Worldline - 2020 Universal Registration Document

RISK ANALYSIS Risk factors

As a No Deal Brexit would have had impacted relationships between UK-based entities and entities based in the remaining EU states ( e.g. PIN entry devices with Worldline SA/NV, passported services for several EU based Worldline entities, transfer of data). The Group has engaged mitigation actions and is pursuing them to limit the risk as well as to adapt to the new applicable rules. The Group’s exposure to GBP fluctuation is limited, as revenue in GBP have corresponding costs in GBP and Indian Rupee. Though the exposure of GBP/Euro fluctuations is limited, it is increasing through enlarged cooperation between UK-based entities and entities based in the remaining EU states. Risk management To mitigate the risks related to macro-economic changes and country instability, the Group enlarges its worldwide presence. With the integration of Ingenico, the Group operates in more than 170 countries around the world, with a vocation to pursue the development of its activities. As a result, it is particularly exposed to the following events: The local economic and political situation; ● Exchange rate fluctuations; ● Restrictions imposed on the repatriation of capital; ● Unanticipated changes to the regulatory environment by ● local regulators; Exchange rate risk F.2.14.1 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. Financial risks F.2.14

The various tax regimes, which may have a negative ● impact on the Group’s results of operations or cash flows, including regulations on transfer pricing, withholding taxes on remittances and other payments made by joint ventures and subsidiaries; Import restrictions; ● Customs duties, export control of goods and services and ● other trade barriers; r other local or global macroeconomic events (such as a ● change in government, a Brexit-type change, or a local or global health crisis such as Coronavirus). The Group conducts a detailed review of the regulatory framework in each country in order to understand the market, define the conditions for setting up operations, and is vigilant with regard to payment terms, particularly in the countries of Africa, Middle East, Southeast Asia and Eastern Europe. The local teams are also a source of information for the Group so that it can adapt its strategy if an event is identified that could have an impact on the Group. The Group makes also a periodic strategic operational review of its activities in order to fully revisit all options in respect of portions of the business which would not have the critical size on their market, as well as activities considered as being non-core business. Risk management 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. Ingenico’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.

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Universal Registration Document 2020

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