Accounting Manual - Sample

Contents Introduction ...........................................................................................................................................................................2 1 Cash and cash equivalents ........................................................................................................................................6 2 Trade and other receivables .....................................................................................................................................8 3 Inventories.................................................................................................................................................................... 15 4 Property, plant and equipment ............................................................................................................................. 19 5 Borrowing costs......................................................................................................................................................... 34 7 Non-current assets held for sale and discontinued operations .................................................................. 41 8 Intangible assets........................................................................................................................................................ 43 9 Goodwill ....................................................................................................................................................................... 49 10 Software ........................................................................................................................................................................ 51 11 Impairment of assets ............................................................................................................................................... 55 12 Share capital, reserves and distributions ........................................................................................................... 62 13 Shared based payments ......................................................................................................................................... 65 14 Provisions, contingent liabilities and contingent assets, and Levies .......................................................... 71 15 Changes in existing decommissioning, restoration and similar liabilities ................................................78 16 Employee benefits .................................................................................................................................................... 80 17 Accounts payable...................................................................................................................................................... 86 18 Loans and borrowings ............................................................................................................................................. 88 19 Leases ............................................................................................................................................................................ 91 21 Revenue recognition ...............................................................................................................................................152 22 Cost of obtaining contracts with customers....................................................................................................176 23 Customer advances and deposits .......................................................................................................................180 24 Operating expenses ................................................................................................................................................182 25 Finance income and expenses .............................................................................................................................184 26 Other Income and expenses ................................................................................................................................185 27 Financial Instruments ..............................................................................................................................................186 28 Income Taxes ........................................................................................................................................................... 203 29 Cash-flow statement ...............................................................................................................................................214 30 Earnings per share ...................................................................................................................................................217 31 Foreign currency translations.............................................................................................................................. 222 32 Business combinations .......................................................................................................................................... 224 33 Put and call options over non-controlling interests .................................................................................... 230 34 Fair value measurement........................................................................................................................................ 233 35 Common control business combinations ........................................................................................................ 238 36 Joint Arrangements ................................................................................................................................................ 240 37 Investments in associates and joint ventures .................................................................................................244 38 Related party disclosures...................................................................................................................................... 247 39 Consolidation ........................................................................................................................................................... 250 40 Operating Segments .............................................................................................................................................. 255 41 Interim financial reporting ................................................................................................................................... 258 42 Accounting policies, changes in accounting estimates and errors ..........................................................261 43 Events after reporting period .............................................................................................................................. 264 44 Government grants ................................................................................................................................................ 266

21 Revenue recognition - IFRS 15 Introduction The amount and timing of revenue is recognized by applying the following five step process: Step 1: Identify the contract(s) with a customer: agreement between two or more parties that creates enforceable rights and obligations. In some cases, contracts need to be combined and accounted for as one contract. Specific requirements also apply for contract modifications. Step 2: Identify the performance obligations in the contract: a contract includes promises to transfer goods or services to a customer. If those goods or services are distinct, the promises are performance obligations Step 3: Determine the transaction price: consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, can be fixed or variable, and/or a form other than cash. Step 4: Allocate the transaction price to the performance obligations in the contract : allocation of transaction price to each performance obligation based on relative stand-alone selling prices. Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation: revenue is recognized when (or as) performance obligations are satisfied. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer). 21.1. Scope This chapter applies to all contracts with customers to provide goods or services in the ordinary course of business, except for those listed below. A custo . The following contracts are excluded from the scope of this chapter, examples are also included overleaf: (a) Lease contracts within the scope of Chapter 20, unless the lease contract includes both a service element, in which case the service element is in the scope of this chapter; (b) Contracts to provide insurance to customers (where VEON is the pri ncipal please contact HQ if such a contract is identified); (c) Financial instruments (including customer loans, advances on credit to customers) (d) Purchase or sale of a business; (e) Network sharing agreements which are considered to be joint arrangements; and (f) Non-monetary exchanges with entities to facilitate sales to customers or potential customers (such as spectrum swaps). Please contact HQ if you are unsure whether the product offering (or part of) falls within the scope of this chapter. Example 1a Providing equipment to customers who have an obligation to buy Example 1b Providing equipment to customers who have an obligation to return Example 2 Mobile financial services interest payments / allowing customers to exceed their prepaid limits Example 3 Receiving commissions when acting as an agent

