Euronext - 2020 Universal Registration Document

Financial Statements

Notes to the Consolidated Financial Statements

35.2.4 Fair Value Measurements Using Unobservable Inputs (Level 3) The following table presents the changes in level 3 instruments for the period ended 31 December 2020:

Contingent consideration payables

Unlisted equity securities

Redemption liability

Total

In thousands of euros

As at 31 December 2018

188,416

(14,186)

(10,200)

164,030

Revaluations recognised in OCI

8,903

–

–

8,903

Revaluations recognised in P&L

–

(1,310)

(11,965)

(13,275)

Additions

246

–

–

246

Payments

–

6,888

–

6,888

Acquisitions/(incurrences)

255

–

–

255

Exchange differences

–

98

–

98

As at 31 December 2019

197,821

(8,510)

(22,165)

167,145

Revaluations recognised in OCI

9,226

–

–

9,226

–

394

(131)

263

Revaluations recognised in P&L

Additions

(2,523)

–

–

(2,523)

Payments

–

8,608

22,296

30,904

Acquisitions/(incurrences)

–

(1,013)

–

(1,013)

Exchange differences

(17)

–

–

(17)

As at 31 December 2020

204,506

(521)

–

203,985

Valuation Process Concerning the valuation process for fair value measurement categorised within level 3 of the fair value hierarchy, the Group’s Central Treasury department collects and validates the available level 3 inputs and performs the valuation according to the Group’s valuation methodology for each reporting period. The fair value estimates are discussed with-, and challenged by the Group Finance Director and the Chief Financial Officer. Periodically the values of investments categorized in “level 3” are validated by staff with extensive knowledge of the industry in which the invested companies operate. Although valuation techniques are applied consistently as a principle, Management, upon advice from the Group’s valuation experts, may decide to replace a valuation technique if such a change would improve the quality or the reliability of the valuation process.

Unlisted Equity Securities in Euroclear S.A./N.V. and Sicovam Holding S.A. For measuring fair value of its long-term investments in unlisted equity securities in Euroclear S.A./N.V. and Sicovam Holding S.A., the Group applies the Gordon Growth Model valuation technique as its primary valuation method with return on equity and expected dividend growth rate as key non-observable parameters. In 2020, the Group considered two most recent transactions observed in 2019 and 2018, while two transactions observed in 2018 were considered in 2019 for the determination of the fair value in addition to its primary valuation technique. In addition, for measuring the fair value of Sicovam Holding S.A., the Group applied an illiquidity discount as an unobservable input for which a sensitivity impact of +10%/(-10%) would amount to a decrease or (increase) of €6.5 million in the fair value (2019: €6.3 million). More information on the investments is further disclosed in Note 20.

8

The key assumptions used in the Gordon Growth Model valuation model are as follows:

2020

Relationship of unobservable inputs to fair value Increase decrease

Range of inputs (probaility- weighted average)

Fair value at 31 December 2020

Unobservable inputs* Return on equity Expected dividend growth rate

In thousands of euros

7.9%-8.9% (8.4%)

Euroclear S.A./N.V.

145,252

4,958

(5,492)

0.74%-1.74% (1.24%)

Return on equity

7.9%-8.9% (8.4%)

Sicovam Holding S.A.

58,913

1,928

(2,136)

Expected dividend growth rate

0.74%-1.74% (1.24%)

* There were no significant inter-relationships between unobservable inputs that materially affect fair value

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2020 UNIVERSAL REGISTRATION DOCUMENT