WORLDLINE_REGISTRATION_DOCUMENT_2017

Financials Consolidated financial statements

Revenue recognition on long term fixed-price contracts Note ‘Accounting rules and policies – Revenue recognition’ of consolidated financial statements Key Audit Matter Our audit approach

Regarding fixed-price contracts performed over the course of several years, particularly related to development projects and/or migration of platform with customers, revenues are recognized, in accordance with IAS 11 ‘Construction contracts’ based on the costs incurred to date as a percentage of the total estimated costs to fulfil the contract. For multi-element service contracts, which may be a combination of different services, revenue is recognized separately for each of the service when it is separately identifiable. Total contract costs and expected remaining costs are subject to regular monitoring to determine whether the stage of completion and margin recognized should be revised. If these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately through a provision for estimated losses on completion. We consider revenue recognition on long-term contracts and the associated costs as a key audit matter as estimated costs on these contracts are based on operational assumptions and their estimation has a direct impact on revenue and margin recognized in the consolidated financial statements.

We assessed the internal control environment relating to contract accounting. We tested the effectiveness of the key controls implemented by the financial controllers and the operational managers, in particular those relating to the costs incurred on contract and those relating to the costs to complete. For a number of contracts that were selected based upon quantitative and qualitative criteria (contracts that experienced technical difficulties or low profitability), we performed the following procedures: For new contracts, we corroborated initial budget margin to ● the financial data within the signed contract and the associated cost estimation.When a contract included multiple elements, we corroborated the company's analysis and accounting treatment with the contractual provisions and our understanding of the services provided. For contracts in progress: ● We reconciled the financial data (revenue, billing and ● work-in-progress) including in the workprogress spreadsheet that is updated monthly by the financial controller to the accounting records; we corroborated the amount of costs incurred with the ● data from the timesheet application system; We analyzed standard hourly rates’ calculation ● methodology; We performed interviews with financial controllers and / ● or operational managers to assess the estimated costs yet to be incurred and the percentage of completion on the contract, which is the basis on which revenue and margin is recognized, we have furthermore analyzed the appropriateness of these estimates by comparing the forecasted data with the actual performance of the contract and by reconciling, if necessary, to the discussions with the client since the contract was signed; When necessary, we analyzed assumptions used by ● management to determine the loss recognized on any unprofitable contracts and confirmed these assumptions with historical performance on the contract and the remaining technical milestones to be achieved.

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Worldline 2017 Registration Document