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4
Risk Factors
Risks related to organizational structure and the Group’s operation as an independent entity
20
Worldline
2016 Registration Document
The Group operates in multiple tax jurisdictions and is
subject to uncertainty relating to the cross-border
application of tax rules.
various regulatory requirements while all the while achieving
their commercial, financial and tax objectives.
As an international group doing business in many countries, the
Group is subject to multiple tax laws and must, accordingly,
ensure that its global operations at once comply with the
certain of these countries will not change, be interpreted
differently or be applied inconsistently. More generally, any
violation of tax laws and regulations in the countries where the
Group or its subsidiaries are located or do business could lead
to tax assessments or the payment of late fees, interest, fines
and penalties. This could have a negative impact on the Group’s
effective tax rate, cash flow and results of operations.
Because tax laws and regulations in effect in the various
countries where the Group does business do not always provide
clear or definitive guidelines, the Group’s structure (including the
Reorganization Transactions), the conduct of its business and
the relevant tax regime are based on the Group’s interpretation
of applicable tax laws and regulations. The Group cannot
guarantee that these interpretations will not be questioned by
the tax authorities, or that applicable laws and regulations in
Furthermore, the Group records deferred tax assets on its balance
sheet to account for future tax savings resulting from differences
between the tax values and accounting values of its assets and
liabilities or tax loss carry forwards of its entities. The effective use of
these assets in future years depends on tax laws and regulations,
the outcome of current or future audits and litigation and the
expected future results of operations of the entities in question.
Changes in assumptions underlying carrying values could
result in impairment of the Group’s goodwill.
date of acquisition. Goodwill has been allocated at the level of
the Group operating segments set forth in the Appendices to
the consolidated financial statements. Goodwill is tested for
impairment at least annually, or more frequently when changes
in the circumstances indicate that the carrying amount may not
be recoverable.
As of December
31, 2016, €
766.4
million of goodwill was
recorded on the Group’s balance sheet. Goodwill represents the
excess of the amounts the Group paid to acquire subsidiaries
and other businesses over the fair value of their net assets at the
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 2015 or 2016, no assurance can
be given as to the absence of significant impairment charges in
the future (see Note
13 to the consolidated financial statements).
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
Company’s exposure to the United-Kingdom and to the
Brexit situation.
The Company has approximately 10% of its sales in the
United-Kingdom, mostly from recurring contracts. The business
in the UK is composed primarily of local delivery around a core
of local solutions. The Group’s exposure to GBP fluctuation is
limited, as revenue in GBP have corresponding costs in GBP and
Indian Rupee. Last, in the UK, the Group does not rely on any UK
or EU regulatory approvals.
Risks related to organizational structure and
4.2
the Group’s operation as an
independent
entity
The Group’s principal shareholder will be able to exercise
significant influence over the Group’s operations and
strategy.
Group’s operations and nomination of members of
management as well as the Group’s dividend policy.
The Atos group is the Group’s majority shareholder and retains
control of Worldline. It may itself control decisions submitted for
the approval of shareholders at Combined Annual General
Meetings and, in particular, if quorum requirements are not met
at Extraordinary Shareholders’ Meetings. The Atos group will be
able to control decisions that are important for the Group, such
as those concerning the nomination of Directors, the approval of
annual financial statements, the distribution of dividends and
changes to the Company’s capital and bylaws. The Atos group
will, therefore, be able to exercise significant influence over the