21.2. Step 1 Identify the contract(s) with the customer Definition of a contract Contracts may be written, oral or implied by customary business practices, but must be enforceable and have commercial substance. Parties to the contract have approved the contract and are committed to perform their respective obligations. The goods and services need to be able to be clearly identified, otherwise transfer of control cannot be assessed and therefore it cannot be a contract with a customer. Payment terms can be identified: There is no requirement that the contract price must be fixed or stated in the contract. The contract must however contain sufficient information to estimate the transaction price and for there to be an enforceable right to payment. Commercial substance: cash flows are expected to change due to the contract. For every contract VEON must be able to demonstrate a substantive business purpose for the nature and structure. Collectability: At contract inception, VEON must assess whether it is probable (greater than 50%) that it will collect the consideration to which it will be entitled in exchange for the goods or services th at will be transferred to the customer. Please note this is different to recognizing impairment on receivables. When there is a significant change in facts and circumstances, VEON must reassess its conclusions under this Step 1. When a contract with a customer does not meet the criteria above, but VEON receives consideration from a customer, the consideration is recognized as revenue only when either of the following events has occurred: (a) VEON has no remaining obligations to transfer goods or services to the customer and all, or substantially all, of the consideration promised by the customer has been received by VEON and is non -refundable; or (b) the contract has been terminated and the consideration received from the customer is non -refundable. When the consideration is received from the customer a liability will be recorded by VEON until one of the events above occur. Example 4a Unused prepaid credit balance is refundable Example 4b Unused prepaid credit balance is not refundable / upfront non-refundable fee is paid Contract term The contract term must be identifiable in order for a contract to exist, and is also relevant for certain consideration such as identifying the transaction price (Step 3) and recognizing revenue based on a time-based measure (Step 5). This policy must be applied throughout the duration of the contract in which the parties to the contract have present enforceable rights and obligations. The contract duration under accounting may be different to what is stated in the contract, for example: Where either party can terminate the contract without a substantive penalty, the contract will be treated as a month-to-month contract, regardless of the term stated in the contract. Where the contract includes a substantive termination penalty, the duration of the contract would be: The same as the stated contractual term in the contract, or The term that needs to pass for the termination penalty to not apply, whichever is the shortest. A substantive termination penalty is one that is material in the context of the individual contract.

Example 5 Contract term: Discount repayable on early termination Example 6 Contract term: Multi-element arrangement Where the contract term is not stated and is considered to the indefinite (i.e. pay-as-you-go contracts), the average customer life term can be used as a proxy. The average customer life is the average time that a certain type of customer (i.e. mobile vs fixed) would be a subscriber to the services offered by VEON. See also Example 10a Activation fee to connect to the network for a circumstance in which revenue is recognized over the average customer life. Combining contracts Careful assessment should be made where two or more contracts are signed with a customer on the same day.If multiple contracts are entered into at or near the same time, such contracts could be treated as a single co ntract if one or more of the following criteria are met: The contracts are negotiated as a package with a single commercial objective; The amount of consideration to be paid in one contract depends on the price or performance of the other contract; or The goods/services sold by VEON are a single performance obligation (i.e. are not distinct, see Step 2 guidance). For example, a customer may receive a discount on a handset if it purchases a service contract simultaneously. The contracts would then be treated as a single contact. Example 7a Contract combinations: Service contract and handset instalment contract Example 7b Contract combinations: Service contract and handset instalment contract with discount Contract modifications A contract modification is a change in the scope (POs/deliverables) or price (or both) of a contract that is approved by the parties to the contract. A contract modification is applicable only when one contract has already been in existence (i.e. the cust - contract afterwards, (i.e. a handset contract is added additionally to the service contract). VEON shall account for a contract modification as a separate contract if both of the following criteria are met: the scope of the contract increases because of the addition of promised goods or services that are distinct (refer Step 2 Identify the separate performance obligations); and the price of the contract increases by an amount of consideration that reflects VEON -alone selling prices of the additional promised goods or services and any appropriate adjustments to that price to reflect the circumstances of the particular contract. In order to determine whether the price of the contract increases by an amount of consideration that reflects the SSPs of the additional promised goods or services, VEON will use the SSPs of the additional services at the time of modification and not at the time of the original contract. If the above criteria are not met, the modification cannot be treated as a separate contract, it should be treated as a modification of the existing contract (depending on the circumstances, either as termination of the existing contract and creation of a new contract or as part of the existing contract). The following decision tree can be used to assist in determining appropriate modification treatment:

