meetings called with the same agenda.

Shareholders may vote by post using a form compliant with the regulatory requirements. Said form shall only be valid when received by the company no later than three days prior to the meeting. Where applicable, this form may be incorporated with the power-of-attorney form".

3. Corporate governance

In light of the following factors, the strong family shareholding, company values upheld by its members etc., the Board of Directors does not deem it necessary to refer to a corporate governance code.

Similarly, the Board of Directors has not fixed its mode of operation according to a written set of internal procedural rules. Changes to rules and corporate governance are decided during the various meetings.

Audit Committee:

The Audit Committee is represented by the Board of Directors, on which the senior executives from the Group's four departments sit.

The Board has not has not formally established any other permanent committees tasked with monitoring particular areas. Ad hoc committees may be put in place according to the issues that need to be dealt with.

Remuneration of the corporate officers:

The recommendation of the Autorité des marchés financiers (AMF – French Financial Markets Authority) regarding remuneration of the corporate officers is not applied within the Exacompta Clairefontaine Group. Neither does the Group offer any stock options, performance-related shares or supplementary pension schemes.

The Group applies the principle of fixed remuneration for all corporate officers and there are no variable remuneration measures in place.

The compensation and benefits of all kinds granted to the corporate officers are set on the basis of the following principles:

• salaries: based on experience and the responsibilities of the position held;
• directors' fees: distributed equally among the members of the Board taking into account attendance at meetings.

Directors' fees:

The remuneration granted to the members of the Board of Directors by way of directors' fees amounted to €60,000 in 2013. This was approved by a decision of the 29 May 2013 Shareholders' Meeting.

4. Internal control procedures established by the company

4.1 Definition of internal control

Internal control is defined as a process implemented simultaneously by the Board of Directors, Senior Management and the employees of a group, which is designed to provide reasonable assurance that objectives are reached in the following areas:

• → effectiveness and efficiency of operations;
• → reliability of financial information;
• → compliance with the laws and regulations in force.

Internal control consists of all methods which the Management have implemented to provide reasonable assurance that objectives are reached and to prevent the occurrence of damaging events.

4.2 Purposes and limits

Internal control ensures control of the company's operations and protects it from various types of risks, including:

• → irregularities and fraud;
• → a material omission or inaccuracy in the processing of information and, therefore, in the financial statements;
• → failure to comply with the company's legal and contractual obligations;
• → destruction, damage or disappearance of assets, or incorrect valuation of assets.

An internal control system, however efficient the system is, can provide only reasonable assurance and not an absolute guarantee as to the achievement of the company's objectives, both because of the limits inherent in any process implemented by human beings and because of the limits on resources which all companies must take into account.

The Group relies on four types of information to guide its operations:

• → the annual parent company and consolidated financial statements;
• → the consolidated half-yearly financial statements;
• → the quarterly statements (March and September unpublished);
• → the projected financial statements (not published).

4.3 Procedures

Systematic identification of risks is the first step in internal control. Mapping the Group's risks presents no specific problems, and the principal challenges are as follows:

• → control of raw materials purchases;
• → control of manufacturing processes;
• → environmental risks;
• → protection of industrial assets and sites;
• → control of the use of financial instruments and hedging foreign currency risk.

The procedures that are applied in the various Group companies may be summarised as follows:

• ¾ accounting and financial
• → preparation of projected financial statements
• → budget monitoring
• → monitoring of intercompany revenue
• → intercompany account reconciliations
• → monitoring of monthly and year-to-date interim operating statements
• → monthly and year-to-date cash position
• → composition and performance of the investment portfolio
• → monthly monitoring of the subsidiaries' short- and medium-term financial commitments, with transmission and control of working capital requirements.

The internal control of financial instruments is specifically monitored by Senior Management, both with regard to the types of instruments used and the maximum risk levels incurred, which are measured daily.

These financial instruments (contracts or options) are of two types:

• either they consist of transactions aimed at reducing the risk of a change in the value of an asset or liability or of a related commitment or future transaction not yet realised,
• or they are purely financial in nature in the case of additional outstanding debt.
• ¾ in other areas, a number of regular reports are prepared:
• → production reports
• → monitoring of monthly and year-to-date industrial results
• → ISO 9000 and ISO 14000 certification
• → safety
• → environmental audits, PEFC, FSC etc.
• → environmental labels

The Group has no department dedicated to internal control that is responsible for conducting verifications on its behalf (either in the parent company or in the companies it controls).

The transactions contributing to the corporate activities of the Group and their presentation in the financial statements are verified, though not necessarily through the application of formalised procedures, by Senior Management or its authorised representatives or agents, with the general goal of complying or ensuring compliance with the laws, regulations and standards in force, and of making every effort to prevent the occurrence of losses that could affect the Group's ability to continue operations.

Exacompta Clairefontaine S.A.

Parent Company Financial Statements for the year ended 31 December 2013

BALANCE SHEET AND INCOME STATEMENT

ASSETS (€000)	31/12/2013	31/12/2012
Intangible assets Concessions, patents, licenses, trademarks Intangible assets in progress	14	27
Property, plant and equipment Land Buildings Other PP&E Property, plant and equipment in progress	3,601 10,575 32 175	3,602 10,775 45 53
Non-current financial assets Equity interests Other long-term investment securities Loans Other non-current financial assets	274,240 9,305 4	299,240 13,931 4
TOTAL NON-CURRENT ASSETS	297,946	327,677
Inventories Advances and progress payments made on orders Receivables	198 135	198 58
Trade and intercompany receivables Other receivables Prepaid expenses Cash and cash equivalents	2,175 86,727 195 1	2,121 83,239 115 1,107
TOTAL CURRENT ASSETS	89,431	86,838
Currency translation adjustment	11
TOTAL ASSETS	387,388	414,515

LIABILITIES AND SHAREHOLDERS' EQUITY (€000)	31/12/2013	31/12/2012
Share capital	4,526	4,526
Share, merger and contribution premiums	162,566	162,566
Revaluation discrepancy	485	485
Reserves
Statutory reserve	453	453
Other reserves	162,219	160,219
Retained earnings	418	578
Profit/(loss) for the year	-22,901	2,406
Regulated provisions	2,821	2,632
SHAREHOLDERS' EQUITY	310,587	333,865
Provisions
For contingent liabilities
For charges	251	233
TOTAL PROVISIONS	251	233
Financial liabilities
Bank loans and borrowings	46,282	55,313
Operating payables
Trade payables	803	733
Taxes and social security contributions payable	1,396	1,541
Other payables	27,758	22,690
Deferred income	311	138
TOTAL PAYABLES	76,550	80,415
Currency translation adjustment		2
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	387,388	414,515

INCOME STATEMENT (€000)	2013	2012
Revenues Operating subsidies	2,259	2,133
Reversals of depreciation, amortisation and provisions, expense transfers Other income	6,495 479	6,522 385
REVENUE FROM OPERATIONS	9,233	9,040
Purchases and other supplies Other purchases and external expenses Taxes, duties and similar payments	8 2,206 411	7 2,166 739
Salaries and wages Social security contributions Increases in depreciation/amortisation of non-current assets Provision charges	3,903 1,495 857 28	3,812 1,494 843 94
Other expenses	67	66
OPERATING EXPENSES	8,975	9,221
OPERATING PROFIT/(LOSS)	258	-181
Financial income from equity investments Income from other securities and receivables from non-current assets Other interest and similar income	720 422 1,413	1,290 700 1,047
Reversals of provisions, expense transfers Positive currency translation adjustments Net profit on sales of marketable securities	65	27 321
FINANCIAL INCOME	2,620	3,385
Increases in depreciation, amortisation and provisions Interest expense and similar expenses Negative currency translation adjustments Net expenses on sales of marketable securities	25,000 932 205	1,276 370
FINANCIAL EXPENSES	26,137	1,646
NET FINANCIAL ITEMS	-23,517	1,739
INCOME BEFORE TAXES	-23,259	1,558
Extraordinary income On operating transactions On capital transactions	14 3	48
Reversals of provisions, expense transfers	29	93
EXTRAORDINARY INCOME	46	141
Extraordinary expenses On operating transactions On capital transactions	5
Increases in depreciation, amortisation and provisions	268	216
EXTRAORDINARY EXPENSES	273	216
EXTRAORDINARY INCOME/(EXPENSE)	-227	-75
Income taxes	-585	-923
NET INCOME FOR THE YEAR	-22,901	2,406

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

KEY EVENTS OF THE YEAR

Introduction

Notes to the balance sheet prior to earnings appropriation for the year ended 31/12/2013, for which:

¾	Total assets amounted to:	€387,387,942
¾	Net loss amounted to:	-€22,901,142

Principal events of the year

A €25 million investment write-down was recorded in the 2013 financial statements.

Accounting principles, rules and methods

The annual financial statements were prepared and are presented in accordance with the applicable French regulations, as set forth in the decrees issued by the Comité de la Réglementation Comptable (CRC - Accounting Regulatory Committee).

Comparability of the financial statements

The fiscal year is a period of 12 months that runs from 01/01/2013 to 31/12/2013.

The notes provided below form an integral part of these annual financial statements.

ACCOUNTING RULES AND METHODS

General accounting conventions have been applied, in compliance with the principle of prudence, in accordance with the following underlying assumptions:

• going concern;
• consistent accounting methods from one year to the next;
• accruals concept;

and in accordance with the general rules regarding the preparation and presentation of annual financial statements.

The basic method used to value the items recorded is the historical cost method.

The principal methods used are as follows

Intangible assets

Amortisation was calculated using the straight line method, based on the estimated useful life:

Software 1 to 3 years

Property, plant and equipment

Valuation:

Property, plant and equipment were valued at their acquisition cost (purchase price excluding ancillary expenses) or production cost.

Depreciation:

Depreciation is calculated using the straight line method based on the estimated useful life of each component of property, plant and equipment on the following bases:

‰	Buildings	25 to 40 years
‰	Fixtures and furnishings	10 to 20 years
‰	Office supplies and computer hardware	3 to 10 years

Write-downs:

At the end of each year, the company assesses the value of its property, plant and equipment to determine whether there are indications of a loss in value. If so, the recoverable value of the asset is estimated. If the recoverable value is less than the book value, a write-down is taken for the amount of the difference.

Non-current financial assets

The gross value consists of the purchase cost, excluding ancillary expenses.

If fair value is less than gross value, a write-down is taken for the amount of the difference. Fair value is assessed on the basis of net assets, which may be consolidated in the case of a group of subsidiaries, and on the outlook of each subsidiary or group of subsidiaries. A €25 million investment write-down was recorded in the 2013 financial statements.

Inventories

Inventories include the purchase of resinous wood made in 1997.

Receivables and payables

Valuation and impairment:

Receivables and payables are valued at their nominal amount. A write-down is taken against receivables when their fair value is less than their book value.

Receivables and payables denominated in foreign currencies:

These items are valued using the closing exchange rate on the balance sheet date. Differences resulting from this valuation are recorded as currency translation adjustments, in assets or liabilities. Provisions are recorded for unrealised foreign exchange losses recognised under assets.

Cash

Short-term cash:

Short-term needs are financed by commercial paper issued in the market by Exacompta Clairefontaine. A fixed rate determined at the moment of issue is paid on the commercial paper, which has a fixed maturity and a maximum term of 365 days. Commercial paper outstanding at year-end amounted to €46 million. The maximum amount issuable was €125 million.

Lines of credit:

Lines of credit are in place with several banks for a total amount of €127 million, with maturities not exceeding 4 years. Lines of credit have a term of between one week and 6 months. As at 31 December 2013, none of these had been used.

Accelerated depreciation/amortisation

Accelerated depreciation consisted of the difference between the depreciation calculated according to tax practices and that calculated according to the straight line method based on the estimated useful life. Accelerated depreciation totalled €2,821,000 at year-end.

Provisions for contingent liabilities and charges

The method used to calculate the provision for pensions is the projected unit credit method. The discount rate is determined using the French average bond market rate, based on blue chip corporate bonds.

