Euronext - 2020 Universal Registration Document

Financial Statements 8 Notes to the Consolidated Financial Statements

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:

2020

2019

In thousands

Assets

£74,334 £(8,758) £65,576 £38,290 €4,276

£58,755 £(7,561) £51,194 £24,052 €2,841

Liabilities

Net currency position

Net currency position after hedge

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

2020

2019

In thousands

Assets

$205,286 $(13,766) $191,520 €15,666

$194,824 $(12,322) $182,502 €16,253

Liabilities

Net currency position

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

2020

2019

In thousands

Assets

kr9,362,231 kr(1,900,044) kr7,462,187

kr8,489,992 kr(1,161,871) kr7,328,121

Liabilities

Net currency position

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

€71,089

€74,322

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 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 bank 37.4.1 Impairment of Financial Assets The Group’s trade and contract receivables and other debt financial assets at amortised cost and FVOCI 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.

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 2020, the Group had a EUR/GBP foreign exchange contract with a notional amount of £27.3 million expiring in three months, which has been designated as a hedge of the net investment in the acquired subsidiary Commcise Software Ltd. (see Note 23).

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2020 UNIVERSAL REGISTRATION DOCUMENT