Worldline - 2020 Universal Registration Document

FINANCIALS Parent company financial statements

Valuation of participating interests Note “Rules and accounting methods – Financial assets” and Note 3 Financial assets Key Audit Matter Our audit approach

As of December 31, 2020, participating interests are recorded on the balance sheet at a net book value of € 10,312 million, or 83% of total assets. They are recorded at cost on the date of acquisition. When the value in use of the participating interests is lower than their acquisition cost, a provision for depreciation is recorded for the amount of the difference. The value in use is determined by taking into account the re-estimated share of net assets and the profitability prospects. The profitability outlook, determined on the basis of cash flow forecasts established on the basis of three-year Global Business Line (GBL) business plans approved by management and a terminal value, requires management’s judgment, particularly with regards to cash flow assumptions. Given the weight of participating interests in the balance sheet and the sensitivity of the valuation models to the assumptions used in determining cash flows, we considered the correct valuation of equity investments to be a key audit matter. Revenue recognition related to multiple-deliverables service contracts Note “Rules and accounting methods” and Note 13 Revenue Key Audit Matter For service contracts with multiple deliverables, which may correspond to a combination of different services, revenue is recognized separately for each identified element 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. The total costs of providing the services corresponding to the performance obligations (mainly consisting of hours spent per project), and in pa rticular 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 the separate element and the allocation of the transaction price to each of them requires management’s estimates and judgment. In a ddition, 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 a mount of revenue recognized in the financial statements.

Our assessment of the fa ir va lue mea suremetnof participating interests is based on the Company’s process for determining the value in use of participating interests. Our work mainly consisted in assessing the reasonableness of the cash flow forecasts taken into account for the valuation of the participating interests, and in particular: Obtaining the cash flow forecasts of the entities concerned ● and reconciling them with the business plans of GBL approved by management; Verifying the consistency of the assumptions used with the ● historical performance of the Group, GBL and the entities, and confirming, in particular through discussions with management, the future growth prospects.

Our audit approach

We have reviewed the internal control procedures relating to the monitoring of multiple-element service contracts and the estimation of costs and margins over the term of the contracts. For a selection of contracts based 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 expected margin with the financial data of the signed ● contract and the associated estimated costs, The analysis and accounting treatment adopted by the ● Company with contractual provisions; For contracts in progress: ● We reconciled the financial data (sales, invoicing and cost ● progress) appearing in the contract monitoring dashboard drawn up monthly by the financial controllers, with the accounts, We corroborated the costs incurred and in particular the ● hours per project with the data from the related application, 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 a lso 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.

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Universal Registration Document 2020

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