The calculation is based on the following main assumptions:

• probability of retirement from the company, turnover, death;
• total amount of benefits outstanding under the "Production of papers, cardboard and cellulose" collective agreement;
• retirement age: between 60 and 67 years of age depending on the year in which the employee was born;
• social security contributions rate: 40%; discount rate: 2.97%.

A provision for the full amount of the retirement commitment – including social security contributions – was taken at year-end and totalled €251,000.

Other information

¾ Identity of the parent company consolidating the company's financial statements:

Ets Charles Nusse SA, a French limited company (société anonyme) with an Executive Board and a Supervisory Board, with share capital of €1,603,248 15, rue des Ecluses Saint Martin 75010 PARIS

Percentage held: 80.46%

¾ Tax consolidation:

All fully consolidated subsidiaries are consolidated for tax purposes, except for the foreign companies.

The parent company of the tax group is Exacompta Clairefontaine.

The tax savings realised by the parent company are returned to the subsidiaries when they become profitable and can charge their own losses. The tax savings realised in 2013 totalled €602,000.

¾ Individual training rights:

At year-end, employees had acquired 4,539 unused hours.

¾ Staff:

The average headcount of the parent company totalled 49 persons in 2013 (2 administrative managers and 47 sales managers).

¾ Competitiveness and Employment tax credit (Crédit d'impôt pour la compétitivité et l'emploi – CICE)

The Competitiveness and Employment tax credit (CICE) was introduced by Article no. 66 of the Amending French Finance Act no. 2012-1510 of 29 December 2012. It is calculated based on the total remuneration paid during the calendar year and the income is accounted for in line with personnel expenses.

For the 2013 fiscal year, total CICE was €16,000.

In accordance with the information issued by the French accounting standards authority (ANC) on 28 February 2013, the CICE is recorded as a reduction in personnel expenses by crediting subaccount 649, which was created specifically for this purpose.

¾ Remuneration of administrative and management bodies:

The members of the Board of Directors receive no remuneration from the company.

The total amount of directors' fees granted to Directors totalled €60,000 in 2013, and was awarded by a decision of the 29 May 2013 Shareholders' Meeting.

BALANCE SHEET AND

INCOME STATEMENT DATA

Share capital

	Number of shares	Par value (€)
At 1 January	1,131,480	€4
At 31 December	1,131,480	€4

Change in shareholders' equity (€000)

Shareholders' equity at 31/12/2012	333,865
Dividends distributed	-566
Change in regulated provisions	189
Income/(loss) for fiscal year 2013	-22,901
Shareholders' equity at 31/12/2013	310,587

Change in gross non-current assets

€000	Gross value b/fwd	Purchases	Sales	Other activity	Gross value c/fwd
Concessions, patents, licences	273	4	50	61	288
Intangible assets in progress	61			-61	0
Intangible assets	334	4	50	0	288
Land	3,602				3,602
Buildings and fixtures	20,290	566		53	20,909
Other PP&E	107	1	10		98
Property, plant and equipment in progress	53	175		-53	175
Property, plant and equipment	24,052	742	10	0	24,784
Equity interests	299,240				299,240
Loans	13,931	970	5,596		9,305
Other non-current financial assets	4				4
Non-current financial assets	313,175	970	5,596		308,549

Inventory of securities held in the portfolio

Company name	Number of shares	% interest	Net asset value
Papeteries de Clairefontaine	5,700,000	100%	103,001,491
Exacompta	135,000	100%	90,692,905
Ateliers de Fabrication d'Agendas	90,000	100%	49,633,433
Clairefontaine Rhodia	256,000	100%	30,912,423
Coopérative Forestière Lorraine	1	insignificant	178

Change in depreciation/amortisation of non-current assets

€000	Amounts b/fwd	Additions	Reversals	Other activity	Amounts c/fwd
Concessions, patents, licences	246	78	50		274
Intangible assets	246	78	50		274
Land		1			1
Buildings and fixtures	9,515	819			10,334
Other PP&E	62	9	5		66
Property, plant and equipment	9,577	829	5		10,401

Change in provisions and write-downs

€000	Provisions b/fwd	Additions	Reversals (used)	Reversals (not used)	Provisions c/fwd
Accelerated depreciation/amortisation	2,632	218	29		2,821
Regulated provisions	2,632	218	29		2,821
Pensions and similar obligations	233	27		9	251
Provisions for contingent liabilities and charges	233	27		9	251
Intangible assets	61		61		0
Equity interests		25,000			25,000
Write-downs	61	25,000	61		25,000

Increases and reversals operating o financial o extraordinary o	27 25,000 218	70 29
Total	25,245	99

Receivables schedule

Receivables due (€000)	Gross amounts	Less than 1 year	More than 1 year
Non-current receivables
Loans	9,305	4,236	5,069
Other financial assets	4		4
Current receivables
Trade receivables	2,175	2,175
Personnel and related	12	12
Income tax	2,840	32	2,808
Value added tax	43	43
Other tax receivables	1	1
Group and associates	83,831	83,831
Prepaid expenses	195	195
Total	98,406	90,525	7,881

Payables schedule

Payables due (€000)	Gross amounts	Less than 1 year	From 1 to 5 years
Bank loans and borrowings	46,282	46,282
Trade payables	803	803
Personnel and related	505	505
Social security organisations	728	728
Value added tax	132	132
Other taxes, duties and similar items	31	31
Liabilities on non-current assets	13	13
Group and associates	27,745	24,792	2,953
Deferred income	311	311
Total	76,550	73,597	2,953

Breakdown of prepaid expenses and deferred income

€000	Prepaid expenses	Deferred income
Operating income/expenses	170	234
Financial transactions	25	77
Total	195	311

Breakdown of accrued expenses and accrued income

€000	Accrued expenses	Accrued income
Invoices not received/to be established	82	171
Tax and social security payables/receivables	627	1
Financial transactions		14
Total	709	186

Breakdown of expense transfers

€000	Expense transfers
Transfer of external expenses	1,251
Transfer of personnel expenses	5,060
Transfer of taxes & duties	114
Total	6,425

Extraordinary income and expenses

€000	2013	2012
Sale of property, plant and equipment	3
Reversal of accelerated depreciation	29	30
Other extraordinary reversals		63
Other income	14	48
Total extraordinary income	46	141
Sale of property, plant and equipment	5
Increase in accelerated depreciation	218	216
Other extraordinary additions	50
Other expenses
Total extraordinary expenses	273	216

Breakdown of income taxes

Breakdown – €000	Income before tax	Taxes owed	Net income after tax
Income/(loss) from ordinary activities	-23,259		-23,259
Extraordinary income	-227		-227
Taxes receivable y Tax consolidation: y Other tax effects		-601 16	601 -16
Total	-23,486	-585	-22,901

Deferred and future tax position

€000	Amount
Tax on:
Accelerated depreciation/amortisation	940
Total increases	940
Prepaid tax on:
Paid holiday	103
Other	85
Total reductions	188
Net deferred tax position	752

Tax loss carryforwards	135
Net future tax position	-135

Financial instruments

Valuation:

The Group uses derivatives products mainly to hedge against interest rate risks. Transactions performed to hedge exchange rate risks are non material. The valuation of the financial instruments was -€324,000 as at 31/12/2013.

Interest rate risks:

In order to hedge against changes in interest rates, the Group has taken out interest rate swaps. The types of instruments that may be used, as well as the maximum risk levels incurred, are determined by Senior Management. The risk is checked daily.

Financial instrument portfolio at 31/12/2013 (current notional amounts):

Residual maturity (€000)	Less than 1 year	1 to 5 years	More than 5 years	Total
Interest rate swaps	4,019	5,067	0	9,086

Off-balance sheet commitments

The companies which head sub-groups (Exacompta, Papeteries de Clairefontaine, Clairefontaine Rhodia, AFA) guarantee all repayments of their subsidiaries which borrow from the parent company.

Exacompta Clairefontaine jointly and severally guarantees payment to Exeltium of all liabilities in respect of purchases of blocks of electricity subscribed to by Papeteries de Clairefontaine.

There are no commitments to related companies.

Amounts concerning related companies

€000	Related companies
Non-current assets	308,540
Equity interests	274,240
Loans	9,300
Current assets	86,019
Trade and intercompany receivables	2,174
Other receivables	83,845
Liabilities	27,938
Trade payables	116
Other payables	27,822
Financial income	2,554
Dividends	720
Financial expenses	25,258
Investment write-down	25,000
Operating revenue	8,957
Real estate leases	2,178
Other income	378
Expense transfers	6,401

Related party transactions

No material non-arm's length transactions involving related parties were executed.

List of subsidiaries and equity interests (€)

Direct subsidiaries in which more than 50% is held	% held Dividends received	Share capital Shareholders' equity	Shares Gross amount Net amount	Loans Advances
Papeteries de Clairefontaine 88480 ETIVAL CLAIREFONTAINE	100%	91,200,000 153,881,242	103,001,491 103,001,491
Exacompta 138, Quai de Jemmapes 75010 PARIS	100%	2,160,000 76,512,546	115,692,905 90,692,905	2,125,000
Atelier de Fabrication d'Agendas 132, Quai de Jemmapes 75010 PARIS	100% 720,000	1,440,000 43,849,289	49,633,433 49,633,433	400,000
Clairefontaine Rhodia RD 52 68490 OTTMARSHEIM	100%	27,264,000 19,173,132	30,912,423 30,912,423

Some accounting information concerning the subsidiaries has not been provided as its disclosure could cause serious harm.

Exacompta Clairefontaine S.A.

Statutory Auditors' Reports

• Report on the parent company financial statements
• Special report on regulated agreements and commitments
• Report on the Chairman's report on the operations of the Board of Directors and internal control

SEREC AUDIT BATT AUDIT Statutory Auditor Statutory Auditor

Member of the Paris Institute of Statutory Auditors Member of the Nancy Institute of Statutory Auditors 21 rue Leriche 25 rue du Bois de la Champelle

75015 PARIS 54500 VANDOEUVRE LES NANCY

Report of the Statutory Auditors on the parent company financial statements

Year ended 31 December 2013

EXACOMPTA CLAIREFONTAINE

A French limited company (société anonyme)

88480 ETIVAL CLAIREFONTAINE

STATUTORY AUDITORS' REPORT ON THE PARENT COMPANY FINANCIAL STATEMENTS

Year ended 31 December 2013

EXACOMPTA CLAIREFONTAINE S.A.

88480 ETIVAL CLAIREFONTAINE

To the Shareholders:

In accordance with the assignment entrusted to us by your Shareholders' Meeting, we hereby present our report on the year ended 31 December 2013, concerning:

• the audit of the annual financial statements of EXACOMPTA CLAIREFONTAINE, which are appended to this report;
• the bases for our assessments;
• the specific verifications and information required by law.

The parent company financial statements were approved by the Board of Directors. It is our responsibility, based on our audit, to express an opinion on those statements.

1 - Opinion on the parent company financial statements

We performed our audit in accordance with the professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance that the parent company financial statements are free from material misstatements. An audit involves the review, by way of sample tests or other means of selection, of the documents underlying the amounts and information set forth in the financial statements. It also consists of an assessment of the accounting principles followed, the significant estimates made and the presentation of the statements as a whole. We believe that the evidence we have gathered provides a reasonable basis for our opinion.

We hereby certify that the parent company financial statements are, with regard to French accounting rules and principles, in order and accurate and fairly present the results of operations for the past year and the financial position, assets and liabilities of the company at the end of that year.

Without calling into question the aforementioned opinion, we would like to draw your attention to the note concerning "Principal events of the year" in which the write-down of equity interests is referred to.

2 - Bases of assessments

Pursuant to the provisions of Article L.823-9 of the French Commercial Code regarding the bases of our assessments, we provide you with the following information:

The section entitled "Non-current financial assets" in the notes explains the methods used for valuing equity interests. Our work included an assessment of the appropriateness of the underlying data used and of the assumptions on which these estimates were based. As part of our assessments, we assured ourselves of the reasonableness of these estimates.