Refer below for common example of modifications: Additional service Treatment Value-added Generally meet the criteria for treatment as separate contract as the increase in scope is services (VAS) generally at SSP. Equipment If purchased at SSP = separate contract (handset/routers) If purchased at a discounted price due to existing tariff plan = account for modification prospectively Example 8a Contract modifications: Increased scope at SSP Example 8b Contract modifications: Increased scope at a discount compared to SSP 21.3. Step 2 Identify the separate performance obligations An entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation (PO) each promise to transfer to the customer. The unit of account for each individual PO can be for either: each good or service (or a bundle of goods or services) that is distinct; or each series of distinct goods or services ( ) that are substantially the same and that have the same pattern of transfer to the customer (i.e. a bundle of services over a fixed term see Step 4 guidance and examples below) A good or service that is promised to a customer is distinct if both of the following criteria are met: the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e. the good or service is capable of being distinct); and the entity's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e. the good or service is distinct within the context of the contract). Example 9a 5-Step Model: Pay-as-you-go tariffs and out-of-bundle charges Example 9b 5-Step Model: Bundle of airtime services with a fixed expiry date

Example 9c Bundle of airtime services with roll-over option Example 9d Bundle of unlimited airtime services within a fixed term Example 9e Products and services provided to customers free-of-charge Example 9f Services provided to customers free-of-charge when purchasing equipment Non-refundable upfront fees When a customer wants to subscribe to a service provided by VEON, a fee is often charged. These can be in the form of an activation fee, connection fee, administration fee, top-up fee or scratch card fee. Such fees do not represent a together with other resources that are readily available to the customer. This applies to all non-refundable upfront fees for which no distinct benefit is provided to the customer. For further guidance regarding non-refundable upfront fees, refer to the examples below: Example 10a Activation fee to connect to the network Example 10b Connection fee for subscribing to a new service Example 10c Administrative fee on recharge/upload of balance 21.4. Step 3 Determine the transaction price (TP) The transaction price is the amount of consideration that VEON expects to be entitled to in exchange for transferring promised goods or services to a customer. Note that this excludes amounts collected on behalf of third parties, such as sales taxes or VAT. The nature, timing and amount of consideration promised by a customer affects the estimate of the transaction price. The following should be considered when determining the transaction price: Is the consideration variable? Are there deferred payment terms which may result in the contract including a significant financing component? Is there any consideration in a form other than cash? Is there any consideration that is payable back to the customer? For the purpose of determining the transaction price, VEON assumes that the PO will be transferred to the customer as promised in accordance with the existing contract and that the contract will not be cancelled, renewed or mo dified. If expectations change during the contract period expectations regarding transaction price and/or goods and services to be provided under the contract, this should be accounted for in accordance with guidance on contract modifications (see Step 1). Variable consideration Consideration from customers may vary for a number of reasons, for example discounts provided to customers based on usage, roaming rebates and other volume discounts for achievement of service levels. Where the amount of consideration to be received is variable, the amount of revenue recognised should not exceed the amount to which VEON is reasonably certain it will be entitled. The amount of revenue recognised should be constrained such that there is no reasonable expectation that a significant reversal may be required (this may be considered at a portfolio level for similar contracts, where appropriate).

