Worldline - 2019 Universal Registration Document

E

FINANCIALS Consolidated financial statements

Revenue recognition related to development projects and/or migration of platformwith customers Note 3 Revenue, segment information and trade accounts 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 IFRS 15 ‘Revenue from contracts with customers’, when the control of the goods or services is transferred to the customer. For multi-element service contracts, which may be a combination of different services, revenue is accounted for distinctly for each identified performance obligation when the control of the solutions or services is transferred to the customer. The revenue accounted for depends on the total estimated transaction price and its allocation between the different performance obligations. Total costs of a contract (mainly made up of men/hours spent per project) and expected remaining costs are subject to regular monitoring and estimates to determine the contract’s stage of completion. 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 onerous contract. We have considered revenue recognition on these contracts and the associated costs as a key audit matter considering that the identification of the performance obligations and the allocation of transaction prices to each of them require management’s estimate and judgement. Furthermore, when revenue is recognized based on costs incurred, the assessment of the stage of completion is based on operational assumptions and estimates that have a direct impact on revenue recognized in the consolidated financial statements.

We have assessed the internal control environment relating to fixed-price services, and the estimation of costs and margin over the duration of the contract. Furthermore, for a number of contracts that were selected based upon quantitative and qualitative criteria (including contracts that are experiencing technical difficulties or low profitability), we performed the following procedures: For new contracts: ● When they include multiple elements, we corroborated the ● Company’s analysis and accounting treatment regarding identification, allocation of the transaction price to the different performance obligation and the definition of the methods of accounting for the revenues regarding each of these performance obligations with the contractual terms and our understanding of the services provided, We also corroborated the initially expected margin to the ● financial data included within the signed contract and the associated estimated costs; For contracts in progress, we have implemented the ● following procedures aimed at assessing the margin at completion when revenue is recognized on the basis of costs incurred: We reconciled the financial data (revenue, billing and costs ● incurred to date) included in the project’s spreadsheet that is updated monthly by the financial controllers to the accounting records, We corroborated the amount of costs incurred, including ● projects timesheets, with the underlying data included within the application system, We analysed standard hourly rates’ calculation methodology, ● We performed interviews with financial controllers and/or ● operational managers to assess the percentage of completion of the contract, which is the basis on which revenue and margin are accounted for; we have furthermore analysed the appropriateness of these estimates by comparing the forecast data with the actual performance of the contract and by reconciling, if necessary, with the information obtained since the contract had been signed.

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Universal Registration Document 2019