The assessments carried out are part of our audit of the annual financial statements, taken as a whole, and thus contributed to the formation of our opinion, which is expressed in the first part of this report.

3 - Specific verifications and information

We also performed the specific verifications required by law, in accordance with the professional standards applicable in France.

We have no comments to make about the accuracy and consistency with the parent company financial statements of the information provided in the report of the Board of Directors and in the documents addressed to the shareholders concerning the financial position and the parent company financial statements.

As required by law, we hereby inform you that, contrary to the provisions of Article L.225-102-1 of the French Commercial Code, your company did not mention the following in its management report:

• information related to remuneration and benefits paid to authorised representatives of the company, as well as commitments of any kind made to them,
• and, in the separate document entitled "Social and Environmental Responsibility", information regarding measures designed to reduce noise and any other forms of pollution specific to the business activity.

Pursuant to the law, we assured ourselves that the other information regarding the identity of the holders of the capital was communicated to you in the management report.

Executed in Paris and Vandœuvre-lès-Nancy, 25 April 2014

The Statutory Auditors

SEREC AUDIT BATT AUDIT

Benoît Grenier Pascal François

SEREC AUDIT BATT AUDIT Statutory Auditor Statutory Auditor

Member of the Paris Institute of Statutory Auditors Member of the Nancy Institute of Statutory Auditors

21 rue Leriche 25 rue du Bois de la Champelle 75015 PARIS 54500 VANDOEUVRE LES NANCY

Special report of the Statutory Auditors on regulated agreements and commitments

Shareholders' Meeting called to approve the financial statements for the year ended 31

EXACOMPTA CLAIREFONTAINE

A French limited company (société anonyme)

88480 ETIVAL CLAIREFONTAINE

SPECIAL REPORT OF THE STATUTORY AUDITORS ON REGULATED AGREEMENTS AND COMMITMENTS

Shareholders' Meeting called to approve the financial statements for the year ended 31 December 2013

EXACOMPTA CLAIREFONTAINE S.A.

88480 ETIVAL CLAIREFONTAINE

To the Shareholders:

In our role as the statutory auditors of your company, we hereby present to you our report on the regulated agreements and commitments.

It is our responsibility to inform you, on the basis of the information provided to us, of the essential characteristics and conditions of the agreements and commitments of which we have been informed or which we have discovered during the course of our audit, without having to express an opinion on their usefulness or appropriateness or to seek out the existence of other agreements and commitments. It is your responsibility, pursuant to Article R.225-31 of the French Commercial Code, to assess the interest attached to entering into these agreements and commitments with a view to their approval.

It is also our responsibility, where appropriate, to provide you with the information stipulated in Article R.225-31 of the French Commercial Code in relation to the performance, during the past year, of those agreements and commitments already approved by the Shareholders' Meeting.

We have carried out the procedures which we judged necessary pursuant to the professional policies of the Compagnie Nationale des Commissaires aux Comptes (National Institute of Statutory Auditors) relative to this assignment. These procedures consisted of verifying that the information given to us was consistent with the source documents from which it was taken.

AGREEMENTS AND COMMITMENTS SUBMITTED TO THE SHAREHOLDERS' MEETING FOR APPROVAL

We have not been informed of any agreement or commitment authorised during the past year and requiring to be submitted to the Shareholders' Meeting for approval pursuant to the provisions of Article L.225-38 of the French Commercial Code.

AGREEMENTS AND COMMITMENTS ALREADY APPROVED BY THE SHAREHOLDERS' MEETING

Pursuant to Article R.225-30 of the French Commercial Code, we were informed that the performance of the following agreements and commitments, which were approved by the Shareholders' Meeting during prior years, continued during this past year.

Agreement with Exacompta and Clairefontaine Rhodia

Nature and purpose: Exacompta and Clairefontaine Rhodia jointly manage part of the Group's communication requirements.

• Conditions: For 2013, the following amounts were recognised as expenses by Exacompta Clairefontaine:
• o €80,652 invoiced by Exacompta,
• o €50,938 invoiced by Clairefontaine Rhodia.

Agreement with the Exacompta Clairefontaine Group companies

Nature and purpose: Exacompta Clairefontaine S.A. provides Group companies with administrative, legal and marketing assistance.

Conditions: Since 1 January 2003, Exacompta Clairefontaine has received a fee from each of the Group companies equal to 0.2% of the value added for the previous year. Income recorded by Exacompta Clairefontaine for the 2013 fiscal year came to €378,230.

Agreement with Clairefontaine Rhodia

• Nature and purpose: Exacompta Clairefontaine leases to Clairefontaine Rhodia a residential complex located in Mulhouse.
• Conditions: Rental income recorded by Exacompta Clairefontaine for the 2013 fiscal year came in at €13,417.

Executed in Paris and Vandœuvre-lès-Nancy, 25 April 2014

The Statutory Auditors

SEREC AUDIT BATT AUDIT

Benoît Grenier Pascal François

SEREC AUDIT BATT AUDIT Statutory Auditor Statutory Auditor

Member of the Paris Institute of Statutory Auditors Member of the Nancy Institute of Statutory Auditors

21 rue Leriche 25 rue du Bois de la Champelle 75015 PARIS 54500 VANDOEUVRE LES NANCY

Report of the Statutory Auditors on the Report of the Chairman of the Board of Directors, drawn up pursuant to Article L.225-235 of the French Commercial Code

Year ended 31 December 2013

EXACOMPTA CLAIREFONTAINE

A French limited company (société anonyme)

88480 ETIVAL CLAIREFONTAINE

Report of the Statutory Auditors on the Report of the Chairman of the Board of Directors, drawn up pursuant to Article L.225-235 of the French Commercial Code

Year ended 31 December 2013

EXACOMPTA CLAIREFONTAINE S.A.

88480 ETIVAL CLAIREFONTAINE

To the Shareholders:

In our role as statutory auditors of Exacompta Clairefontaine and pursuant to the provisions of Article L. 225-235 of the French Commercial Code, we hereby present to you our report on the report prepared by the Chairman of your company in accordance with the provisions of Article L. 225-37 of the French Commercial Code with regard to the year ended 31 December 2013.

The Chairman is required to draw up and submit to the Board of Directors for its approval a report detailing the internal control and risk management procedures established by the company, in addition to other information required by Article L.225-37 of the French Commercial Code relating in particular to corporate governance.

It is our responsibility to:

• y provide you with our comments on the information contained in the Chairman's report concerning the internal control and risk management procedures related to the preparation and treatment of the accounting and financial information; and
• y certify that the report includes all the other information required by Article L.225-37 of the French Commercial Code, on the understanding that it is not our responsibility to verify the accuracy of said other information.

We carried out our work in accordance with the professional standards applicable in France.

Information concerning the internal control and risk management procedures for preparing and processing accounting and financial information

The professional standards require the performance of procedures that aim to assess the accuracy of the information concerning the internal control and risk management procedures related to the preparation and treatment of accounting and financial information contained in the Chairman's report.

These procedures include:

• y acquainting ourselves with the internal control and risk management procedures for the preparation and treatment of the accounting and financial information underlying the information presented in the Chairman's report and with the existing documentation,
• y acquainting ourselves with the work that enabled the preparation of this information and with the existing documentation,
• y determining whether the main deficiencies in the internal control system regarding the preparation and treatment of the accounting and financial information which we identified during the course of our assignment are appropriately discussed in the Chairman's report.

Based on the work performed, we have no comments to make regarding the information concerning the company's internal control and risk management procedures for the preparation and treatment of the accounting and financial information contained in the Chairman's report, which was prepared in accordance with the provisions of Article 225- 37 of the French Commercial Code.

Other information

We hereby certify that the report of the Chairman of the Board of Directors contains the other information required by Article L.225-37 of the French Commercial Code.

Executed in Paris and Vandœuvre-lès-Nancy, 25 April 2014

The Statutory Auditors

SEREC AUDIT BATT AUDIT

Benoît Grenier Pascal François

Exacompta Clairefontaine S.A.

Consolidated financial statements for the 6 months ended 31 December 2013

Consolidated balance sheet

€000	31/12/2013	31/12/2012	Notes
NON-CURRENT ASSETS	240,838	242,977
Intangible assets	14,172	15,335	(2.1.4)
Intangible assets – Goodwill	10,550	10,620	(2.1.4)
Property, plant and equipment	212,668	213,134	(2.1.5)
Financial assets	2,871	3,359	(2.1.6)
Deferred taxes	577	529	(2.4)
CURRENT ASSETS	332,807	330,456
Inventories	164,232	167,061	(2.2.1)
Trade and other receivables	105,315	101,608	(2.2.2)
Advances	1,941	3,975
Taxes receivable	3,009	804
Cash and cash equivalents	58,310	57,008	(2.2.3)
TOTAL ASSETS	573,645	573,433

SHAREHOLDERS' EQUITY	367,270	364,754
Share capital	4,526	4,526
Reserves related to capital	256,321	254,480
Consolidated reserves	103,489	106,695
Currency translation reserve	-1,389	-726
Profit/(loss) – Group share	4,277	-266
Shareholders' equity – Group share	367,224	364,709
Minority interests	46	45
NON-CURRENT LIABILITIES	50,212	46,835
Interest-bearing debt	2,809	395	(2.6)
Deferred taxes	29,790	29,694	(2.4)
Provisions	17,613	16,746	(2.5)
CURRENT LIABILITIES	156,163	161,844
Trade payables	47,024	47,699
Short-term portion of interest-bearing debt	58,080	61,909	(2.6)
Provisions	3,277	3,302	(2.5)
Other payables	47,782	48,934	(2.8)
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	573,645	573,433

Consolidated income statement

€000	2013	2012	Notes
Income from ordinary activities	524,635	525,742
- Sales of products	518,416	519,002
- Sales of services	6,219	6,740
Other operating income	5,127	7,362
- Reversal of depreciation/amortisation	115	249	(2.1.4, 2.1.5)
- Subsidies	35	39
- Other income	4,977	7,074
Change in inventories of finished products and work-in-progress	-4,688	-1,121	(2.2.1)
Capitalised production costs	646	519
Goods and materials used	-247,246	-250,531	(2.2.1)
External expenses	-85,028	-88,025
Personnel expenses	-145,079	-147,330	(2.11)
Taxes and duties	-11,693	-10,842
Depreciation/amortisation	-25,266	-25,018	(2.1.4, 2.1.5)
Other operating expenses	-6,316	-9,785
OPERATING PROFIT/(LOSS) – before goodwill impairment	5,092	971
Goodwill impairment	-70	-421	(2.1.4, 2.1.1)
OPERATING PROFIT/(LOSS) – after goodwill impairment	5,022	550
Financial income	2,136	3,156
Financial expenses	-2,760	-3,484
Net financial items	-624	-328	(2.12)
Income taxes	-120	-489	(2.4.2.10)
Income/(loss) after tax	4,278	-267
Net income/(loss) – minority share	1	-1
Net income/(loss) – Group share	4,277	-266
Net income/(loss) for the period	4,277	-266
Number of shares	1,131,480	1,131,480	(2.3)
EARNINGS PER SHARE (basic and diluted)	3.78	-0.24

Comprehensive income statement

€000	2013	2012
Net income/(loss) for the period	4,278	-267
y Currency translation differences resulting from the conversion of foreign entities' financial statements	-665	-179
y Actuarial gains and losses	-531	-326
Total comprehensive income/(loss)	3,082	-772
Attributable to:
- minority interests	1	-1
- the Group	3,081	-771

Statement of changes in consolidated shareholders' equity

€000	Shareholders' equity – Group share	Shareholders' equity – minority share	Total shareholders' equity
Balance at 31/12/2011	366,611	46	366,657
Currency translation difference	-179		-179
Other changes	-326		-326
Total from transactions not affecting earnings	-505		-505
Profit/(loss) for the year	-266	-1	-267
Dividends	-1,131		-1,131
Balance at 31/12/2012	364,709	45	364,754
Currency translation difference	-665		-664
Other changes	-531		-532
Total from transactions not affecting earnings	-1,196		-1,196
Profit/(loss) for the year	4,277	1	4,278
Dividends*	-566		-566
Balance at 31/12/2013	367,224	46	367,270

* €0.50 per share

Statement of consolidated cash flows

The opening and closing cash in the cash flow statement is determined as follows:

€000	31/12/2013	31/12/2012	Notes
Cash and cash equivalents in assets	58,310	57,008	(assets)
Bank overdrafts payable	-58,080	-61,907	(2.6)
Accrued interest on debt	-	-2	(2.6)
Cash in statement of changes in cash flow	230	-4,901

The reconciliation with the "Short-term portion of interest-bearing debt" recorded in liabilities is presented in Note 2.6.

