Worldline - 2020 Universal Registration Document

FINANCIALS Consolidated financial statements

Liquidity risk As at December 31, 2020, the Group’s net debt (amounting to € 3,165.1 million) consists mostly of long-term financing borrowings (for € 4,546.5 million) and cash and cash equivalents (for € 1,381.4 million). The banking and financial indebtedness of the Group is described in Section E.4.3, as well as in Note 6.4 to the consolidated financial statements. Although the Group has a demonstrated capacity to generate significant levels of free cash flow (amounting to € 294.5 million in 2020), its ability to repay its borrowings in the manner provided for therein will depend on its future operating performance and could be affected by other factors (economic environment, conditions in the debt market, compliance with legislation, regulatory changes, etc.). In addition, the Group could have to devote a significant part of its cash flow to the payment of principal and interest on its debt, and this could consequently reduce the funds available to finance its day-to-day operations, investments, acquisitions or dividend payments. The Group has an investment grade credit rating from Standard & Poor’s Global Ratings (BBB with stable outlook), a testament to the strength of the Group’s business model and its balance sheet. The Group considers that managing liquidity risk depends primarily on having access to diversified sources of financing in terms of origin and maturity. This approach represents the basis of the Group’s financing policy.

Credit and/or Counterparty Risk Credit and/or counterparty risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group believes that it has limited exposure to concentrations of credit risk due to its large and diverse customer base. The Group’s greatest credit risk position is borne with respect to its financial institution customers. The Group is also exposed to some credit risk in connection with its Commercial Acquiring. For each transaction, the Group provides a performance guarantee to the merchant in respect the cardholder’s payment. Therefore, the Group is exposed to a credit risk in the event of non-payment by the cardholder. Additionally, the Group offers a guarantee of “service rendered” to the cardholder. Accordingly, in the event a merchant goes bankrupt (or ceases to operate) before delivering the product or rendering the service purchased by a cardholder, the cardholder can require the Group to reimburse it for the amount of the transaction. This credit risk exposure is especially significant where services are purchased through e-Commerce well in advance of the time that they are actually rendered ( e.g. , ticket purchases through travel agencies). Deposits are requested to the merchants as the beginning or in the course of the business relation with the Group For the Terminal business, the Group is also exposed to the credit risk on its receivables which could lead in payment defaults. The Group manages this invoice risk through individual or mass market assessment based on customer’s probability of default, terms of payments, revenue flows and invoice recurrence. The riskier a customer is, the shorter the payment terms are, strengthened by secured payments (prepayments, bank guaranties, insurances).

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Universal Registration Document 2020

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