Worldline - 2020 Universal Registration Document

E

FINANCIALS Consolidated financial statements

Market risk Note 15

Foreign exchange risk The bulk of the Group’s revenue, expenses and obligations are denominated in euro. In 2020, 68.8% of the Group’s revenue was generated in euro-zone countries whereas 31,2% was generated in non-euro zone countries, including 12.3% in Swiss francs, 3.5% in pounds sterling, and 3.5% in US dollars. Since the Group’s financial statements are denominated in euros, its revenue is affected by the relative value of the euro versus the currency of the non-euro zone countries in which it generates revenue (currency translation exposure). In terms of currency transaction exposure ( i.e. , a mismatch between the currencies in which revenue is generated and costs are incurred), the Group considers its exposure to be limited as its costs in the euro zone are generally incurred in euros and its revenue is generated in euros and in non-Eurozone countries it generally makes its sales and incurs the majority of its operating expenses in the local currency. The intercompany reinvoicing of central costs is labeled in euros. The variation of the balances linked to exchange rate fluctuations are booked in financial statements of each subsidiary and may impact positively or negatively the financial result of the Group. Following the acquisition of Ingenico Group, forex exposure to a number of currencies have risen (US dollar, Canadian dollar and Chinese RMB). Hedgings are set up based on budget exposure which is qualified as “Cash Flow Hedge” (IFRS). A large share of Ingenico’s revenue and expenses is denominated in foreign currencies. Ingenico is therefore exposed to foreign exchange risk arising from purchases from payment terminal suppliers and on transactions between subsidiaries and parent company. Foreign-currency denominated purchases and sales for which there is no “natural” hedge may be covered by a hedge instrument. Group’s objective is to hedge future risks (purchase or sale commitments) and risks already on the balance sheet (currency payables and receivables). The hedging strategy therefore covers both forward and balance sheet exposures. The main foreign exchange risks hedged are generated by: the purchase and sale in foreign currencies of goods and services associated with the Ingenico’s operations (purchases from suppliers, sales to customers); financial assets or liabilities in foreign currencies (in particular, in relation to the financing of subsidiaries); investments in foreign subsidiaries. Financial instruments used to hedge are forward purchase and sale contracts, foreign exchange options, swaps, and foreign lending/borrowing. On December 20, 2018, Worldline (as Borrower) signed a five-year Revolving Credit Facility (the “Facility”) for an amount of € 600 million, maturing in December 2023 with an option for Worldline to request the extension of the Facility maturity date until December 2025. In October 2019, first extension has been requested and approved by the banks. The Facility maturity date was December 2024.In October 2020; a second extension has been requested and approved by the banks for Interest rate risk

an amount of € 554 million. The Facility maturity date is now December 2025. Therefore, the amount of this Revolving Credit Facility is € 600 million until December 2024 and € 554 million between December 2024 until the final maturity (December 2025). On January 2021, following lender’s approvals, Revolving Credit Facility at the level of Ingenico SA for an amount of € 750 million, maturing in July 2023 was amended as follow: modification of the counterparty which is now Worldline SA, reduction of the amount from € 750 million to € 450 million, updated margin conditions and financial commitments (“covenants”), extension of the maturity to January 2024. The borrower is now Worldline SA. At December 31, 2020, there were no drawings on € 600 million Revolving credit facility of Worldline. If the Facility were to be drawn down, the Group would be subject to interest rate risk since the interest rate on drawings under the Facility are based on Euribor. In addition, the Group could also face higher interest rate in the event Worldline’s rating assigned by Standard & Poor’s would deteriorate. At December 31, 2020, there were no drawings on € 750 million Revolving credit facility of Ingenico. If the Facility were to be drawn down, the Group would be subject to interest rate risk since the interest rate on drawings under the Facility are based on Euribor. Margin applied in this revolving credit facility is not subject to modification of Worldline’s rating assigned by Standard & Poor’s. Worldline has entered into a “Negotiable European Commercial Papers” program (NEU CP) on April 12, 2019 to optimize its financial charges and improve Group’s cash for a maximum initial amount of € 600 million. On December 31, 2020, the outstanding amount of the program was € 373 million. Total amount of this “Negotiable European Commercial Papers” program (NEU CP) has been raised to € 1,000 million in December 2020. On December 31, 2020, the outstanding amount of the € 750 million Ingenico NEU CP program was at € 103 million. On March 30, 2020 Worldline entered into a mandate letter providing the terms and conditions under which a pool of banks commit to enter into a Bridge Facility Agreement upon Company’s request for an amount of € 2.6 billion and for a one-year maturity (with options for extension) in order to finance the contemplated acquisition of Ingenico as announced on February 3, 2020. This Bridge Facility agreement was signed on July 2020 for an updated amount of € 1.6 billion and has never been drawn. This Bridge Facility agreement was cancelled in November 2020. The Group is subject to fluctuations in interest rates on commercial paper issuance. Others components of gross borrowings are mainly bonds with fixed interest rates. In 2014, Ingenico put in place an interest rate swap for 50% of the nominal value of the bond issued in 2014, or € 225 million, with a 7-year life. This swap turns the Group’s fixed-rate exposure into variable-rate exposure. Maturity of this interest rate swap is on May 2021.

296

Universal Registration Document 2020