Worldline - Registration Document 2016

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Operation and financial review Overview

Summary Description of Principal Income Statement Line Items

9.1.3

9.1.3.1

Revenue

these costs is the number and mix of terminals sold and the average cost of components per terminal; expenses for the maintenance of the Group’s software, equipment and facilities; Maintenance. Maintenance costs relate primarily to ● Rent and lease expenses. Rent and lease expenses consist ● of facility rental costs, software rental fees and certain card scheme royalties. Rental costs for facilities are generally a function of the size of the relevant facility and average rental rates, which are generally driven by the location and nature of the facility; Telecommunications costs. The group makes significant ● use of postal services and communications bandwidth. These costs are generally a function of the amount of usage Professional fees. These fees include fees paid to ● professionals such as consultants, accountants and lawyer; Taxes and similar expenses (other than income tax). These ● charges include various taxes other than income taxes such as non-recoverable VAT, and have remained fairly stable as a percentage of sales over the period under review; Other expenses. This line item includes a number of items, ● including the allocation of Atos global management & global support function cost to the Group, energy costs for the Group’s data centers and the cost of indemnities for unpaid receivables and net change to provisions. Depreciation charges are driven primarily by the size and the evolution of the Group’s asset base; include depreciation charges as well as other charges such as gains or losses on disposals of assets, write offs of trade reported net of capitalized production costs. Costs of specific application development for clients or technology solutions made available to a group of clients with a useful life of the underlying asset greater than one year are capitalized. Their aggregate amount is offset in the profit and loss statement through this line item. Other operating expenses. Other operating expenses ● Capitalized production costs. Operating expenses are ● checks paid to check service customers; Scheme fees include the fees paid to Visa, MasterCard and ● BCMC (Belgium debit card scheme) as part of the Group’s Commercial Acquiring activities; and average rates; 2016; Travel expenses and company cars. These expenses ● consist of travel costs and the cost of company cars, which have remained fairly constant as a percentage of sales in

lines as described above. See Section 9.1.2.3, “Composition of Global Business Line Revenue”. The Group generates revenue from its three global business

9.1.3.2

Personnel Expenses

41.0% in 2016 and 40.8% in 2015. remained relatively consistent as a percentage of revenue at The Group’s personnel expenses primarily consist of wages and salaries, social security charges, taxes, training and profit sharing expense and differences between pension contributions and net pension expenses. These charges are generally driven by the average number of employees and average compensation levels. Over the period under review, these charges have Please note that equity based compensation expense is now represented in Other operational income and expenses. This change in presentation has been applied retroactively in 2015, as indicated in the Note “Basis of preparation of consolidated financial statements”. categories of expenses: The Group’s operating expenses include the following of the cost for subcontracted services, roughly half of which is typically IT subcontracting, mostly on a time & materials basis. The other half comes from other outsourced services, which mainly include non-IT services such as printing, Subcontracting costs direct. Subcontracting costs consist ● of the Group’s time & materials subcontracting costs in 2016 was related to outsourced services provided by Atos to the Group; outsource rather than handle in-house, and customer volumes, which drive costs that are dependent on volume, such as printing, mailing and statement activity. Roughly half mailing and other statement preparation activity and ATM services. The level of these expenses in any given period is mainly driven by the number of projects in the project phase, some aspects of which the Group may decide to primarily consist of the cost of components used to manufacture the Group’s terminals, hardware security modules and other devices, and to a lesser extent hardware Purchases of hardware and software. These expenses ● sold as part of integration projects. The primary driver of Operating Expenses 9.1.3.3

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Worldline 2016 Registration Document