Change in cash flows

4,278 26,147 96 60 -665 -531 29,385 -720 -2,031 -174	-267 27,037 637 -154 -179 -326 26,748 8,859 3,324 -1,919	(2.1.4 to 2.1.6, 2.5) (2.4)
		Balance sheet
26,460	37,012
-26,489	-30,099	(2.1.4 to
3,312	2,484	2.1.6)
-23,177	-27,599
		(Change in
		shareholders'
		equity)
803	731
1,848	-17,694
5,131	-8,281
	-4,313 3,747 3,413 -1,349 -453	16 -5,833 4,702 686 -17,294 -686

Opening cash	-4,901	3,380
Closing cash	230	-4,901
Change in cash	5,131	-8,281

Presentation of the consolidated financial statements

1- General principles – statement of compliance

The consolidated financial statements of the EXACOMPTA CLAIREFONTAINE Group were prepared in accordance with the IFRS (International Financial Reporting Standards), as adopted within the European Union.

The consolidated financial statements of the Exacompta Clairefontaine Group were approved by the Board of Directors on 26 March 2014. They will not be final until they have been approved by the Shareholders' Meeting.

2- Adoption of international standards

The comparative results for 2012 have been adjusted in accordance with changes to IAS 19 – Employee benefits that are mandatory as of 2013, due to their retrospective nature. Actuarial gains and losses are recorded under items of other comprehensive income.

2012 consolidated net loss came to €267,000, a €326,000 improvement on the €593,000 loss initially published in the 2012 annual report.

The 2012 financial data has been restated where necessary in order to ensure comparability between the financial years.

• ¾ Mandatory standards, amendments and interpretations in 2013:
• 8 IFRS 13 Fair value measurement
• 8 Amendments to IFRS 7 Disclosures Offsetting financial assets and financial liabilities
• 8 Amendments to IAS 1 Presentation of items of other comprehensive income
• 8 Amendments to IAS 12 Deferred tax: recovery of underlying assets
• 8 Amendments to IAS 19 Employee benefits
• 8 Annual improvements 2009-2011 cycle

Other than those amendments to IAS 19 described in the preceding section, the adoption of other standards and amendments has not had any material impact on the Group's consolidated financial statements.

• ¾ Standards, amendments and interpretations adopted by the European Union and mandatory after 2013
• 8 IFRS 10 Consolidated financial statements
• 8 IFRS 11 Joint arrangements
• 8 IFRS 12 Disclosure of interests in other entities
• 8 IAS 27 revised 2011 Separate financial statements
• 8 IAS 28 revised 2011 Investments in associates and joint ventures
• 8 Amendments to IAS 32 Presentation Offsetting financial assets and financial liabilities
• 8 Amendments to IAS 36 Impairment of assets Recoverable amount disclosures for nonfinancial assets

• 8 Amendments to IAS 39 Financial instruments: Recognition and measurement Novation of derivatives and continuation of hedge accounting

• 8 Amendments to IFRS 10, 11 and 12 Transition guidance

• 8 Amendments to IFRS 10 and 12 and IAS 27 Investment entities

The Group did not apply any optional standard, amendment or interpretation. The impacts of these new standards are currently being studied. However, the Group does not expect them to have a material impact on the financial statements.

¾ Standards and amendments not yet adopted by the European Union

• 8 IFRS 9 Financial instruments
• 8 Amendments to IAS 19 Employee benefits Defined benefit plans: employee contributions
• 8 Annual improvements 2010-2012 cycle
• 8 Annual improvements 2011-2013 cycle

The impacts of these new standards, amendments and improvements are currently being studied.

3- Bases of preparation of the financial statements

The financial statements are presented in euros, rounded to the nearest one thousand euros. They are prepared on the basis of historical cost, with the exception of financial instruments, which are shown at their fair value.

The preparation of the financial statements according to IFRS requires the exercise of judgement by Management in making estimates and assumptions that have an impact on the application of the accounting methods and on the amounts of the assets, liabilities, revenues and expenses. The underlying estimates and assumptions are made based on past experience and other factors deemed reasonable in view of the circumstances. They also form the basis for the exercise of judgement required for determining the book values of assets and liabilities that cannot be obtained directly from other sources. The real values may differ from the estimated values. The estimates and underlying assumptions are reviewed on an ongoing basis. The impact of changes in accounting estimates is recorded during the period in which the change occurs and all subsequent periods affected.

The accounting methods described below have been applied on a consistent basis to all the periods presented in the consolidated financial statements. Furthermore, said methods have been applied uniformly to all the entities of the Exacompta Clairefontaine Group.

4- Consolidation of subsidiaries

The consolidated financial statements include the financial statements of the parent company, Exacompta Clairefontaine, and those of the entities controlled by the parent company (the "subsidiaries").

Control means the power to direct, directly or indirectly, the financial and operating policies of the entity in order to obtain benefits from its activities.

The financial statements of the subsidiaries are included in the consolidated financial statements from the date on which control was obtained, and until the date on which control is no longer held.

The balances shown in the balance sheet, unrealised losses and gains, and the revenues and expenses resulting from Group transactions are eliminated in the consolidation.

Unrealised gains arising from transactions with affiliates are eliminated in proportion to the Group's equity interest.

Unrealised losses are eliminated in the same way, but only if they do not represent a loss in value.

5- Foreign currencies

The individual financial statements of each of the Group's entities are presented in the currency of the economic environment in which that entity operates. For the purposes of the consolidated financial statements, the profit or loss and the financial position of each entity are stated in euros, which is the functional currency of Exacompta Clairefontaine S.A. and the currency in which the consolidated financial statements are presented.

Transactions in foreign currency are recorded at the exchange rate in effect on the date of the transaction.

Monetary assets and liabilities denominated in a foreign currency at the balance sheet date are converted to euros at the closing rate. The currency translation differences resulting from this conversion are recorded in the income statement as income or expense, as applicable.

The assets and liabilities of each individual entity that engages in its activity abroad are converted to euros at the exchange rates in effect at the balance sheet date. Income and expenses are converted at the average exchange rates for the period, which is a sufficient approximation of the rates on the transaction dates, in the absence of major fluctuations.

The currency translation differences resulting from the conversion are recorded under currency translation adjustment as a separate shareholders' equity account.

6- Business combinations

Acquisitions of subsidiaries are recorded using the acquisition method set forth in revised IFRS 3. The identifiable assets acquired and the liabilities taken over are measured at their fair value as at the acquisition date, which is the date on which control of the entity is obtained.

The goodwill acquired as part of a business combination is recorded as an asset and is valued as the excess [a - b] of:

• a) the sum of the consideration transferred, the non-controlling interest in the acquired entity and, in the case of a step acquisition, the fair value of the previously held interest as at the acquisition date, over
• b) the book value, as at the acquisition date, of the identifiable assets acquired and liabilities taken over.

If a business combination takes place under favourable conditions, the purchaser records the corresponding profit under income as at the acquisition date.

A business combination involving a number of entities under common control is a grouping in which all of the entities or operations that are grouped are ultimately controlled by the same party, both before and after the combination, and where this control is not temporary. In the absence of specific provisions in the accounting standards, the Group applies the book value method to all transactions involving the entities under common control.

7- Property, plant and equipment

The land and buildings held by the Group are intended for use in the production or supply of goods and services, or for administrative purposes.

The Group does not hold any significant real estate that falls within the category of investment property. The industrial facilities and other equipment are assets held in respect of operations related to the production or supply of goods and services.

All of the property, plant and equipment owned by the Group are recorded at the initial purchase cost, less accumulated depreciation and impairment.

Property, plant and equipment under construction are assets intended for use in production and are recorded at cost, less any impairment identified.

When the components of fixed assets have different useful lives, they are recorded as separate assets. All ongoing service and maintenance costs are recorded as expenses at the time they are incurred.

Lease agreements that involve the transfer to the Group of substantially all the risks and benefits inherent in owning an asset are classified as finance lease agreements.

The respective assets are booked as fixed assets at their fair value or, if lower, at the discounted value of the minimum lease payments less accumulated depreciation and impairment, as the offset to a financial liability. The minimum payments under these agreements are divided between interest expense and repayment of the debt. The interest expense is charged to each period covered by the finance lease agreement so as to obtain a constant periodic interest rate on the balance of the remaining debt shown in liabilities.

These assets are depreciated over their expected useful life on the same basis as owned assets.

Depreciation is recognised as expenses using the straight line method, without any residual value. The depreciation is calculated based on the estimated useful life of each component of fixed assets on the following bases and by year:

-	Land	not depreciated
-	Buildings	25 to 40 years
-	Fixtures and furnishings	10 to 20 years
-	Plant and equipment	10 to 20 years
-	Other office supplies and computer hardware	3 to 10 years

The useful life of the main assets is reviewed when the accounts are closed. Any change in the useful life is recorded on a prospective basis as a change in an accounting estimate.

8- Intangible assets

Research and development costs

Research costs are recorded as expenses in the year in which they are incurred. Development expenses are recorded as a non-current asset if the costs can be reliably measured and if the Group can demonstrate the technical and commercial feasibility of the product or procedure, the existence of probable future economic benefits and its intention, as well as the availability of sufficient resources, to complete the development of and use or sell the asset. When the requirements for recording development expenses in assets are not met, they are recognised as expenses for the year in which they are incurred. A review of the costs incurred led the Group not to book development expenses.

Greenhouse gas emission rights

The paper subsidiaries of the Group engage in an activity that is regulated by Order no. 2004-330 of 15 April 2004, with the adaptation to French law, in the environmental code, of Directive no. 2003/87/EC of the European Parliament and the Council, establishing a scheme for trading greenhouse gas emission allowances, adopted on 13 October 2003.

An allowance is a unit of account that represents the emission of one tonne of carbon dioxide. The new greenhouse gas emission allowance allocation period runs from 2013 to 2020.

The accounting regulations in force until 31 December 2012 have been repealed. The new regulations came into force on 1 January 2013.

The Group applies the accounting principles set forth in Regulation no. 2012-03 of 4 October 2012 on the accounting treatment of greenhouse gas emission allowances and similar units, as adopted by the French accounting standards authority ("Autorité des normes comptables" or ANC) and published in the French government's official journal on 30 December 2012.

Pursuant to the regulation, the Group applies the "production" model, in which the holding of allowances is linked to a production process that generates greenhouse gas emissions. The allowances are used in order to comply with the requirement to surrender them to the State.

The main features of the model applied by the Group are as follows:

• 8 The allowances are recorded under inventories
• Allowances allocated by the State are recorded at zero value. They are treated purely in terms of volume.
• Purchased allowances are recorded at purchase cost.
• 8 Balance sheet valuation
• An impairment charge is recorded when the present value of inventories is lower than the book value.

• No specific valuation is carried out in the case of allocated allowances, as they are recorded at zero value.

