Worldline - 2020 Universal Registration Document

E

FINANCIALS Consolidated financial statements

Revenue recognition related to multiple-deliverable service contracts Note 3 Revenue, segment information and trade accounts of the notes to the consolidated financial statements Key Audit Matter Our audit approach

We have reviewed the internal control procedures relating to the monitoring of multiple-element service contracts a nd the estimation of costs and margins over the term of the contracts. For a selection of contracts ba sed on quantitative and qualitative criteria (in particular contracts presenting technical difficulties in their implementation or low profitability), we performed the following procedures: For new contracts: ● We have corroborated the analysis and accounting ● treatment adopted by the Group with regards to the identification of performance obligations, the allocation of the transaction price and the revenue recognition methods in accordance with contractual provisions, We also corroborated the estimated costs and the ● associated margin, with the financial data of the signed contract. For contracts in progress for which revenue is recognized ● on the basis of costs incurred, we performed the following procedures in order to assess the estimated percentage of completion margin: We reconciled the financial data (sales, invoicing and ● cost progress) appearing in the contract monitoring dashboard drawn up monthly by the financial controller, with the accounts, We corroborated the costs incurred and in particular the ● hours per project with the data from the application concerned, We analyzed the methods used to calculate standard ● hourly rates, On the basis of interviews with financial controllers ● and/or operational managers, we assessed the degree of completion of the contract which they had determined and on which the revenue recognition was based; we also confirmed the relevance of these estimates by comparing the forecast data with the performance to date of the contract and by comparing it, where appropriate, with all the information obtained since the contract was signed.

For service contracts with multiple deliverables, which may correspond to a combination of different services, revenue is recognized separately for each identified performance obligation when control of the solutions or services is transferred to the client. The revenue recognized depends on the estimate of the total transaction price and its allocation to the various elements of the contract. Revenue is recognized when the Group transfers control of the goods or services sold to the customer for each performance transaction, either at a specific point in time or progressively on the basis of costs incurred when the Group has an irrevocable right to payment for work performed to date. The total costs of providing the services corresponding to the performance obligations (mainly consisting of hours spent per project), and in particular those still to be incurred, are regularly monitored and estimated in order to determine the degree of completion of the contract and the revenue to be recognized. If these estimates show that a contract will be onerous, a provision for loss on completion is recognized immediately for the full amount of the estimated loss. We considered the recognition of revenue and related costs for these contracts to be a key audit matter, because the identification of performance obligations and the allocation of the transaction price to each of them requires management’s estimates and judgment. In addition, where revenue is recognized on the basis of costs incurred, the assessment of the stage of completion is based on operational assumptions and estimates, which have a direct impact on the amount of revenue recognized in the consolidated financial statements.

Revenue arising from transactional activities Note 3 Revenue, segment information and trade accounts of the notes to the consolidated financial statements Key Audit Matter Our audit approach

For services relating to transactional activities, in the Merchant Services and Financial Services business segments, revenue is recognized in the period in which the transactions are processed. These activities are dependent on numerous IT applications that collect and value all transactions passing through the Group’s various payment processing platforms. We considered the recognition of revenue from transactional activities to be a key audit matter due to the complexity of the IT architecture and the very high number of transactions.

We have reviewed and tested the internal control system relating to the security of the flows recorded in the Group’s revenues; our IT specialists have assisted us in this respect in implementing the following procedures: We tested the general IT controls of the main IT ● applications processing the revenue flows resulting from transactional activities; We also tested the operational effectiveness of the ● automatic and manual controls used to ensure the validity and completeness of accounting records. Finally, we assessed the compliance of the accounting treatment of each type of flow with the terms of the main contracts signed with clients.

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Universal Registration Document 2020