Euronext - 2019 Universal Registration Document

Financial Statements 8

Consolidated Statement of Changes in Equity

37.3. Currency risk

Foreign currency translation risk: The Group’s net assets are exposed to the foreign currency risk arising from the translation of assets and liabilities of subsidiaries with functional currencies other than the euro. The following table summarises the assets and liabilities recorded in respectively GBP, USD and NOK functional currency and the related impact of a 10% in/decrease in the currency exchange rate on balance sheet:

2019

2018

In thousands

Assets

£58,755 £(7,561) £51,194 £ 24,052

£46,911 £(5,141) £41,770 £ 15,043

Liabilities

Net currency position

Net currency position after hedge

ABSOLUTE IMPACT ON EQUITY OF 10% IN/DECREASE IN THE CURRENCY EXCHANGE RATE

€2,841

€1,674

2019

2018

In thousands

Assets

$194,824 $(12,322) $182,502 €16,253

$196,579 $(20,087) $176,492 €15,411

Liabilities

Net currency position

ABSOLUTE IMPACT ON EQUITY OF 10% IN/DECREASE IN THE CURRENCY EXCHANGE RATE

2019

2018

In thousands

Assets

kr 8,489,992 kr (1,161,871) kr 7,328,121

kr - kr - kr -

Liabilities

Net currency position

ABSOLUTE IMPACT ON EQUITY OF 10% IN/DECREASE IN THE CURRENCY EXCHANGE RATE

€74,322

€ -

cash and cash equivalents in bank current accounts and money market instruments, such as short-term fixed and floating rate interest deposits, are governed by rules aimed at reducing credit risk: maturity of deposits strictly depends on credit ratings, counterparties’ credit ratings are permanently monitored and individual counterparty limits are reviewed on a regular basis. In addition to the intrinsic creditworthiness of counterparties, the Group’s policies also prescribe the diversification of counterparties (banks, financial institutions, funds) so as to avoid a concentration of risk. Derivatives are negotiated with leading high-grade banks. 37.4.1 Impairment of financial assets The Group’s trade and contract receivables and other debt financial assets at amortised cost are subject to the expected credit loss model. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was considered immaterial. Trade and contract receivables The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade and contract receivables. To measure expected credit losses, trade and contract receivables have been grouped based on shared credit risk characteristics and the days past due. The historical loss rates are based on the payment profiles of the sales over a period of 24months before reporting date and the corresponding historical credit losses experience within this period. The historical loss rates are adjusted to reflect current

Most operating revenue and expenses in the various subsidiaries of the Group are denominated in the functional currency of each relevant subsidiary. The Group’s consolidated income statement is exposed to foreign currency risk arising from receivables and payables denominated in currencies different from the functional currency of the related entity. The Group may use derivatives instruments designated as hedge of net investment or foreign denominated debt to manage its net Investment exposures. The decision to hedge the exposure is considered on a case by case basis since the Group is generally exposed to major, well established and liquid currencies. The Group would, by the same token, hedge transaction risk arising from cash flows paid or received in a currency different from the functional currency of the Group contracting entity on a case by case basis. As at 31 December 2019, the Group had a EUR/GBP foreign exchange contract with a notional amount of £27.1 million expiring in six months, which has been designated as a hedge of the net investment in the acquired subsidiary Commcise Software Ltd. (see Note 23). 37.4. Credit risk The Group is exposed to credit risk in the event of a counterparty’s default. The Group is exposed to credit risk from its operating activities (primarily trade receivables), from its financing activities and from the investment of its cash and cash equivalents and short-term financial investments. The Group limits its exposure to credit risk by rigorously selecting the counterparties with which it executes agreements. Most customers of the Group are leading financial institutions that are highly rated. Investments of

238

www.euronext.com

2019 UNIVERSAL REGISTRATION DOCUMENT