Significant financing component VEON shall adjust the transaction price for the significant financing component if this is app licable. A significant financing component may exist whether this is explicitly stated in the in the contract or not. A careful assessment should be made (at the contract level, not on a portfolio level) whether: A financing component is present, and Whether the financing component is significant. VEON will use the practical expedient permitted by IFRS 15 whereby the transaction price will not be adjusted for the significant financing component if the time between the delivery of the goods/services and pay ment of such goods/services are less than 1 year. However, where the contract term is longer than 12 months, the financing should be assessed to determine if it is significant. In general, significant financing is not likely to exist as most contracts are considered to be month-to-month. Please contact HQ should you believe a significant financing component is present in the product offering. Where financing is a significant component of equipment, the discounting is applied to the element of the transacti on price that is allocated to the PO (see Step 4 guidance below), rather than to the entire transaction price. The discounting is performed at contract inception using a rate determined on the basis consistent with the guidance below. Subsequent changes in market rates are not applied to pre-existing contracts (i.e. contracts that were already concluded before the change in market rates). The significant financing component consideration must be determined using the discount rate that would be reflected in a separate financing transaction between VEON and its customer at contract inception. That rate would therefore reflect the credit characteristics of the customer receiving financing and any security deposit provided by the customer or collateral held (i.e. handset to be retuned if payments are failed). Non-cash consideration Where customers provide non-cash consideration to VEON (for example, equipment trade-ins), such consideration should be measured at fair value. When goods or services are exchanged with other market participants, assessment should be made whether these are, in substance, for the purposes of facilitating sales to customers. Such transactions are outside the scope of this policy (see Scoping section above) and revenue/costs should be recorded on a net basis. Consideration payable to a customer If consideration, taking the form of cash, credit notes or other items that can be applied to balances owed VEON is be paid to customers, then an assessment should be made to determine the accounting treatment of such payments. Note that rebates payable to customers upon achievement of certain volume targets may fall within the scope of both this section, as well as variable consideration (see Variable consideration section above). For a payment by VEON to a customer to be treated as something other than a reduction in the transaction price, the goods/services provided by the customer must be distinct. 21.5. Step 4 Allocating the transaction price to performance obligations The transaction price (refer Step 3) must be allocated between performance obligations (refer Step 2), pro-rata, based on the relative standalone selling prices ( ) as determined at contract inception.

The stand-alone selling price of a performance obligation is the observable price for which the good or service is sold separately by VEON in similar circumstances to similar customers. If the stand-alone selling price is not directly observable, it shall be estimated, using one of the substitute methods, described in further detail below. Stand-alone Selling Prices (SSP) for services Stand-alone Selling Prices (SSP) for equipment Stand-alone selling prices are determined at contract inception and are not updated to reflect changes between contract inception or when performance is complete. Determination of Stand-alone Selling Prices (SSP) for services Services are offered to customers either on: -as-you- ) basis: SSP needs to be determined for each individual PO unit (i.e. per minute / SMS / MB) (see further details below); or As part of a bundle of various core services (i.e. 100 minutes voice, 100 MB data and 100 SMSs for $5 ). The SSP should be determined first for the bundle as a whole (distinct series of POs), and only then for the individual components within the bundle (see further details below). These services might then be included in a multiple-element arrangement, for example with equipment. PAYG tariffs Reference is made to Step 2, Example 4a,Example 4b and Example 9a. When the SSP of an individual PO needs to be determined, it will be determined by reference to the price of those services when sold by VEON on a routine basis to the same class of customer on a stand-alone basis. For example, this would be the price that the same class of customer would pay for a single entitlement of a minute of voice, a megabyte of data or an SMS in a PAYG contract, or outside of a services bundle. In practice, the SSP for each individual PO is determined with reference to the price char ged to a prepaid, SIM-only customer on a PAYG tariff. Bundle of core services Reference is made to Step 2, Example 9b and Example 9d. When a customer purchases a bundle of core services, there is commonly a volume discount included in the price (i.e. the sum of price for each individual PO would be greater than purchasing a bundle).

