Worldline - 2019 Universal Registration Document

FINANCIALS Parent company financial statements

Valuation of participating interests Note Rules and accounting methods – Financial assets of statutory financial statements and Note 3 Financial fixed assets Key Audit Matter Our audit approach

As of December 31, 2019, Participating interests are recorded on the balance sheet at a net book value of € 4,168 million, or 94% of total assets. Participating interests are initially booked at their acquisition cost. An impairment loss is recognized when a participating interest’s net book value exceeds its value-in-use. Value-in-use is determined based on the Group’s share in the participating interest’s net assets and earnings outlooks. The profitability prospects are determined based on the cash flow forecasts derived from the Global Business Line’s (GBL) business plans over 3 years as approved by Management; and on a terminal value which requires Management to use its judgement especially relating to cash flow forecasts. Given the weight of the participating interests on the balance sheet and the sensitivity of the valuation models to the assumptions used in determining cash flows, we considered the valuation of participating interests as a key audit matter. 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, 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 (mainly related to men/hours by project) are subject to regular monitoring and estimates to determine the contract’s stage of completion and the margin to be recognized. 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 and the estimate of the associated margin as a key audit matter as they are based on operational assumptions as mentioned above.

Our assessment of the net book value of the participating interests is based on the procedures implemented by the Company to determine the value-in-use of the participating interests. Our procedures mainly consisted in assessing the reasonableness of the cash-flows forecasts considered for the valuation of participating interests and in particular: Obtaining the cash flow forecasts of the related entities and ● assess their consistency with the business plans for each GBL (Global Business Line) approved by Management; Verifying the consistency of the assumptions used with the ● historical performance of the Group, the GBL and the entities, and confirm through interviews with management, the future expected growth; Reviewing the consistency of the terminal value and the ● underlying assumptions. We have assessed the internal control environment relating 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: ● The initial expected budget margin to the financial data ● included within the signed contract and the associated estimated costs, The Company’s analysis and accounting treatment with the ● contractual terms and our understanding of the services provided, when they include multiple elements; For contracts in progress: ● We reconciled the financial data (revenue, billing and costs ● incurred to date) included in the project spreadsheet updated monthly by the financial controller to the accounting records, We corroborated the costs incurred, particularly the hours ● incurred by project with the corresponding underlying data from the timesheet application system, We analysed standard hourly rates’ calculation methodology, ● We performed interviews with financial controllers and/or ● operational managers to assess the contract’s percentage of completion, which is the basis on which revenue and margin are accounted for. We have furthermore analysed the appropriateness of these estimates by comparing the forecasted data with the actual performance of the contract and by reconciling, if necessary, with all the other information obtained since the contract had been signed.

Revenue recognition related to development projects and/or migration of platformwith customers Note Rules and accounting methods – Revenue and Note 13 Revenue Key Audit Matter Our audit approach

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291 Universal Registration Document 2019