WORLDLINE_REGISTRATION_DOCUMENT_2017

E

Financials Introduction

OperatingMargin

Purchases of hardware and software. These expenses primarily consist of the cost of components used to manufacture the Group’s terminals, hardware security modules and other devices, and to a lesser extent hardware sold as part of integration projects. The primary driver of these costs is the number and mix of terminals sold and the average cost of components per terminal; Maintenance. Maintenance costs relate primarily to expenses for the maintenance of the Group’s software, equipment and facilities; Rent and lease expenses. Rent and lease expenses consist of facility rental costs, software rental fees and certain card scheme royalties. Rental costs for facilities are generally a function of the size of the relevant facility and average rental rates, which are generally driven by the location and nature of the facility; Telecommunications costs. The group makes significant use of postal services and communications bandwidth. These costs are generally a function of the amount of usage and average rates; Travel expenses and company cars. These expenses consist of travel costs and the cost of company cars, which have remained fairly constant as a percentage of sales in 2017; Professional fees. These fees include fees paid to professionals such as consultants, accountants and lawyer; Taxes and similar expenses (other than income tax). These charges include various taxes other than income taxes such as non-recoverable VAT, and have slightly decreased as a percentage of sales over the period under review; Scheme fees. Include the fees paid to Visa, MasterCard and Bancontact (Belgium debit card scheme) as part of the Group’s Commercial Acquiring activities; Other expenses. This line item includes a number of items, including the allocation of Atos global management & global support function cost to the Group, energy costs for the Group’s data centers and the cost of indemnities for unpaid cheques paid to cheque service customers (activity disposed on July 1, 2017); Other operating expenses. Other operating expenses include depreciation charges as well as other charges such as gains or losses on disposals of assets, write offs of trade receivables and net change to provisions. Depreciation charges are driven primarily by the size and the evolution of the Group’s asset base; Capitalized production costs. Operating expenses are reported net of capitalized production costs. Costs of specific application development for clients or technology solutions made available to a group of clients with a useful life of the underlying asset greater than one year are capitalized. Their aggregate amount is offset in the profit and loss statement through this line item.

The Group’s operating margin is calculated by subtracting personnel costs and operating costs from revenue. The primary drivers of the Group’s operating margin are the level of its revenue and the average level of its personnel costs and operating costs as a percentage of revenue.

OMDA

The Group also presents OMDA, a non-IFRS measure that it believes provides useful additional information to investors. See Section E.7, “Non-IFRS Financial Measures” for a reconciliation of OMDA to operating margin and further information on its calculation.

Other operating income and expenses

Other operating income and expenses relate to income and expenses that are unusual and infrequent, and include staff reorganization costs, rationalization and associated costs, integration and acquisition costs, amortization of customer relationships and other costs. These costs include transition and reorganizational costs related to the Reorganization Transactions. The line item “other costs” under “other operating costs and expenses” primarily includes gain or loss on the sale of assets.

Net financial expense

Net financial expense consists of the cost of net financial debt, gains (losses) on exchange rates and related instruments and other financial income (expense). The main driver of net financial expense is the amount of outstanding net debt and the average rates paid.

Income taxes

The Group’s income taxes are a function of pre-tax income and the effective tax rate. The effective tax rate depends on a number of factors including the relative mix of the Group’s pre-tax income, the tax rates applicable in the jurisdictions where income is earned as well as factors such as the availability and usability of deferred tax assets.

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Worldline 2017 Registration Document