Euronext - 2019 Universal Registration Document

Financial Statements

Consolidated Statement of Changes in Equity

(vi) Purchase price allocation The cost of other intangible assets that are acquired in the course of business combinations, corresponds to their acquisition date fair values. Depending on the nature of the intangible asset, fair value is determined by application of: n market approach (by reference to comparable transactions); n income approach (Relief-from-Royalty- or Multi-period Excess Earnings Method); n cost approach. Assets with a finite useful life are amortized using the straight-line method over their expected useful life. Assets with an indefinite useful life are tested for impairment at least once a year. (vii) Revenue from contracts with customers The Group applied the following judgments that significantly affect the determination of the amount and timing of revenue from contracts with customers: Identifying Performance Obligations and Determining the Timing of Revenue Recognition of Listing Admission Fees The Group provides services related to the initial (and subsequent) listing of securities on its markets and hereto directly related corporate action services, and ongoing services related to the continuous listing. The Group determined that the admission services around initial (and subsequent) admission and its directly related corporate action services do not transfer a good or service to the customer, but are considered activities that the Group needs to undertake to enable the customer to be listed. The Group concluded that these activities should be combined with the ongoing listing services and should be used as inputs to produce the combined output, which is the service of being listed. As the service of being listed is satisfied over a period of time, as the customer simultaneously receives and consumes the benefits from the service, the related revenues are therefore recognised over a period of time. The Group determined that the period of time that best reflects the satisfaction of listing admission services is the period over which the customer actually benefits from the admission. An average lifetime of companies being listed on Euronext’s markets would serve as best proxy for the period that a listing customer benefits from an admission. Based on historic evidence, the Group has defined the following average lifetimes for the relevant groupings of listed securities: n Equity admissions: 5 years n Bond- and fund admissions: 3 years n Equity subsequent admissions (“follow-on’s”): 3 years Revenue from the listing admission services is therefore recognised over those periods of time. Cost to Obtain or Fulfil a Contract Related to Listing Admission Services The Group has considered the type of cost that is directly associated to a listing contract and that can be separately identifiable. Such cost would typically concern staff cost incurred by the Listings team involved in admission – and subsequent listing of an issuer. There is

(ii) Income taxes Due to the inherent complexities arising from the nature of the Group’s business, and from conducting business and being taxed in a substantial number of jurisdictions, critical assumptions and estimates are required to be made for income taxes. The Group computes income tax expense for each of the jurisdictions in which it operates. However, actual amounts of income tax due only become final upon filing and acceptance of the tax return by relevant authorities, which may not occur for several years subsequent to issuance of these Consolidated Financial Statements. The estimation of income taxes also includes evaluating the recoverability of deferred income tax assets based on an assessment of the ability to use the underlying future tax deductions against future taxable income before they expire. This assessment is based upon existing tax laws and estimates of future taxable income. To the extent estimates differ from the final tax return, earnings may be affected in a subsequent period. The Group operates in various countries with local tax regulations. New tax legislation being issued in certain territories as well as transactions that the Group enters into regularly result in potential tax exposures. The calculation of our tax liabilities involves uncertainties in the application of complex tax laws. Our estimate for the potential outcome of any uncertain tax treatment is highly judgmental. However, the Group believes that it has adequately provided for uncertain tax treatments. Settlement of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations, financial condition and cash flows. The Group recognises a liability for uncertain tax treatments when it is not probable that a taxation authority will accept an uncertain tax treatment. (iii) Fair value of equity investments The Group holds investments in unlisted equity securities which are carried at fair value in the balance sheet. The valuation methodology The Group classifies the interest in LCH SA as an investment in associate suggesting significant influence even though it owns less than 20% of the voting rights (see Note 7). The Group concluded that it has significant influence over this investment, which is derived from the governance structure that was put in place, the Group’s position as the largest customer and sole minority shareholder of LCH SA. (v) Contingent consideration and buy options resulting from business combinations The Group may structure its business combinations in a way that leads to recognition of contingent consideration to selling shareholders and/or buy options for equity held by non-controlling interests. Contingent consideration and buy options are recognized at fair value on acquisition date. When the contingent consideration or buy option meets the definition of a financial liability or financial instrument, it is subsequently re-measured to fair value at each reporting date. The determination of fair value is based on the expected level of EBITDA 3 over the last 12 months that precede the contractual date (in case of contingent consideration) or exercise date of the underlying call- and put options (in case of buy option). The Groupmonitors the expected EBITDA 3 based on updated forecast information from the acquired companies involved. and critical assumptions are described in Note 20. (iv) Classification of investments in associates

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2019 UNIVERSAL REGISTRATION DOCUMENT