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CONFIDENTIAL - Copyright © Aptitude Software Ltd. 2015

IFRS 15 – The State of EuropeTom Crawford President, Aptitude SoftwareMartin Redington SVP Product & Delivery

Thursday 10th December – 10:00 GMT

The information contained in this document is owned by and confidential to Aptitude Software Limited and members of its group companies (together “Aptitude Software”) and must not, therefore, be disclosed to any third party without the express written permission of Aptitude Software. Information in this document is subject to change without notice and does not represent a commitment on the part of Aptitude Software. In addition, no part of this document may be reproduced or transmitted in any form or by any means electronic or mechanical including photocopying, recording or information storage and retrieval systems, for any purpose other than the recipient’s personal use without the express written permission of Aptitude Software. APTITUDE, APTITUDE ALLOCATION ENGINE and the Triangles device are trademarks of Aptitude Software Limited. MICROGEN is a trademark of Microgen plc.

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https://www.aptitudesoftware.com/patentsandtrademarks

28 April 20233

Our Focus

• Delivering exceptional ROI while enabling Finance transformation

• Addressing the difficult 20% of functionality that Finance requires but that is not met by ERP or other IT systems.

• Enabling financial insight, control and transparency - at scale, in detail and with speed

• Best-in-class technology platform for the design and execution of finance applications

CONFIDENTIAL. Copyright © Aptitude Software Ltd. 2014-15

About Aptitude Software

A multinational telecoms operator streamlines, simplifies and automates finance operations while implementing a new accounting policy.

One of the world’s largest global banks generates multi-GAAP reporting from millions of daily trade and transaction events.

A leading insurer is building a financial data foundation to empower them to compete more effectively in a competitive market.

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Agenda


• IFRS 15 projects in telcos across the world

• How European telcos are progressing in their projects

• Typical challenges and how they are being addressed

• The IFRS 15 journey, from compliance to adding value

• The Aptitude Software IFRS 15 Revenue Recognition Engine

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Aptitude Software’s experience


174 Customer-provided scenarios

proven for

operators

in17countries around the world, in Europe, Asia and North America

37

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IFRS 15 around the world

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IFRS 15 in Europe

Impact analysis ProjectPreparation

SolutionSelection Contracting Implementation

25% 61% 8% 6%


Contract or portfolio level accounting?

Set & forget Reconciliation Auditability

Data volume

Processing power

Contract rules

Materiality

9

Common Challenges - Accounting

28 April 2023CONFIDENTIAL. Copyright © Aptitude Software Ltd. 2014-15

IFRS 15 interpretation

• Revenue Allocation

• Revenue Recognition

• Contract Asset Accounting

• Cost Recognition

• Revenue Allocation Groups

• Prospective and retrospective calculations

• Determining Stand Alone Selling Prices (SASP)

• Region specific equip. pricing

• Storing Stand Alone Selling Prices (SASP)

Contract lifecycle events

• Modification

• Tariff change

• Addition/subtraction of individual services

• Addition/subtraction of equipment

• Returns (device returns within allotted period)

• Partial-Termination

• Termination

• Early Termination

• Maturity

• Extension

• Delayed equipment delivery

Business and finance processes

• Billing Cycles• Expected Life• Income Suppression and

Bad Debt Write-Offs• Collectability Risk and

Provisions• Timing Differences

(income recognition vs. billing)

• Overlap with estimated billing accruals/deferrals

• Financing / Time Value of Money (TVM)

• Guarantee Liabilities for Financing

• Tech Funds• Direct versus Indirect

Channels

• Loyalty programmes• Long term contracts for

networking side

Example contract options

• Advance or Arrears Billing

• Discounts

• Fees

• Commission (Expenses)

• Bundles and Unbundling

• Material Rights

• Variable Pricing and Corporate Discounting

• Shared Plans (with multiple handsets)

• Shared and Individual plans on one contract

• Termination fees

• 1 month rolling contracts

• Delayed Discounts (which represent Material Rights)

• Upgrade Options (which represent Material Rights)


Revenue Recognition Project challenges

Streaming Service

VoicePlan

HandsetLease

Life CycleEvents

Stand alone selling price

Channel

Market

Location

Product

2. Reconciling deltas back to the

current Billing accounting

3. Resourcing

1. How to construct a Subscriber/Bill Payer “contract”

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Typical telco environment


• Multiple billing systems, loan lease systems, sales & store fronts with opaque logic between systems and general ledgers makes a very complex landscape.

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Journey after Compliance


• Simplifying and automating all revenue accounting processes– Accruals and deferrals– Manual adjustments– Reconciliations

• Ensuring accounting consistency across multiple entities

• Accounting flexibility• A foundation of contract

accounting (revenue and direct costs) for profitability analysis.

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“Value after compliance” in action


Compliance

1aCompliance plus all revenue lines

associated with contracts

1bFull Accounting

Engine and IFRS 15

Compliance

2Reporting & Analysis

3

Delta journal generation for the adjustment of the

existing cash based accounting for

contract revenue lines and usage

affected by IFRS15/ASC606, based on expected contract cash flows

Full and Delta journal generation for the

creation and/or adjustment of the

existing cash based accounting for contract

revenue lines and usage affected by IFRS15/ASC606, based on expected contract cash flows

Centralise all accounting functions

for all revenue streams/contracts to

achieve full Revenue and Cost accounting.

Revenue accounting includes support

for IFRS15/ASC606. Cost accounting

including the matching of Costs against

Revenues over time

Full segmented sales margin

reporting & analysis

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A major US customer


Objectives Solution

IFRS 15 & FASB 606 compliance

Value beyond compliance in wider revenue management processes

Enhanced financial control – eg. accruals process

Financial insights from contract & financial data in the warehouse

Ability to apply new business rules• for new accounting treatments• for statutory & mgmt reporting

60m customers

Aptitude Revenue Recognition Enginefor revenue adjustments

Aptitude Accounting Hub for revenue sub-ledger, adjustment & close process

Common data preparation layer from numerous source systems to validate & identify contract accounting events

Maintains multiple sets of books/GAAPs (through transition period) and drives movements for existing general ledger

ComplianceControl

TransparencySpeed of close

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Our Revenue Recognition Engine


Visit the website

to request a demo

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How Aptitude Differentiates


• Focus and Expertise – we are focused on working with operators, SIs and auditors to understand their challenges and deliver on IFRS 15 requirements.

• Mature Product - Product designed and developed over 4 years.

• Packaged - Minimise project risk and cost – allow finance to own the rules – 400+ scenarios.

• Configurable - IFRS 15 is policy related so every operator has slightly different approaches for example to material rights - policy driven not technologically limited.

• Proven for Innovation – Scenario driven for rapid adoption of new products and services

• Rapid Implementation - Project estimated at 6-9 months.

• User Friendly – Designed to allow Finance users to see, understand and configure.

• High Performance - Volume of contracts in consumer and number of modifications in enterprise.

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Thank you for joining


Tom CrawfordPresident of Aptitude Software

Martin RedingtonSVP of Product and Delivery

email [email protected]

CONFIDENTIAL - Copyright © Aptitude Software Ltd. 2015

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