• 8 Inventory withdrawal

• The allowances are withdrawn from inventories on an ongoing basis in line with actual CO2 emissions. Allocated allowances have no impact on the financial statements.
• Any gains or losses arising from the sale of emission allowances are recorded under operating profit.
• 8 Requirements related to greenhouse gas emissions
• The basic requirement to surrender the CO2 emission allowances in accordance with emissions produced remains unchanged from the previous allocation periods.
• At the end of each reporting period, if the Group lacks a sufficient number of allowances [allocated + purchased] to meet its obligation to surrender allowances to the State, a liability representing the value of missing allowances to be purchased is recorded.

Goodwill

Goodwill arises from the acquisition of subsidiaries. Goodwill is the difference between the acquisition cost and the fair value of identifiable net assets minus contingent liabilities. Following the application of revised IFRS 3 – Business combinations, as of 1 January 2010 goodwill is measured in accordance with the principles described in paragraph 6 above. Goodwill recorded prior to this date is not adjusted.

Goodwill is valued at cost, less accumulated impairment.

For the purposes of impairment testing, goodwill is allocated to cash generating units (CGUs) or groups of CGUs consisting mainly of subsidiaries or groups of subsidiaries with synergies. Most of these CGUs are outside the consolidated Group, and they are smaller in size than the operating segments defined by IFRS 8 Operating segments.

Impairment tests are carried out on all cash generating units to which goodwill is allocated; these tests are performed annually, and at each account statement date if there is an indication that the unit may have lost value, using the discounted future cash flows method. The future cash flows are calculated for an average period of 5 years, are discounted at a rate between 8% and 10%, and include a terminal value. There is no major variation in the principal key assumptions used to calculate expected cash flows.

If the recoverable value of the cash generating unit is less than that unit's book value, the loss in value is first allocated to reducing the book value of any goodwill allocated to that cash generating unit, and then to other assets of the unit, pro rata to the book value of each asset in the unit.

Impairment of goodwill recorded in the income statement is not reversed in a subsequent period.

Trademarks

Trademarks are recorded as intangible assets at their fair value, which is determined on the purchase date. In the absence of a foreseeable limit on their capacity to generate net cash flows, the useful life of the trademarks used by the Group is considered to be indefinite.

They are not amortised but undergo an impairment test once a year and at each account statement date if there is an indication of any loss in value. The recoverable value is determined based on expected cash flows discounted at the rate of 8%.

The internally generated expenses related to trademarks are recorded in expenses when they are incurred.

Other intangible assets

Other intangible assets that have been acquired by the Group are recorded at their cost, less amortisation and accumulated impairment.

Amortisation is recorded as expenses using the straight line method over the estimated useful life, on the following bases and by year:

-	Patents, licences and software	3 to 8 years
-	Other intangible assets	5 to 10 years

9- Impairment of property, plant and equipment and intangible assets (excluding goodwill and trademarks)

At the end of each period, the Group reviews the book values of property, plant and equipment and intangible assets in order to determine whether there is any indication that an asset has suffered impairment. If it has, the recoverable value of the asset is estimated in order to determine the potential impairment.

The recoverable value of an asset is the higher of the fair value less costs to sell and the value in use. The value in use is estimated using the discounted future cash flows method. If the recoverable value is estimated to be less than the book value, impairment is recognised immediately in expenses in the income statement.

Impairment recorded for an asset during a prior period may be reversed if there has been a change in the estimates used to determine the recoverable value. However, this book value, increased because of a reversal of impairment, may not exceed the book value that would have been determined, net of depreciation or amortisation, if no impairment had been recorded. The reversal of impairment is recorded in the income statement.

10- Financial assets

Unconsolidated equity interests are classified as assets available for sale, and are valued at their fair value; changes in that fair value are recorded in shareholders' equity. If the fair value cannot be reliably estimated, the interests continue to be valued at the purchase cost. In the event of a write-down, the loss in value is recorded in the income statement.

Intercompany receivables and other non-current financial assets are valued at fair value when initially recorded and at the amortised cost at the time of subsequent valuations.

11- Trade and other receivables

Trade and other receivables are included in the IAS 39 category "loans and receivables". They are valued at their fair value when initially recognised and at cost at the time of subsequent valuations. Any losses in value are recorded in the income statement when the recoverable value is less than the book value.

12- Inventories

Inventories are recorded at the lower of cost and net realisable value. The net realisable value is the estimated sales price in the normal course of business, less the estimated costs for completion and the estimated costs to make the sale.

The cost includes direct raw materials costs and direct labour costs, and directly attributable general expenses incurred to put the inventories in place in their existing condition. In general, the cost is calculated using the weighted average cost method.

13- Cash and cash equivalents

Cash and cash equivalents include cash on hand, bank balances and short-term investments in money market instruments. These investments can be converted into a known amount of cash within one week at most and are subject to a negligible risk of a change in value. Marketable securities are classified under assets held for trading.

Bank overdrafts repayable on demand and current borrowings, which are an integral part of the Group's cash management, are included in cash and cash equivalents for the purposes of the cash flow statement.

14- Derivative financial instruments

The Group uses derivative financial instruments to limit its exposure to the interest rate risks resulting from its operating, financing and investing activities.

The Group does not apply hedge accounting (cash flow and fair value hedges). Derivative financial instruments are included in financial assets and liabilities, at their fair value through profit/loss. The profit or loss resulting from subsequent valuations of the fair value is recorded immediately in income.

Interest rate swaps, caps and floors are recorded at fair value, which corresponds to the price that would be exchanged between knowledgeable and willing parties in an arm's length transaction. This value is communicated by the financial institutions with which these instruments are contracted.

15- Interest-bearing debt

All financial instruments are initially valued at their fair value and at their amortised cost at the time of subsequent valuations.

Transaction costs are included in the initial valuation of the financial instruments that are not valued at fair value through profit or loss. The transaction costs are the marginal costs directly attributable to the purchase or issuance of a financial instrument and do not include internal administration costs.

All loan expenses are recorded as expenses for the period in which they are incurred.

16- Employee benefits

Defined contribution plans

Payments to a defined contribution plan are recorded as expenses at the time they are incurred.

Provisions for retirement indemnities

The Group's net liability for defined benefit plans is estimated separately for each scheme by estimating the amount of the future benefits acquired by personnel in exchange for services rendered during the present and prior periods.

This amount is discounted to determine its present value, and is reduced by the fair value of the assets of the scheme. The discount rate is determined using the French average bond market rate on the balance sheet date, based on blue chip corporate bonds. The calculations are performed using the projected unit credit method.

Actuarial gains and losses have been recorded under items of other comprehensive income in accordance with amendments to IAS 19 – Employee benefits of mandatory application from 2013. The 2012 financial data has been restated where necessary in order to ensure comparability between the financial years.

17- Provisions

A provision is recorded in the balance sheet when the Group has a current legal or constructive obligation resulting from a prior event and it is probable that that an outflow of resources representing economic benefits will be necessary to satisfy the obligation.

A restructuring provision is recorded when a transaction is approved by the Group and has been the subject of a communication.

The amount recorded in provisions is the best estimate of the expense that will be required to satisfy the obligation, and it is updated when the effect is significant.

18- Income

Income from ordinary activities

Sales of products and services are valued at the fair value of the consideration received or receivable, net of trade discounts and sales taxes.

Sales of goods are recorded in the income statement at the time of delivery of the goods and transfer of ownership to the buyer, who takes on their risks and benefits. Income obtained from provision of services is recorded in the income statement based on the degree of progress in provision of the service at the balance sheet date, and is valued based on the work performed.

Public subsidies

The public subsidies that offset some expenses incurred by the Group are recorded systematically as income in the income statement, for the period in which the expenses are incurred.

The subsidies that cover all or part of the costs of an asset are deducted from this asset to determine its cost price.

The subsidy is recorded as income over the useful life of the asset and can be amortised through a decrease in the depreciation expense.

Competitiveness and Employment tax credit (Crédit d'impôt pour la compétitivité et l'emploi – CICE)

The Competitiveness and Employment tax credit (CICE) was introduced under Article no. 66 of the Amending French Finance Act no. 2012-1510 of 29 December 2012.

It is calculated based on the total remuneration paid during the calendar year and the income is accounted for in line with personnel expenses. CICE is recorded as a reduction in personnel expenses.

19- Expenses

Payments under operating leases

Payments under operating leases are recognised as expenses on a straight line basis over the term of the lease.

The benefits received or receivable by the lessee are recorded as income according to the same rule, spread out over the term of the lease.

Net financial items

Net financial items include interest payable on loans and cash liabilities, interest receivable on investments, foreign exchange gains and losses, and gains and losses on financial instruments. All are recorded in the income statement.

20- Income tax

Income taxes include current tax expense or income and deferred tax expense or income. The tax is recorded in income unless it is related to items posted directly to shareholders' equity, in which case it is also recorded in shareholders' equity.

The Cotisation sur la Valeur Ajoutée des Entreprises (CVAE – French business value added tax) is not classified as an income tax and does not come within the scope of IAS 12. The contributions are recorded under operating expenses.

Current tax is the estimated tax due on taxable income for a period and any adjustment of the amount of current tax for prior periods.

It is determined by using the tax rates that have been adopted or substantially adopted at the closing date.

The deferred tax is determined using the accrual method for all temporary differences between the book value of the assets and liabilities and their tax bases, by using the tax rates that were adopted or substantially adopted at the closing date.

The following items do not result in deferred taxes:

• Goodwill not deductible for tax purposes;
• Initial recording of an asset or liability that affects neither accounting income nor taxable income (except in the case of a business combination).

A deferred tax asset is not recorded unless it is probable that the Group will have future taxable income against which this asset can be charged. Deferred tax assets are reduced when it is no longer probable that sufficient taxable income will be available.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset tax assets and liabilities due, and when they involve taxes on income withheld by the same tax authority and the Group intends to pay them based on their net amount.

21- Management of financial risk

Generally, the Exacompta Clairefontaine Group does not engage in any complex financial transactions. However, it is exposed to certain risks related to the use of financial instruments in the context of its activities.

Risk management is performed by the operating units, in accordance with the policy established by Senior Management.

Market risks

Exposure to market risks involves mainly exchange rate and interest rate risks.

Foreign exchange risk

The Group operates internationally. Risks related to commercial transactions denominated in a currency other than the respective functional currencies of Group entities are related mainly to purchases of raw materials denominated in US dollars.

In order to manage exchange rate risk, the Group hedges approximately 50% of its anticipated future transactions in USD for the coming three months using options contracts.

Exchange rate variations do not have a material impact on the financial statements for the year.

Interest rate risk

The risk to which the Group is exposed comes from borrowings. The borrowings initially undertaken at floating rates expose the Group to the risk of cash flow changes. Accordingly, the Group enters into interest rate swap contracts.

Liquidity risk

The Group's approach to managing this risk is to ensure that it always has sufficient liquid assets to meet its liabilities as they fall due without incurring unacceptable losses or damaging its reputation.

To this effect, short-term financing (maturities of less than one year) is provided by commercial paper on which a fixed rate is paid.

The Group also has lines of credit to cover medium-term maturities.

The Group has conducted a specific review of its liquidity risk and deems that it will be able to meet future maturities.

Credit risk

Credit risk represents the risk of financial loss for the Group if a client or counterparty to a financial instrument fails to perform its contractual obligations.

Trade and other receivables

The concentration of credit risk is not significant. It is divided among a large number of clients. The risk of default by business sector and country in which the clients engage in their activities does not have a significant influence on credit risk.

The Group has implemented tools to monitor outstandings that enable it to ensure that its clients have an appropriate credit history. Clients that do not satisfy solvency requirements cannot carry out transactions with the Group without making advance payments. In addition, credit risk is limited by taking out credit insurance contracts.

The Group determines a level of write-downs that represent its estimate of losses that will be incurred in respect of trade and other receivables. Losses in value correspond to specific losses related to individual risks.

The amounts presented in the balance sheet are net of impairment recorded.

Investments

The Group limits its exposure to credit risk from investments, short-term deposits and other cash instruments, by investing only in liquid securities.

As the counterparties are leading banks, the Group does not expect that any of them will default.

22- Segment information

Based on the Group's internal organisation, the operating segments for financial reporting purposes are defined by area of activity.

