WORLDLINE_REGISTRATION_DOCUMENT_2017

Financials Consolidated financial statements

Costs to acquire a contract Under IFRS 15, incremental costs to acquire a contract have to be capitalized. Such change has no major impacts at Group level. Financial impacts at Group level The Group will adopt the full retrospective method with restatement of 2017 comparative figures. 2017 revenue will decrease by circa -2.6%, most of the impact being generated by principal versus agent restatements. The cumulative effect in equity as of January 1, 2017 will be nil. IFRS 16 The standard is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted. IFRS 16 replaces existing leases guidance IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC 15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. There are recognition exemptions for short-term leases and leases of low-value items. IFRS 16 introduces a single on-balance sheet lease accounting model for lessees. Worldline Group, as a lessee, will have to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The Group has completed an initial assessment of potential impact on its consolidated financial statements but has not yet completed its detailed assessment. So far, the most significant impact identified is that the Group will recognize assets and liabilities for its operating leases of Real Estate and IT equipment. In addition, the nature of expenses related to those leases will now change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge of right-of-use assets and interest expense on lease liabilities. The Group is required to adopt IFRS 9 Financial Instruments from January 1, 2018. IFRS 9 application will have no material impact on the Group consolidated Financial Statements. IFRS 9 IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement. The following three main areas have been amended by IFRS 9. Classification of Financial assets IFRS 9 defines a new classification and measurement approach for financial assets. There are three principal classification categories for financial assets: measured at amortized cost, Fair FVOCI, FVTPL. Based on its assessment, the Group does not believe that the new classification requirements will have a material impact on its accounting for trade receivables, loans, investments in receivables, contract assets, loans, and cash and cash equivalent. Impairment of financial assets and contract assets IFRS 9 introduces a new forward-looking “expected loss” impairment model which will replace the existing “incurred loss” impairment model.

Trade and other receivables, including contract assets The Group has assessed the actual credit losses experienced over the past several years and estimated that the application of IFRS 9’s impairment requirement at 1 January 2018 results in no material impact over the impairment recognized under IAS 39. Cash and cash equivalent The cash and cash equivalents are held with bank and financial institution counterparties, majority of which are rated from A- to AA-. The Group used not to depreciate such assets, the estimated impairment on cash and cash equivalent was calculated based on the S&P ratings and is not material on the Group accounts. Hedge accounting While initially applying IFRS 9, the Group has to choose as its accounting policy to continue to apply the hedge accounting requirement of IAS 39 instead of the requirements in IFRS 9. The Group has elected to apply the new requirements of IFRS 9. The Group uses forward foreign exchange contracts to hedge the variability in cash flows arising from changes in foreign exchanges rates relating to foreign currency sales and purchases. The Group designates only the change in fair value of the spot element of the forward exchange contract as the hedging instrument in cash flow hedging relationship. Under IAS 39, the change in fair value of the forward element of the forward exchange contracts is recognized immediately in profit and loss. On adoption of IFRS 9 requirements, the Group has elected to separately account for the forward points as a cost of hedging. Consequently, the changes in forward points will be recognized in OCI and accumulated in a cost of hedging reserve as a separate component within equity and accounted for subsequently as gain and losses accumulated in the cash flow hedge reserve. The estimated impact on reserves and retained earnings at 1 January 2018 as result of the application of IFRS 9 hedge accounting requirements is not material. The following other standards, potentially applicable to the Group consolidated financial statements, are not expected to have a significant impact on Worldline Group’s consolidated financial statements. Annual Improvement to IFRSs 2014-2016 Cycle – ● Amendments to IFRS 1 and IAS 28; Amendment to IFRS 2 Classification and Measurement of ● Share-based Payment; Transfers of Investment property (Amendment to IAS 40); ● Sale or Contribution of Assets between an Investor and its ● Associate or Joint venture (Amendment to IFRS 10 and IAS 28); IFRIC 22 Foreign Currency Transactions and Advance ● Consideration; IFRIC 23 Uncertainty over Income Tax treatments. ●

E

203

Worldline 2017 Registration Document