Worldline - 2020 Universal Registration Document

RISK ANALYSIS Risk factors

Risk management In the context of regular and significant acquisitions such as the acquisition of SIX Payment Services on November 30, 2018, and Ingenico on October 28, 2020, the Group rolls out an integration program closely monitored by general management through a weekly “Integration Committee”. This program is built around dedicated streams to ensure complete and adequate integrations and aimed at improving the global efficiency. It includes notably an in-depth review of contracts and merchants at risk in all countries in order to assess properly the fair value of contracts and implement corrective actions when needed.

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 2019 nor 2020, no assurance can be given as to the absence of significant impairment charges in the future (see Note 8 to the consolidated financial statements). 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 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, Expansion to new markets F.2.8 Change in laws and regulations F.2.9.1 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 Regulatory and Legal risks F.2.9

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. Risk management With regard to new markets expansion, the Group ensures that all due diligence activities it carries out involves various departments within the Group ( e.g. Legal, Compliance, risk management). The Groupalso seeks the support of external experts when needed. Furthermore, significant decisions are going through an internal approval process to ensure that all risks are identified and considered during the decision process. the Group’s business, financial condition or results of operations, as well as damage the Group’s reputation. Regulation of the payments industry has increased significantly in recent years and continues to increase. For instance, the growing enthusiasm for Internet, mobile and IP-based communication networks have led to new laws and regulations regarding confidentiality. Extra regulatory requirements are now applicable, such as additional regulatory filing as to ensure keeping the payment institution licenses, the obligation to register agents with supervisory authorities and to establish local contact points towards regulators in countries where licenses are passported via group companies or via agents, additional reporting ( e.g. fraud, incidents, etc.). In addition, the Group must adapt the solutions in accordance with the Regulatory and Technical Standards on Strong customer authentication and secure communication under PSD2, for the migration to Strong customer authentication for e-commerce card-based payment transactions.

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