Worldline - 2019 Universal Registration Document

RISK ANALYSIS Risk factors

On February 3, 2020, the Group announced the signing of a Business Combination Agreement with Ingenico, with a view to creating a European leader in the payment industry through a friendly tender offer expected to be completed in Q3 2020. This transaction remains subject to certain conditions precedent, including approval by Worldline shareholders, a sufficient tender rate by Ingenico shareholders in the tender offer, as well as a number of regulatory approvals, including pursuant to applicable merger control regulations. While the Groupe is actively seeking such approvals, failure to obtain such approvals or a dealy in securing them may result in abandoning or delaying the closing of the transaction. This transaction also subjects the Group to the risks generally applicable to acquistions noted above. In addition, as of December 31, 2019, €3,114.5 million of goodwill was recorded on the Group’s balance sheet. Goodwill represents the excess of the amounts the Group paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill has been allocated at the level of the Group operating segments set forth in the Appendices to the consolidated financial statements. Goodwill is tested for impairment at least annually, or more frequently when changes in the circumstances indicate that the carrying amount may not be recoverable. The recoverable amounts of the Cash Generating Units are determined on the basis of value in use calculations, which depend on certain key assumptions, including assumptions regarding growth rates, discount rates, and weighted average costs of capital during the period. If management’s estimates change, the estimate of the recoverable amount of goodwill could fall significantly and result in impairment. While impairment does not affect reported cash flows, the decrease of the estimated recoverable amount and the related non-cash charge in the income statement could have a material adverse effect on the Group’s results of operations. Although no goodwill impairments were recorded in 2018 and 2019, no assurance can be given as to the absence of significant impairment charges in the future (see Note 8 to the consolidated financial statements).

regulatory frameworks or consumer preferences in the new markets entered may make the Group’s products less attractive, potential less favorable payment terms and increased difficulty in collecting accounts receivable and developing payment histories that support collectability of accounts receivable and revenue recognition, obstacles to its use of, and access to, property and data centers important for its operations, especially in emerging countries. There can be no assurances that these markets will develop as expected or that the Group will fully recover the investments it has made to develop such products and services. Similarly, there can be no assurances that the Group’s efforts to expand its services into new markets will be successful, particularly in light of the competition it faces from incumbent providers of such services in these new countries. If the Group is not able to successfully expand its existing service to new markets, the Group’s growth strategy may not be successful, which, in turn could have a material adverse effect on its business, financial condition, results of operation or prospects. F.2.5.4.1 Change in laws and regulations The Group is subject to a wide array of stringent regulations, particularly in the following fields: competition law, payment regulations, corruption, controls on exports of dual-use goods, data protection, labor laws, human rights, international sanctions, money laundering and terrorist financing, fraud, harassment and discrimination and, to a lesser extent, tariffs and trade barriers, restrictions on the repatriation of funds. Failure to comply with laws, rules and regulations or standards to which the Group is subject in different countries it is operating in, Europe and internationally, in particular the regulations applicable to payment institutions and systemic processors, which are considered critical to the local economy, may result, among other things, in the suspension or revocation of a license or registration, forced replacement of existing management, the limitation, suspension or termination of service, and the imposition of fines, sanctions or other penalties, any of which could have a material adverse effect on the Group’s business, financial condition or results of operations, as well as damage the Group’s reputation. Regulatory and Legal risks F.2.5.4 [extra-financial risks – D.4 Business ethics & value chain]

F

Expansion to new markets F.2.5.3

One of the core elements of the Group’s strategy is to expand the geographic footprint for its services including by expanding services that have experienced success in one or more of the Group’s markets to other markets served by the Group. This strategy involves a number of significant risks including: the

335 Universal Registration Document 2019