Euronext - 2020 Universal Registration Document

GLOSSARY, CONCORDANCE TABLES & ANNEX G

NOTE 2

BASIS OF PREPARATION AND ACCOUNTING POLICIES

2.1 Basis of Preparation The consolidated financial statements of London Stock Exchange Group Holdings Italia S.p.A. and its subsidiaries have been prepared for the first time for the year ended 31 st December 2020 in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been prepared on a voluntary basis for the purpose of their inclusion in the offering documents to be prepared by Euronext N.V. for the proposed issue and offering of certain securities by Euronext N.V. in connection with the proposed acquisition of the Group. For all the periods up to and including the year ended 31 st December 2019, the Group did prepare its owwn consolidated financial statements since London Stock Exchange Group Holdings Italia S.p.A. is an intermediate parent company within the London Stock Exchange Group and is consolidated by the ultimate parent company. As a result of the Group becoming a first-time adopter for its consolidated financial statements later than its ultimate parent, management has elected to measure its assets and liabilities at the carrying amounts that would be included in the ultimate parent’s consolidated financial statements, based on the ultimate parent’s date of acquisition of the subsidiary sub-group, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. In making such an election, management took into consideration that the Borsa Italiana sub-group was acquired by the London Stock Exchange Group on 1 st October 2007 via a branch entity, which was subsequently transferred under a common control transaction on 1 st April 2013 to the newly formed and wholly-owned subsidiary, London Stock Exchange Group Holdings Italia S.p.A,. that was incorporated on 13 th March 2013. No other elections or exemptions have beenmade by management in preparing these consolidated financial statements for the first time under IFRS. The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments, debt and equity financial assets and contingent consideration that have been measured at fair value. The consolidated financial statements, which provide comparative information in respect of the previous period, are presented in euros and all values are rounded to the nearest thousand (€000), except when otherwise indicated. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Basis of Consolidation The consolidated financial statements as at 31 December 2020 is composed of the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and these Notes. 2.2

The structure and the content of the consolidated financial statement are aligned to the indications provided by the IAS n. 1 (“presentation of the financial statements”) and to the criteria for the classification of the items included in the tables in the notes to the consolidated financial statements which are constant over time. The consolidated financial statements of the Group comprise the financial statements of the Parent Company and its subsidiary companies with all inter-company balances and transactions eliminated, together with the Group’s attributable share of the results of associates. The results of subsidiary companies sold or acquired in the period are included in the income statement up to, or from, the date that control passes. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.. The acquisition of subsidiary companies is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Upon completion of the Group’s fair value exercise, comparatives are revised up to 12 months after the acquisition date, for the final fair value adjustments. Adjustments to fair values include those made to bring accounting policies into line with those of the Group. The Group applies a policy of treating transactions with non- controlling interests through the economic entity model. Transactions with non-controlling interests are recognised in equity. These consolidated financial statement have been prepared under the going concern basis assumption, as the directors have verified the absence of indicators of financial, management or other nature that could determine critical situations regarding the ability of the Group to meet its obligations in the foreseeable future and in particular over the next twelve months. Critical Accounting Judgements and Estimates Judgements and estimates are regularly evaluated based on historical experience, current circumstances and expectations of future events. The Group has considered and exercised judgements in evaluating the ongoing impact of Covid-19 on preparation of these consolidated financial statements. In addition to sources of estimation uncertainty, a number of areas have been impacted by Covid-19 as explained in Note 3. Going Concern In assessing whether the appropriate basis of preparation of the consolidated financial statements, the directors are required to consider whether the Group and Parent Company can continue in operational existence for the foreseeable future. The Group’s combined businesses are profitable, generate strong free cash flow and operations are not significantly impacted by seasonal variations. The Group maintains sufficient liquid resources to meet its financial obligations as they fall due. 2.3 2.4

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2020 UNIVERSAL REGISTRATION DOCUMENT