Although the bundle of core services is made up of a series individual POs (distinct series of POs see Step 2), the SSP needs to be determined first for the bundle as a whole, and only then for the individual components within the bundle. In this way, the volume discount that is inherently included in a bundle of core services is automatically allocated, in its entirety, to services (i.e. no portion of this discount is allocated to other POs in the MEA, such as equipment). The SSP of a service bundle is -only tariffs, being those for which both the airtime service entitlements and contract duration are substantively the same. As such, the SSP for the bundle will be used, and treated as a single performance obligation, except when: The SSP of the bundle of the core services cannot be determined (for example, the services bundle is never sold separately without a device); or The total transaction price of the bundle of core services exceeds the sum of the SSPs of the individual services. In these circumstances, VEON shall apply the residual method for allocating transaction price to service bundles. The Under the residual approach the stand-alone selling price will be determined as the total transaction price less the sum of the observable selling prices of other goods and services promised in the contract. Where the residual approach is used, the calculated SSP should be compared to observable market data to ensure the amount determined is reasonable. For example, where the SSP calculate for a 1-month bundle is higher than the monthly cost of another one-month bundle with more entitlements, it may suggest that the calculated SSP is too high. Determination of Stand-alone Selling Prices (SSP) for equipment The SSP of equipment will typically be the price for which the equipment is offered for sale by VEON on a standalone basis. In some circumstances VEON may not have a reliable indicator of the standalone selling prices from sales to customers, for example: VEON does not offer the device on a standalone basis (the device is only sold bundled with services) VEON sells the device on a standalone basis only infrequently (i.e. due to inflated prices, limited availability or marketing strategies); Where reliable indicators for stand-alone selling In such circumstances, select an appropriate method for determining the stand-alone selling price (see below) and prepare a position paper for HQ approval. The SSP should therefore be determined based on is determined based on the methods listed below must be considered, and are in order of priority: Expected cost plus margin approach this approach focuses on internal factors (e.g., cost basis), but has an external component as well. That is, the margin included in this approach must reflect the margin the market would be willing to pay, not just VEON for differences in products, geographies, customers and other factors. The cost of the goods or services should be based on the actual invoice from procurement. T he cost of the device should be adjusted to include the impact of any price adjustments (e.g., volume discounts) that would not be included in the original invoice.

When estimating the SSP, the VEON shall consider all information (including market conditions, entity- specific factors and information about the customer or class of customer) that is reasonably available to VEON. VEON also will need to maximize the use of observable inputs in its estimate. As a Group Policy, VEON elects to use the expected cost-plus margin approach to estimate the stand-alone selling price where there is no observable selling price. Adjusted market assessment approach VEON could evaluate the market in which it sells the goods and estimate the price a customer would pay for those goods. This approach would include recommended retail prices (RRP) set by manufacturers, where that price is the minimum price for which a device is sold in the local market and the devices are readily available at that price or the stand-alone prices set by other retailers (including online retailers) in the local market adjusted for VEONS costs and margins. The information in this approach might be difficult to obtain and monitor, and this should be considered in determining the SSP. Residual approach If none of the above approaches are deemed to be appropriate to determine the standalone selling price of equipment, the residual approach may be used. Under the residual approach the stand-alone selling price will be determined as the total transaction price less the sum of the observable selling prices of other goods and services promised in the contract. The use of the residual approach to determine the standalone selling price of equipment is expected to be very rare and should be discussed with HQ first. 21.6. Step 5 Recognizing revenue when (or as) VEON satisfies a performance obligation VEON only recognizes revenue when it satisfies an identified performance obligation by transferring a promised good or service to a customer. A good or service is deemed transferred when the customer obtains control. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits from the asset. This also includes the ability to prevent others from directing the use of, and receiving the benefit from, a good or service. Performance obligations satisfied over time VEON can conclude that control of goods/services is transferred over time if one of the following criteria are met: 1. As VEON performs, the customer simultaneously receives and consumes the benefits provided by VEON performance. 2. VEON s performance creates or enhances an asset (e.g., work in progress) that the customer controls as the asset is created or enhanced. 3. VEON ive use to VEON and VEON has an enforceable right to payment for performance completed to date. If these any of these three criteria are met, the control is transferred over time. Generally, all service provided by VEON are considered to be transferred over time. If the control transfers over time, VEON has to select a single revenue recognition method for the relevant performance obligation that represents VEON For VEON services, this will generally be using an output method, such as a time-based or usage-based method. See below for specific services that are transferred over time, and the relevant output method that should be applied for each service:

