Euronext - 2020 Universal Registration Document

Selected Historical Consolidated Financial Information, Other Financial Information and Unaudited Pro Forma Combined Financial Information

Unaudited Pro Forma Combined Financial Information

NOTE 2. ACCOUNTING POLICY IMPACTS

and default fund contributions. Treasury income earned through the CCP businesses is presented net in the income statement, is recognised as other income as incurred and is shown on a separate line from revenues on the face of the income statement. Interest expense or income is recorded using the effective interest rate method which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial instruments. Where negative interest rates apply, the Group recognises interest paid on cash assets as a net treasury expense and interest received on clearing member’s margin as net treasury income. Thus, a separate financial statement line item, “Net treasury income through CCP business” is incorporated in the unaudited pro forma combined statement of profit or loss for the financial year ended 31 December 2020, as presented in the Borsa Italiana Group Audited Consolidated Financial Statements. Euronext N.V. intends to apply the accounting policy applied by Borsa Italiana Group and described above; n CCP clearing business financial assets and liabilities : Clearing Services is the procedure by which an organisation (Central Counterparty) acts as an intermediary and assumes the role of a buyer and seller in a transaction through the process of novation in order to reconcile orders between transacting parties. CCP trading assets and liabilities are recognised at fair value through profit or loss, CCP repurchase agreements are recognised at amortised cost, CCP other receivables and payables are recognised at amortised cost, CCP other financial assets through other comprehensive income are recognised at Fair value through other comprehensive income and CCP cash and cash equivalent are recognised at amortised cost. Certain CCP financial assets and liabilities are presented on a net basis on the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liabilities simultaneously. Thus, separate financial statement line items “CCP clearing business assets” and “CCP clearing business liabilities”, are incorporated in the unaudited pro forma combined balance sheet as of 31 December 2020, as presented in the Borsa Italiana Group Audited Consolidated Financial Statements. Euronext N.V. intends to apply the same accounting policy applied by Borsa Italiana Group and described above; n other income : Borsa Italiana Group presents in a separate financial statement line, “Other income”, any rental income and property service recharges. Euronext N.V. adopted the presentation of Borsa Italiana Group and added the line, “Other income” in its unaudited pro forma combined statement of profit or loss for the financial year ended 31 December 2020. After completion of the Transaction, the topics above will be further assessed as Euronext N.V. and Borsa Italiana Group share access to information. Additional adjustments or changes in the presentation of the Financial Statements may be performed as management aligns the accounting methods of the two companies.

A preliminary review has been completed to assess if adjustments are necessary to conform Borsa Italiana Group’s accounting policies to conform to Euronext N.V.’s accounting policies. This preliminary review has been conducted by comparing Euronext N.V.’s accounting policies from its Consolidated Financial Statements as of and for the year ended 31 December 2020 to LSEG’s accounting policies (as applied by Borsa Italiana Group) as described in the most recent LSEG’s Consolidated Financial Statements as of and for the year ended 31 December 2020 which are publicly available. Euronext N.V. and Borsa Italiana Group prepare their Consolidated Financial Statements in accordance with IFRS as adopted by the European Union. Upon consummation of the Transaction, a detailed comparison of Euronext N.V.’s and Borsa Italiana Group’s accounting policies will be conducted. As a result of that comparison and as additional information becomes available and additional analyses are performed, more differences between the two companies might be identified with respect to recognition, measurement or presentation. The preliminary review performed by the management of both Euronext N.V.’s and Borsa Italiana Group’s accounting policies did not result in the identification of significant differences except for the following: n leases of intangible assets : As specified in paragraph 4 of the IFRS 16 “Leases”, “A lessee may, but is not required to, apply the Standard to leases of intangible assets other than those described in paragraph 3(e)” . Euronext N.V. uses this practical expedient and does not apply IFRS 16 to leases of intangible assets, whereas Borsa Italiana Group does. Given the difference in accounting policy with Euronext N.V., the following adjustment is incorporated in the unaudited pro forma combined financial information, as of and for the year ended 31 December 2020: a. derecognition of the right-of-use asset of €11.6 million and of the lease liability of €10.7 million on the unaudited pro forma combined balance sheet as of 31 December 2020, b. elimination of the interest cost of €0.2 million linked to the lease liability, elimination of the amortisation expense linked to the right-of-use intangible asset of €7.3 million and recognition of the related rent expense of €8.3 million, on the unaudited pro forma combined statement of profit or loss for the financial year ended 31 December 2020. In addition, for the purpose of the preparation of unaudited pro forma combined financial information, Euronext N.V. has added the following financial statement line items in the unaudited pro forma combined balance sheet as of 31 December 2020 and in the unaudited pro forma combined statement of profit or loss for the financial year ended 31 December 2020, in contemplation of the potential acquisition of Borsa Italiana Group; n net treasury income through CCP business : CC&G (Cassa di Compenazione e Garanzia, the entity acting as central counterparty in Borsa Italiana Group) provide the markets with clearing and central counterparty (CCP) services to mitigate risk and ensure the efficient running of capital markets. This type of income is a result of interest earned on cash assets lodged with the clearing house, less interest paid to the members on their initial margin

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2020 UNIVERSAL REGISTRATION DOCUMENT