The main activities, by area of activity, are as follows:

• Paper: production, finishing and formatting of paper
• Processing: manufacture of stationery, office and filing items.

Transactions between the different operating segments are carried out on arm's length terms.

Segment information by geographic area is also presented and is divided by sales-to-customer area in respect of revenues and by the area in which the consolidated companies are located in respect of other information.

Notes to the consolidated financial statements

1. CONSOLIDATED ENTITIES

All the companies have been consolidated at 31 December 2013 using the full consolidation method (F.C.).

Name	Address	% interest	% controllin g interest	Consolidation method	SIREN No.
EXACOMPTA CLAIREFONTAIN E	88480 ETIVAL CLAIREFONTAINE			Parent company	505 780 296
A.B.L.	132, Quai de Jemmapes 75010 PARIS	100	100	F.C.	622 033 124
A.F.A.	132, Quai de Jemmapes 75010 PARIS	100	100	F.C.	582 090 452
L'AGENDA MODERNE	144, Quai de Jemmapes 75010 PARIS	100	100	F.C.	552 097 347
CARTOREL	358, Avenue de Paris 79025 NIORT	100	100	F.C.	025 770 470
CFR Ile Napoléon	RD 52 68490 OTTMARSHEIM	100	100	F.C.	439 721 697
PAPETERIES DE CLAIREFONTAIN E	88480 ETIVAL CLAIREFONTAINE	100	100	F.C.	402 965 297
CLAIREFONTAIN E RHODIA	RD 52 68490 OTTMARSHEIM	100	100	F.C.	339 956 781
CLAIRCELL	ZI – Rue de Chartres 28160 BROU	100	100	F.C.	432 357 358
COGIR	10, Rue Beauregard 37110 CHATEAU RENAULT	100	100	F.C.	885 783 159
REGISTRES LE DAUPHIN	27, Rue Georges Sand 38500 VOIRON	100	100	F.C.	055 500 953
MADLY	6, Rue Henri Becquerel 69740 GENAS	100	100	F.C.	400 210 449
EVERBAL	2, Route d'Avaux 02190 EVERGNICOURT	100	100	F.C.	542 091 194
EXACOMPTA	138, Quai de Jemmapes 75010 PARIS	100	100	F.C.	702 047 564
FACIMPRIM	15, Rue des Ecluses Saint Martin 75010 PARIS	100	100	F.C.	702 027 665

LALO	138, Quai de Jemmapes 75010 PARIS	100	100	F.C.	572 016 814
LAVIGNE	139-175, Rue Jean Jacques Rousseau 92130 ISSY LES MOULINEAUX	100	100	F.C.	332 346 444
PAPETERIE DE MANDEURE	14, Rue de la Papeterie 25350 MANDEURE	100	100	F.C.	339 310 807
MANUCLASS	ZI d'Etriché 49500 SEGRE	100	100	F.C.	318 110 665
CLAIRCELL INGENIERIE	ZI – Rue de Chartres 28160 BROU	100	100	F.C.	490 846 763
EDITIONS QUO VADIS	14, rue du Nouveau Bêle 44470 CARQUEFOU	100	100	F.C.	054 807 748
IMPRIMERIE RAYNARD	6, rue de la Peltière – 35130 LA GUERCHE DE BRETAGNE	100	100	F.C.	659 200 786
ROLFAX	ZI route de Montdidier 60120 BRETEUIL	100	100	F.C.	432 030 088
PAPETERIES SILL	Rue du Moulin 62570 WIZERNES	100	100	F.C.	085 650 141
BRAUSE Produktion	D – 51149 KÖLN	100	100	F.C.
EXACLAIR GmbH (Germany)	D – 51149 KÖLN	100	100	F.C.
RODECO	D – 51149 KÖLN	100	100	F.C.
MAKANE BOUSKOURA	Parc industriel de Bouskoura, lot n°4 20180 BOUSKOURA	100	100	F.C.
CLAIR MOROCCO	Parc industriel de Bouskoura, lot n°4 20180 BOUSKOURA	100	100	F.C.
PUBLIDAY MULTIDIA	Parc industriel de Bouskoura, lot n°4 20180 BOUSKOURA	100	100	F.C.
ERNST STADELMANN	Bahnhofstrasse 8 A – 4070 EFERDING	99	99	F.C.
EXACLAIR (Spain)	E – 08110 MONTCADA I REIXAC	100	100	F.C.
EXACLAIR (Belgium)	249, Boulevard de l'Humanité B – 1620 DROGENBOS	100	100	F.C.
EXACLAIR Inc (USA)	143 West 29th Street USA – NEW YORK	100	100	F.C.
EXACLAIR Ltd (UK)	Oldmedow Road KING'S LYNN, Norfolk PE30 4LW	100	100	F.C.
QUO VADIS International Ltd	1055, Rue Begin – Ville Saint Laurent QUEBEC H4R 1V8	100	100	F.C.

EXACLAIR Italia Srl	26 via Ferrante Aporti I – 20125 MILANO	100	100	F.C.
QUO VADIS Japon Co Ltd	Sangenjaya Combox 4F 1–32–3 Kamjuma Setagaya-Ku, TOKYO	100	100	F.C.
QUO VADIS Polonia Spzoo	Ul Oeniadeckich 18 60–773 POZNAN	100	100	F.C.
QUO VADIS Editions Inc.	120 Elmview Avenue HAMBURG, NY 14075–3770	100	100	F.C.
SCHUT PAPIER	Kabeljauw 2 NL – 6866 HEELSUM	100	100	F.C.

Changes affecting the scope of consolidation
Companies newly consolidated - acquisitions	Companies deconsolidated
• None	DIFTAR EXPORT– Liquidated: balance • sheet at 31 December 2013

The effects of the changes in the scope of consolidation are detailed in the information in the balance sheet and income statement below.

2. INFORMATION ON THE CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT

2.1 Non-current assets

2.1.1 Intangible assets

Greenhouse gas emission rights

No amounts were recorded under this heading in the 2013 financial statements following regulatory changes set forth in note 8 of the presentation of the consolidated financial statements. The change in accounting principles has not had any effect, either on income for the period or on consolidated shareholders' equity.

Trademarks

The item "Concessions, patents, licences" includes trademarks totalling €8,655,000. No impairment was recorded in the financial statements for fiscal year 2013.

Goodwill

The goodwill recorded applied mainly to four subsidiaries at 31 December 2013.

Impairment of €70,000 was recorded in the 2013 financial statements pursuant to the rules and methods described in paragraph 8 of the presentation of the consolidated financial statements.

The segment information shows the distribution of goodwill by business and geographic segment.

2.1.2 Property, plant and equipment

The useful life of the principal assets has been reviewed by the Group. No changes in useful lives leading to a material change in the accounting estimates were identified during the year.

€000	31/12/2013	31/12/2012
Property, plant and equipment	10,049	10,049
Land	22	22
Buildings	1,345	1,345
Plant and equipment	8,682	8,682
Depreciation	8,988	8,409
Accumulated b/fwd	8,409	13,250
Increase for the period	579	615
Disposals of fixed assets	0	-5,456
Loans	0	0

Finance lease agreements aggregated in the respective tables

2.1.3 Financial assets

Unconsolidated equity interests and other non-current securities are stated at cost if there is no reliable fair value.

Intercompany receivables, loans and other financial assets are valued at amortised cost. The book value is equal to the fair value.

2.1.4 Intangible assets

At 31 December 2013 (€000)	Goodwill	Concessions, patents, licences and similar rights	Other	Total
Gross value b/fwd	13,676	27,543	1,606	42,825
Purchases		484	1,914	2,398
Sales		-281	-5	-286
Changes in scope of consolidation
Currency translation adjustments		-12	-33	-45
Transfers and other activity	-10	-1,992	107	-1,895
Gross value c/fwd	13,666	25,742	3,589	42,997
Amortisation and write-downs b/fwd	3,056	12,353	1,461	16,870
Sales		-281	-5	-286
Changes in scope of consolidation
Amortisation		1,590	135	1,725
Write-downs	70			70
Reversals			-61	-61
Currency translation adjustments		-11	-22	-33
Transfers and other activity	-10			-10
Amortisation and write-downs c/fwd	3,116	13,651	1,508	18,275
Net book value b/fwd	10,620	15,190	145	25,955
Net book value c/fwd	10,550	12,061	2,111	24,722

At 31 December 2012 (€000)	Goodwill	Concessions, patents, licences and similar rights	Other	Total
Gross value b/fwd	13,911	25,345	1,882	41,138
Purchases		3,963	62	4,025
Sales		-251	-132	-383
Changes in scope of consolidation
Currency translation adjustments		2	-10	-8
Transfers and other activity	-235	-1,516	-196	-1,947
Gross value c/fwd	13,676	27,543	1,606	42,825
Amortisations and write-downs b/fwd	2,854	11,446	1,388	15,688
Sales		-155	-132	-287
Changes in scope of consolidation
Amortisation		1,361	212	1,573
Write-downs	421			421
Reversals		-300		-300
Currency translation adjustments		1	-7	-6
Transfers and other activity	-219			-219
Amortisation and write-downs c/fwd	3,056	12,353	1,461	16,870
Net book value b/fwd	11,057	13,899	494	25,450
Net book value c/fwd	10,620	15,190	145	25,955

2.1.5 Property, plant and equipment

At 31 December 2013 (€000)	Land and buildings	Plant and equipment	Other PP&E	Advances and PP&E in progress	Total
Gross value b/fwd	127,958	387,021	29,853	5,324	550,156
Purchases	4,404	13,217	1,464	5,161	24,246
Sales	-226	-3,659	-929		-4,814
Changes in scope of consolidation
Currency translation adjustments	-208	-310	-106	-8	-632
Transfers and other activity	752	2,959	24	-4,094	-359
Gross value c/fwd	132,680	399,228	30,306	6,383	568,597
Depreciation and write-downs b/fwd	68,788	243,858	24,376	0	337,022
Sales	-183	-2,919	-910		-4,012
Changes in scope of consolidation
Depreciation	4,064	17,761	1,715		23,540
Write-downs
Reversals			-53		-53
Currency translation adjustments	-79	-266	-82		-427
Transfers and other activity		-141			-141
Depreciation and write-downs c/fwd	72,590	258,293	25,046	0	355,929
Net book value b/fwd	59,170	143,163	5,477	5,324	213,134
Net book value c/fwd	60,090	140,935	5,260	6,383	212,668

At 31 December 2012 (€000)	Land and buildings	Plant and equipment	Other PP&E	Advances and PP&E in progress	Total
Gross value b/fwd	128,185	373,510	28,615	5,842	536,152
Purchases	1,553	17,061	1,949	4,898	25,461
Sales	-106	-5,549	-859		-6,514
Changes in scope of consolidation
Currency translation adjustments	38	125	-5		158
Transfers and other activity	-1,712	1,874	153	-5,416	-5,101
Gross value c/fwd	127,958	387,021	29,853	5,324	550,156
Depreciation and write-downs b/fwd	68,071	233,620	23,309	0	325,000
Sales	-64	-5,005	-772		-5,841
Changes in scope of consolidation
Depreciation	4,066	17,504	1,874		23,444
Write-downs
Reversals		-216	-33		-249
Currency translation adjustments	9	117	-2		124
Transfers and other activity	-3,294	-2,162			-5,456
Depreciation and write-downs c/fwd	68,788	243,858	24,376	0	337,022
Net book value b/fwd	60,114	139,890	5,306	5,842	211,152
Net book value c/fwd	59,170	143,163	5,477	5,324	213,134

2.1.6 Financial assets

At 31 December 2013 (€000)	Unconsolidate d equity interests	Intercompany receivables	Loans	Other receivables	Total
Gross value b/fwd	1,840	0	842	1,795	4,477
Purchases			81	21	102
Sales				-2	-2
Changes in scope of consolidation
Currency translation adjustments				-40	-40
Transfers and other activity			-40	-425	-465
Gross value c/fwd	1,840	0	883	1,349	4,072
Write-downs b/fwd	1,092	0	0	26	1,118
Purchases/Sales
Changes in scope of consolidation
Write-downs	85				85
Reversals				-2	-2
Currency translation adjustments
Transfers and other activity
Write-downs c/fwd	1,177	0	0	24	1,201
Net book value b/fwd	748	0	842	1,769	3,359
Net book value c/fwd	663	0	883	1,325	2,871

At 31 December 2012 (€000)	Unconsolidate d equity interests	Intercompany receivables	Loans	Other receivables	Total
Gross value b/fwd	1,797	0	843	1,762	4,402
Purchases	43		76	88	207
Sales
Changes in scope of consolidation
Currency translation adjustments				-23	-23
Transfers and other activity			-77	-32	-109
Gross value c/fwd	1,840	0	842	1,795	4,477
Write-downs b/fwd	888	0	0	30	918
Purchases/Sales
Changes in scope of consolidation
Write-downs	204			23	227
Reversals				-27	-27
Currency translation adjustments
Transfers and other activity
Write-downs c/fwd	1,092	0	0	26	1,118
Net book value b/fwd	909	0	843	1,732	3,484
Net book value c/fwd	748	0	842	1,769	3,359

Other receivables consist mainly of deposits and bonds totalling €801,000 at 31 December 2013, compared to €1,210,000 at 31 December 2012.