Service Method for recognition Voice Usage-based (i.e. each minute) Messaging * Usage-based (i.e. each SMS or MMS) Data * Usage-based (i.e. each byte or other unit) Bundle of services (fixed-term) Time-based (i.e. straight-line over 30 days) VAS (fixed-term service, i.e. always online) Time-based (i.e. straight-line over 30 days) VAS (fee per unit, i.e. mass SMS) * Usage-based (i.e. per each unit delivered) * Note: The customer simultaneously receives and consumes the benefits of the network services provided by VEON as it performs the services, measured in increments of seconds / SMS (character length) / bytes . As such, revenue is recognized over time, with measurement on an output-basis, based on actual usage by the customer. Performance obligations satisfied at a point in time For performance obligations in which control is not transferred over time, control is transferred as at a point-in-time. Currently, all goods sold (equipment etc) are considered to be satisfied at a point-in-time, whilst all services are satisfied over time (see above). Should you believe that you have a service that is satisfied at a point-in-time, please contact HQ. 21.7. Agent vs Principal When revenue is recognised for a PO, it must be considered whether VEON is the principal in satisfying the PO (and thus should recognise revenue and costs on a gross basis), or if VEON is acting as the agent for another party fulfilling the PO such that VEON payments to the supplier are debited to revenue and only net margin retained by VEON is recognised in revenue). If VEON obtains control of a good or service (other than momentarily) prior to resale to the customer, it is likely that VEON will be considered to be the principal. However, possible indicators that VEON is acting as an agent and should recognise revenue and costs on a net basis need to be considered. These indicators include: A) Another party is primarily responsible for fulfilling the contract: Indicators that the supplier is the responsible party include: The supplier is party to the contract with the customer The supplier is liable to the customer in the event of non-performance or other issues The supplier is specified by the customer The product or service (and/or related services, such as helpdesk support) are supplier-branded B) VEON does not have inventory risk before or after the customer order, during shipping ,or on return;

Indicators that VEON has inventory risk include: Purchases, or commitments to purchase, goods or services are made prior to resale in volumes that are substantive compared to expected sales levels VEON has substantive physical loss risk C) VEON does not have discretion in establ the benefit that VEON can receive from those goods or services is limited; D) VEON does not have latitude in establishing prices when the price is fixed, or closely regulated, by the supplier or another third party. The existence of one or more indicators that VEON is acting as an agent does not preclude VEON being the principal in the relationship if the overall balance of the above indicators confirms that VEON has taken control of the good or service and is the principal in the transaction. 21.8. Classification of non-operating items VEON distinguishes results of operations into operating and non-operating parts depending on the nature of the transaction. All the results that directly relate to operations are classified as operating items regardless whether they involve cash, occur irregularly, infrequently, or are unusual in amount (e.g. , or ). All the results that do not directly relate to operations are classified as non-operating (e.g. Other non-operating losses/(gains)). The following are examples of non-operating items: 1. Change of fair value of derivatives 2. Exchange differences on translation 3. Re-measurement of previously held investment in investments that became subsidiaries 4. Loss upon early debt retirement If in doubt, consult HQ. 21.9. Examples Example 1a Providing equipment to customers who have an obligation to buy These arrangements normally form part of fixed line product offerings. The product offering may include equipment (Routers/Set-up boxes) which are provided to the customer either free of charge or for a monthly fee over a fixed term. If the customer terminates the contract, a final fee is payable by the customer for the equipment. The amount to be paid for the equipment is usually dependent on the remaining contract term before termination. If the control of the equipment transfers to the customer when the customer initially obtains the equipment, at the outset of the arrangement, then it is not a lease. Instead, it is generally deemed that the customer is merely paying for the equipment in instalments, that control transfers when the customer initially receives the equipment and therefore these arrangements would not be considered a lease. Note: See Step 5 for definition of control. Example 1b Providing equipment to customers who have an obligation to return Circumstances are the same as in Example 1a, except that when the customer terminates the contract, the equipment must be returned to VEON, and there are no further fees payable by the customer.

In general, it is deemed that the customer is merely paying a monthly fee for the use of the equipment (either directly or indirectly), but ownership of the equipment never transfers to the customer. The equipment needs to be assessed in accordance with Chapter 20, considering whether it is locked to the VEON network, and whether it has any additional functionality besides providing access to the service, to assess whether it is a lease. If the contract is a multi-element arrangement (i.e. equipment and services), and it has been concluded that the equipment is a lease, the equipment will be accounted in accordance with Chapter 20 and the services in accordance with this chapter. Example 2 Mobile financial services interest payments/allowing customers to exceed their prepaid limits VEON provides different types of MFS to customers. If VEON provides credit to a customer for a period of time, and in return the customer pays a fee to VEON for this service based on the time and amount of credit provided by VEON, this is similar to an interest payment, which will therefore be a financial instrument, and not in the scope of this chapter. For Trusted Payments provided to customers, VEON allows the customer to exceed their limit of prepaid credit for a period of 3 to 5 days, and then charges a fee, which may be based on the time and/or amount for which the customer used this Trusted Payment. Such a transaction would also fall outside the scope of this chapter. Example 3 Receiving commissions when acting as an agent VEON also offers services to customers performed by another party, for which VEON receives a commission (i.e. VEON does not actually provided the services). Customers can also sometimes buy goods or services from other companies and pay for it with their mobile credit. VEON then receives a percentage of the sale as commission from the 3rd party. This is a service fee that VEON receives, in exchange for providing a service, and falls within the scope of IFRS 15. Example 4a Unused prepaid credit balance is refundable When the customer uploads/recharges a balance, a liability is created for the balance. The contract is wholly unperformed as the customer can still request a refund of his prepaid balance, without a penalty. For purpose of applying IFRS 15, a contract is only considered to exist, once the customer uses the prepaid balance. Therefore, each time the customer uses portion of his credit balance, this is considered a separate contract. Each time the customer uses the prepaid credit, this is considered a separa te contract (see Step 1 guidance). Each service that is used is considered to be a separate PO as discussed in (see Step 2 guidance). The TP is calculated as the actual charge to the customer for the service (see Step 3 guidance). As there is only a single PO in the contract no allocation of the TP has to be performed. Example: Customer recharges $20 to the prepaid account. The customer can request a refund of the balance at any time. A contract liability is recognized for the $20. The customer uses data of $5 and voice services of $3. The $8 of service revenue is recorded as the customer uses the service. Example 4b Unused prepaid credit balance is not refundable / upfront non-refundable fee is paid In the event that the prepaid credit balance is non-refundable and/or the customer has paid a non-refundable upfront right to payment

regarding payment terms or collectability, and the arrangement has commercial substance. In these scenarios, the contract term will be the term over which Veon has an obligation to provide services and the customer has a right to services. A contract exists for the recharged credit for the total term that the customer takes to use all of the recharge credit (see Step 1 guidance). As the term over which the customer will use the services cannot be determined, the contract has an indefinite term. Each service that is used is considered to be a separate PO (see Step 2 guidance). The TP is the total amount recharged by the customer (see Step 3 guidance). Technically each service is a separate PO and therefore the recharge balance should be allocated to each service based on its SSP. Since all the service are recorded and disclosed as a single line item, service revenue, as a practical expedient all the services will be deemed to be a combined PO, and no allocation will be performed. This will have no impact on the total service revenue recognized for the month. (see Step 4 guidance). Example: Customer recharges $20 to the prepaid account. No refund of the credit is possible. The contract term is the time is takes the customer to use the $20. A contract liability is recognized for the $20. The customer uses data of $5 and voice services of $3. The $8 of service revenue is recorded as the customer uses the service. At the e nd of the month a contract liability of $12 will remain. Example 5 Contract duration: Discount repayable on early termination If discount is provided to a customer that is repayable should the customer terminate the contract within a speci fied period, and that discount is substantive, then the contract term would be the shortest of the contract term, or the period after which the discount is not repayable by the customer. Example 6 Contract duration: Multi-element arrangements VEON sometimes includes free services to the customer when the customer buys equipment from VEON. Example: When a customer buys an IPhone 7, the customer will receive 1GB of data every month for a period of 12 months. Consequently, the contract term is 12 months, as VEON has an obligation to deliver these services to the customer. Example 7a Contract combinations: Service contract and handset instalment contract A 12-month service contract is normally sold for $15 per month. A separate handset instalment agreement can be purchased for $20 per month over 12 months. A customer enters into a contract with VEON for the services and the handset on the same day and is charged $35 per month over 12 months. Therefore, the amount of consideration of the one contract is not depe ndant on the other, as both contracts are provided at their standalone selling price, and both are distinct performance obligations. The contracts will not be combined under Step 1, as the contracts are not negotiated as a package with a single objective but includes provision of services and sale of a handset separately. Example 7b Contract combinations: Service contract and handset instalment contract with discount The same information as above applies, but the customer enters into a contract with VEON for the services and the handset on the same day and is charged $30 for the bundle. The contract will be combined under Step 1 as the contract is negotiated as a package, and the discount is only provided when purchasing the two items together.