2.1.7 Table of maturities of other financial assets

At 31 December 2013 (€000)	Less than 1 year	1 to 5 years	More than 5 years	Total
Loans receivable	78	160	645	883
Other financial assets	391		958	1,349
Financial assets and receivables	469	160	1,603	2,232

At 31 December 2012 (€000)	Less than 1 year	1 to 5 years	More than 5 years	Total
Loans receivable	62	128	652	842
Other financial assets	953		842	1,795
Financial assets and receivables	1,015	128	1,494	2,637

2.2 Current assets

2.2.1 Inventories by type

At 31 December 2013 (€000)	Raw materials	In progress	Intermediate and finished goods	Total
Gross value b/fwd	55,599	16,916	105,350	177,865
Change	2,505	391	-5,455	-2,559
Gross value c/fwd	58,104	17,307	99,895	175,306
Write-downs b/fwd	4,767	667	5,370	10,804
Additions	4,858	763	4,846	10,467
Reversals	-4,620	-614	-4,951	-10,185
Currency translation adjustments and other activity	-2		-10	-12
Write-downs c/fwd	5,003	816	5,255	11,074
Net book value b/fwd	50,832	16,249	99,980	167,061
Net book value c/fwd	53,101	16,491	94,640	164,232

At 31 December 2012 (€000)	Raw materials	In progress	Intermediate and finished goods	Total
Gross value b/fwd	61,247	17,624	105,510	184,381
Change	-5,648	- 708	-160	-6,516
Gross value c/fwd	55,599	16,916	105,350	177,865
Write-downs b/fwd	4,127	455	5,246	9,828
Additions	4,596	638	4,917	10,151
Reversals	-3,958	-426	-4,801	-9,185
Currency translation adjustments and other activity	2		8	10
Write-downs c/fwd	4,767	667	5,370	10,804
Net book value b/fwd	57,120	17,169	100,264	174,553
Net book value c/fwd	50,832	16,249	99,980	167,061

2.2.2 Write-down of other current assets

€000	Write-downs b/fwd	Additions	Reversals	Other changes	Write-downs c/fwd
Trade receivables	3,536	1,007	-1,227	-4	3,312
Other receivables	251		-74		177
Total	3,787	1,007	-1,301	-4	3,489

Statement of maturities of trade and other receivables

€000	Less than 1 year	1 to 5 years	More than 5 years	Total
Trade and similar receivables	92,271	1,004		93,275
Taxes and social security contributions receivable	10,956			10,956
Debit current accounts	175			175
Other receivables	2,482			2,482
	105,884	1,004		106,888
Impairment				-3,489
Financial assets				103,399

Prepaid expenses	1,916
Trade and other receivables presented in the balance sheet	105,315

2.2.3 Marketable securities

Marketable securities are assets held for trading. The book value of €33,819,000 is their market value at 31 December 2013. The book value is equal to the fair value.

2.3 Shareholders' equity

The capital of the parent company consists of 1,131,480 shares with a par value of 4 euros each, totalling €4,525,920, and did not change during the year. A double voting right is granted to each fully paid-up share which has been registered for at least two years in the name of the same shareholder.

The Group has not implemented any specific capital management policy.

ETABLISSEMENTS CHARLES NUSSE holds 80.46% of the share capital.

2.4 Deferred taxes

The principal sources of deferred taxes are the regulated provisions, finance leases, public subsidies, trademarks, internal profits on inventories and provisions.

The change in deferred taxes presented in the balance sheet totalled €48,000 (increase in net deferred tax liability).

Income statement:

• The change in deferred taxes recorded in net income was €298,000 (deferred tax expense).
• The change in deferred taxes recorded in comprehensive income was -€266,000 due to restatement of actuarial gains and losses associated with IAS 19R.

The tax calculation is presented in paragraph 2.10.

Statement of changes in deferred tax

€000	Closing balance	Opening balance	Change
Deferred tax assets	577	529	48
Deferred tax liabilities	29,790	29,694	96
Net deferred tax	29,213	29,165	48

2.5 Provisions

Provisions break down as follows:

€000	Provisions b/fwd	Additions	Reversals	Provisions not used	Other changes	Provisions c/fwd
Provisions for pensions and similar obligations	16,746	1,616	-1,067	-448	766	17,613
Other non-current provisions	0					0
Non-current provisions	16,746	1,616	-1,067	-448	766	17,613
Provisions for contingent liabilities	3,203	495	-489	-124	-5	3,080
Other provisions for charges	99	105	-11		4	197
Current provisions	3,302	600	-500	-124	-1	3,277

Other changes in provisions for pensions and similar obligations correspond to €797,000 of actuarial adjustments recorded under comprehensive income, amounting to €531,000 after tax. Provisions for pensions and similar obligations consist mainly of provisions for retirement indemnities and are calculated at each balance sheet date.

They are valued (including social security contributions) according to the following main parameters:

• y probability of retirement from the company, turnover, death;
• y changes in salaries;
• y discounting the amount obtained at the rate of 2.97%.

The amounts paid to insurance organisations are deducted from provisions.

Net change in the provision for pensions and similar obligations

€000	31/12/2013	31/12/2012
Liability b/fwd	16,746	15,898
Cost of services rendered	1,139	770
Financial expense	484	570
Changes for the year	-1,553	-981
€ o/w new recruits	62	119
€ o/w departures during the year	-1,615	-1,100
Liability excluding actuarial gains and losses	16,816	16,257
Actuarial gains and losses under comprehensive income	797	489
Liability c/fwd	17,613	16,746

The liability recorded at 31 December 2013 includes €14,273,000 of obligations under the plan applicable to French companies and €3,340,000 under plans applicable to foreign companies.

2.6 Loans and borrowings with financial institutions

Statement of liquidity risk

€000	Less than 1 year	1 to 5 years	More than 5 years	Total
Loans from financial institutions	261	1,149	382	1,792
Other borrowings	89	1,118	160	1,367
Bank loans and overdrafts	57,721			57,721
Subtotal	58,071	2,267	542	60,880
Accrued interest	9			9
Total	58,080	2,267	542	60,889
Estimated interest to maturity				195

¾ Including current liabilities €58,080,000

¾ Including non-current liabilities €2,809,000

All short, medium and long term financing transactions are based on Euribor. The average commitment fee charged on credit lines is 0.25%.

Drawdowns are charged at a variable rate negotiated on the basis of the amount and the maturity date of each line of credit. The fair value of financial debts is equal to the book value.

2.7 Issuance & financial instruments programmes

Commercial paper

Short-term needs are financed by commercial paper issued by Exacompta Clairefontaine. A fixed rate determined at the moment of issue is paid on the commercial paper, which has a maximum term of 365 days.

The amount recorded in the item "Current portion of interest-bearing debt" was €46 million at the closing date. The maximum amount of commercial paper that may be issued was €125 million at closing.

Lines of credit

Lines of credit are in place with several banks for a total amount of €127 million, with maturities not exceeding 4 years. The term of drawdowns ranges from one week to six months. As at yearend 2013, none of these had been used. As there have been no drawdowns, the 2013 financial statements have not been affected by the related covenants.

Long-term financing is arranged through negotiated loans.

Financial instruments

The Group uses derivatives products mainly to hedge against interest rate risks. Transactions performed to hedge exchange rate risks are non material.

The fair value of the financial instruments is communicated by the financial institutions from which they are obtained.

The change in the fair value recorded in income amounted to €344,000.

Interest rate risks

In order to hedge against changes in interest rates, the Group has taken out interest rate swaps. The types of instruments that may be used, as well as the maximum risk levels incurred, are determined by Senior Management. The risk is checked daily.

A change of 1 percent (100 basis points) in interest rates would have a €408,000 effect on income as at 31 December 2013.

Portfolio of financial instruments

Residual maturity (€000)	Less than 1 year	1 to 5 years	More than 5 years	Total
Interest rate swaps	4,019	5,067	0	9,086

The amounts shown in the table are current notional amounts.

2.8 Other current liabilities

€000	31/12/2013	31/12/2012
Advances and down payments received	501	750
Taxes and social security contributions payable	32,679	32,941
Suppliers - fixed assets	3,038	2,461
Other liabilities	10,861	10,924
Deferred income	379	1,190
Derivative financial instruments	324	668
Total	47,782	48,934

Derivative financial instruments are recorded at fair value.

2.9 Off-balance sheet commitments

¾ Greenhouse gas emission allowances

The greenhouse gas emission allowance trading system has started its third phase, running from 2013 to 2020.

The new principles applied by the Group from 1 January 2013 are set forth in note 8 of the presentation of the consolidated financial statements.

The change in accounting principles means that there is no measurable emission allowance liability as at 31 December 2013. The allowances from the previous allocation period and the newly attributed allowances issued free of charge will be treated only in terms of volume.

The Order of 24 January 2014 establishing the list of operators who have been attributed greenhouse gas emission allowances and the total amount of allowances issued free of charge for the 2013-2020 period were published in the French government's official journal on 14 February 2014.

The quantities allocated in 2013 for the new period totalled 74,155 tonnes. The Group did not purchase any allowances on the market.

Emission allowances surrendered in April 2013 for the previous allocation period (2008-2012) amounted to €1,045,000. This figure is shown in the table below under "Commitments given surrender".

€000	31/12/2013	31/12/2012
Greenhouse gas emission rights
Commitments given – surrender ¾	–	1,045
Commitments received – net 2013 allocations ¾ Commitments received – annual allocations receivable ¾	–	934 –

¾ Sureties and guarantees

Exacompta Clairefontaine jointly and severally guarantees payment to Exeltium of all liabilities in respect of purchases of blocks of electricity subscribed to by Papeteries de Clairefontaine.

€000	2013	2012
Consolidated net income before goodwill impairment	4,278	-267
Goodwill impairment	70	421
Income taxes	-178	-159
Deferred taxes	298	648
Consolidated tax base	4,468	643
Tax rate applicable to parent company	33.33%	33.33%
Theoretical tax charge	1,489	214
Tax assets not withheld on foreign companies	214	277
Tax rate differences	592	819
Tax adjustments	-1,414	-510
Tax debits and credits	-761	-312
Other effects		1
Actual tax charge	120	489
Income taxes	-178	-159
Deferred taxes	298	648
Tax charge in the consolidated financial statements at closing	120	489

2.10 Income tax – Calculation of tax

2.11 Group headcount and employee benefits

Average headcount	31/12/2013	31/12/2012
Management	465	468
Employees	772	753
Labourers and other salaried workers	1,854	1,916
Total	3,091	3,137
Expenses recorded for defined contribution schemes (€000)	39,823	41,549

The Competitiveness and Employment tax credit (CICE) is recorded as a reduction in personnel expenses and came to €2,316,000.

2.12 Financial income and expenses

€000	2013	2012
Equity interests and income from other financial assets	3	9
Income from other receivables and marketable securities	803	731
Other financial income	140	339
Financial instruments – change in fair value	344	202
Reversal of provisions and write-downs	2	27
Foreign exchange gains	825	1,775
Net gain on sale of marketable securities	19	73
Total financial income	2,136	3,156
Increase in provisions and write-downs	85	228
Interest and financial expenses	453	682
Financial expenses on finance leases	–	4
Foreign exchange losses	1,876	2,071
Other financial expenses	346	499
Total financial expenses	2,760	3,484

2.13 Related parties

¾ The consolidated financial statements include transactions performed by the group with Etablissements Charles Nusse.

€000	2013	2012
Income statement
Financial expenses	0	119
Fees	1,135	1,143
Leases	5,734	5,436

The Group companies benefit from the leadership of Etablissements Charles Nusse and pay a fee equal to 0.6% of the value added of the previous year.

¾ Remuneration of administrative and management bodies:

The total direct and indirect remuneration of all kinds received by all Group managers amounted to €1,855,000 in 2013, of which €1,347,000 was paid by Exacompta Clairefontaine Group, compared to €1,766,000 and €1,238,000 respectively in 2012.

No benefits are granted to Group managers apart from retirement commitments, which are calculated pursuant to the rules applicable to the entire workforce.

The total amount of director's fees granted to Directors totalled €60,000 in 2013, and was awarded by a decision of the 29 May 2013 Shareholders' Meeting.

2.14 Statutory auditors' fees

Breakdown of the total amount of statutory auditors' fees shown in the consolidated income statement for the fiscal year, pursuant to Articles R123-198 and R233-14 of the French Commercial Code, between fees invoiced for statutory audits of the consolidated financial statements and fees invoiced for consultancy and other services provided as part of the procedures directly linked to the statutory auditing of the consolidated financial statements

€000	2013	2012
Fees invoiced for statutory auditing of the financial statements	694	722
Fees invoiced for related consultancy and other services	–	–

3. SEGMENT INFORMATION

Correspondence with the consolidated balance sheet:

• "Other assets allocated" includes inventories and advances;
• "Unallocated assets" consists of tax receivable and deferred tax assets.

¾ Segment information by business – 31/12/2013

€000	Paper	Processing	Intersegment transactions	Total
Segment income statement
Revenues	250,863	393,080	-119,308	524,635
Depreciation/amortisation (net of reversals)	11,788	13,373	-10	25,151
Write-downs and provisions	263	-197		66
Operating profit/(loss) (excl. goodwill)	3,181	1,913	-2	5,092
Goodwill impairment		70		70
Segment assets
Net PP&E and intangible assets	114,277	112,563		226,840
o/w investments	15,062	11,582		26,644
Goodwill		10,550		10,550
Trade receivables	35,694	75,964	-21,695	89,963
Other receivables	4,215	11,719	-582	15,352
Balance sheet total	39,909	87,683	-22,277	105,315
Other assets allocated	53,699	114,561	-2,087	166,173
Unallocated assets				3,586
Total assets	207,885	325,357	-24,364	512,464
Segment liabilities
Current provisions	1,545	1,732		3,277
Trade payables	20,617	48,099	-21,692	47,024
Other payables	17,404	30,964	-586	47,782
Unallocated liabilities				0
Total liabilities	39,566	80,795	-22,278	98,083

¾ Segment information by region – 31/12/2013

€000	France	Europe	Outside Europe	Total
Revenues	339,964	158,481	26,190	524,635
Net PP&E and intangible assets	209,972	8,955	7,913	226,840
o/w investments	22,043	2,229	2,372	26,644
Goodwill	10,550			10,550
Trade receivables	73,182	14,699	2,082	89,963
Other receivables	12,315	590	2,447	15,352
Balance sheet total	85,497	15,289	4,529	105,315
Other assets allocated	151,895	7,829	6,449	166,173
Unallocated assets				3,586
Total assets	457,914	32,073	18,891	512,464

¾ Segment information by business – 31/12/2012

€000	Paper	Processing	Intersegment transactions	Total
Segment income statement
Revenues	246,261	392,772	-113,291	525,742
Depreciation/amortisation (net of reversals)	11,445	13,328	-4	24,769
Write-downs and provisions	1,466	858		2,324
Operating profit/(loss) (excl. goodwill)	3,445	-2,419	-55	971
Goodwill impairment		421		421
Segment assets
Net PP&E and intangible assets	113,594	114,875		228,469
o/w investments	11,004	18,482		29,486
Goodwill		10,620		10,620
Trade receivables	34,394	76,112	-22,520	87,986
Other receivables	3,252	10,439	-69	13,622
Balance sheet total	37,646	86,551	-22,589	101,608
Other assets allocated	52,574	120,540	-2,078	171,036
Unallocated assets				1,333
Total assets	203,814	332,586	-24,667	513,066
Segment liabilities
Current provisions	1,494	1,808		3,302
Trade payables	20,681	49,468	-22,450	47,699
Other payables	17,744	31,336	-146	48,934
Unallocated liabilities				0
Total liabilities	39,919	82,612	-22,596	99,935

¾ Segment information by region – 31/12/2012

€000	France	Europe	Outside Europe	Total
Revenues	342,041	154,865	28,836	525,742
Net PP&E and intangible assets	213,710	8,299	6,460	228,469
o/w investments	25,800	1,751	1,935	29,486
Goodwill	10,620			10,620
Trade receivables	70,781	14,793	2,412	87,986
Other receivables	10,803	1,049	1,770	13,622
Balance sheet total	81,584	15,842	4,182	101,608
Other assets allocated	156,262	7,676	7,098	171,036
Unallocated assets				1,333
Total assets	462,176	31,817	17,740	513,066

Exacompta Clairefontaine S.A.

Report of the Statutory Auditors on the consolidated financial statements

Resolutions submitted to the Ordinary Shareholders' Meeting

SEREC AUDIT BATT AUDIT Statutory Auditor Statutory Auditor

Member of the Paris Institute of Statutory Auditors Member of the Nancy Institute of Statutory Auditors 21 rue Leriche 25 rue du Bois de la Champelle

75015 PARIS 54500 VANDOEUVRE LES NANCY

Report of the Statutory Auditors on the consolidated financial statements

Year ended 31 December 2013

EXACOMPTA CLAIREFONTAINE

A French limited company (société anonyme)

88480 ETIVAL CLAIREFONTAINE

STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended 31 December 2013

EXACOMPTA CLAIREFONTAINE S.A.

88480 ETIVAL CLAIREFONTAINE

To the Shareholders:

In accordance with the assignment entrusted to us by your Shareholders' Meeting, we hereby present our report on the year ended 31 December 2013, concerning:

• the audit of the consolidated financial statements of EXACOMPTA CLAIREFONTAINE, which are appended to this report;
• the bases for our assessments;
• the specific verifications required by law.

The consolidated financial statements were approved by the Board of Directors. It is our responsibility, based on our audit, to express an opinion on those statements.

1 - Opinion on the consolidated financial statements

We performed our audit in accordance with the professional standards applicable in France. These standards require the performance of an audit to obtain reasonable assurance that the consolidated financial statements for the year are free from material misstatements. An audit involves the review, by way of sample tests or other means of selection, of the documents underlying the amounts and information set forth in the consolidated financial statements. It also consists of an assessment of the accounting principles followed, the significant estimates made and the presentation of the statements as a whole. We believe that the evidence we have gathered provides a reasonable basis for our opinion.

We hereby certify that the consolidated financial statements are, with regard to the IFRS adopted within the European Union, in order and accurate and fairly present the assets and liabilities, financial position and earnings of the persons and entities included in the consolidation.

2 - Bases of assessments

Pursuant to the provisions of Article L.823-9 of the French Commercial Code regarding the bases of our assessments, we hereby draw the following information to your attention:

Goodwill and trademarks are monitored and, where applicable, written down, according to the procedures set forth in Note 8 hereto. Using the information provided to us, we assessed the data and assumptions used regarding goodwill and checked to ensure that Note 8 provides appropriate information.

The assessments carried out are part of our audit of the consolidated financial statements, taken as a whole, and thus contributed to the formation of our opinion, which is expressed in the first part of this report.

3 - Specific verifications

In accordance with the professional standards applicable in France, we also performed the specific verifications required by law relating to information on the Group contained in the management report.

We have no comments to make about the accuracy and conformity thereof with the consolidated financial statements.

Executed in Paris and Vandœuvre-lès-Nancy, 25 April 2014

The Statutory Auditors

SEREC AUDIT BATT AUDIT

Benoît Grenier Pascal François

RESOLUTIONS SUBMITTED

TO THE ORDINARY SHAREHOLDERS' MEETING OF 27 MAY 2014

FIRST RESOLUTION

That, following a reading by the Board of Directors and the Statutory Auditors of their respective reports, the Meeting approve these reports in their entirety, as well as the operations described therein, and the parent company financial statements for the year ended 31 December 2013.

SECOND RESOLUTION

That, following a reading by the Board of Directors and the Statutory Auditors of their respective reports, the Meeting approve these reports in their entirety, as well as the operations described therein, and the consolidated financial statements for the year ended 31 December 2013.

THIRD RESOLUTION

That, at the recommendation of the Board of Directors, the Shareholders' Meeting resolve to distribute and appropriate earnings for the year as follows:

2013 loss	-€22,901,141.51
Retained earnings	€418,203.07
	-€22,482,938.44

We propose the following appropriation: Deduction from other reserves…………………..-€22,482,938.44

We propose the payment of a €565,740.00 dividend from other reserves.

As the authorised capital of the company is divided into 1,131,480 shares, each of these shares will receive a total dividend of €0.50.

The following table shows the dividends paid for the last three years:

Year	Dividend	Number of shares
2010	1.00	1,131,480
2011	1.00	1,131,480
2012	0.50	1,131,480

FOURTH RESOLUTION

That, following a reading of the Statutory Auditors' special report, the Shareholders' Meeting formally note the absence in 2013 of any operations related to Article L.225-38 of the French Commercial Code.

FIFTH RESOLUTION

That the Shareholders' Meeting give a full discharge to the Directors for their management during the past year and resolve in favour of the Board of Directors' recommendation to set the total directors' fees to be distributed between the company Directors in 2014 at €60,000.

SIXTH RESOLUTION

That the Shareholders' Meeting resolve in favour of the Board of Directors' recommendation to renew the appointment as director of François Nusse, residing at 105 rue de Lille, 75007 Paris. This appointment, which is valid for six years, will terminate at the close of the Shareholders' Meeting called to approve the financial statements for fiscal year 2019.

SEVENTH RESOLUTION

That the Shareholders' Meeting resolve in favour of the Board of Directors' recommendation to renew the appointment of the regular auditors and one of the alternate auditors and that it appoint a new alternate auditor.

These appointments, which are valid for six years, will terminate at the close of the Shareholders' Meeting called to approve the financial statements for fiscal year 2019:

• SEREC AUDIT, with registered offices at 21, rue Leriche 75015 Paris, registered in the Paris Trade Register under No. 324 834 399, as the regular auditor;
• G.B.A. Audit et Finance, with registered offices at 10, rue du Docteur Finlay 75015 Paris, registered in the Paris Trade Register under No. 342 775 137, as the alternate auditor;
• BATT AUDIT, with registered offices at 25, rue du Bois de la Champelle 54500 Vandœuvre-lès-Nancy, registered in the Nancy Trade Register under No. 414 570 622, as the regular auditor;
• REVILEC AUDIT & ASSOCIES, with registered offices at 25, rue du Bois de la Champelle 54500 Vandœuvre-lès-Nancy, registered in the Nancy Trade Register under No. 484 943 626 is appointed as alternate auditor, replacing SOVEC whose appointment has not been renewed.

NOTES