Euronext - 2020 Universal Registration Document

GLOSSARY, CONCORDANCE TABLES & ANNEX

the Company has a perfect balance of assets and liabilities, this amount is equally entered in both assets and liabilities, therefore the fair value of both items does not lead to any net profit or loss in the income statement of the Company (item “Net profit/loss from trading activities”), n other financial assets/liabilities measured at fair value for CCP activities: the Company decided to adopt the settlement date as reference date for the recognition of these items. Given the Company’s fully balanced position as market central counterparty with regard to assets and liabilities, no net income or loss is generated; n financial assets/liabilities at amortised cost are financial instruments that are held in order to collect the contractual cash flows and the contractual terms give rise to cash flows that are solely payments of principal and interest (Solely Payment of Principal and Interest test – SPPI – passed). Receivables that do not pass the SPPI test are classified under the portfolio of financial assets that must be measured at fair value (see Financial assets measured at fair value impacting the income statement). This item includes cash and cash equivalents, trade and other receivables/payables, receivables/payables from/ to clearing member, and other receivables/payables from/ to clearing members for CCP activities. The initial recognition of financial assets is done on the settlement date for debt instruments and on the date of disbursement in the case of receivables. At the time of initial recognition, assets are stated at their fair value, which normally corresponds to the total amount disbursed for costs/incomes directly determined from the start of the transaction, referring to individual instruments, even if they are settled at a subsequent date. Even though they may have the stated characteristics, costs are excluded when they refer to a reimbursement by the debtor counterparty or if they qualify as administrative costs; n financial assets at fair value impacting on comprehensive income (“FVOCI”) include all financial assets (debt instruments, equities and loans) classified in the portfolio at fair value, impacting on comprehensive income. The CCP has decided to include in this item all financial assets that do not belong to other categories of financial instruments typical of its core business. These assets are initially recognised at fair value, which corresponds to the purchase or subscription cost of the transaction. This category includes the investment in secured assets of Margins and payments to the Default Funds deposited by participants with the central guarantee system, in compliance with EMIR rules. This refers to EU country Government Bonds and Bonds issued by the European Union and Supranational Bonds issued by the European Investment Bank, the European Stability Mechanism and the European Financial Stability Facility. Subsequent measurement: n financial instruments at FVPL are carried on the balance sheet at fair value with net changes in fair value recognised in the statement of profit or loss; n financial instruments at amortised cost are measured at amortised cost. The amortised cost equals the difference between the gross carrying amount and the provision for losses determined by the expected credit losses. The gross carrying amount is

The estimated useful life for intangible assets is the following:

Intangible assets

Useful life 13-25 years

Customer and supplier relationships

Brands

2-15 years

Software licences and intellectual property

1.5-15 years

Software licenses

3 years -5 years

Application Software development costs

3 years -5 years

Amortisation begins the first day of the month after the asset is available for use. The Group verifies, at least once a year, if there is any indication that intangible assets could have undergone impairment compared to the book value recorded in the Financial Statements. In the presence of these indications, the recoverable value of the asset is estimated, to determine the possible extent of the impairment. Investment in Associates An associate is a company over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the Company, but is not control nor joint control over those policies. Significant influence is determined using considerations similar to those for determining control over subsidiaries. The Group’s investments in associates are accounted for at cost, less any impairments recognised in profit or loss. The Group’s investments in associates are assessed for impairment at least at each balance sheet date. Where indicators of impairment are identified, a full impairment assessment is performed and any difference between the recoverable amount of the associate and its carrying value is recognised as an impairment loss in the income statement. Financial Assets and Liabilities The Group classifies its financial instruments as fair value through profit or loss (FVPL), fair value impacting on comprehensive income (“FVOCI”), or amortised cost. The classification depends on the Group’s business model for managing its financial instruments and whether the cash flows generated are “solely payments of principal and interest” (“SPPI”). Initial recognition: n financial assets/liabilities at fair value impacting on income statement (through profit or loss (FVPL)) are assets/liabilities held at fair value. They include CCP businesses’ clearing member trading balances comprising derivatives, equity and debt instruments that are marked to market on a daily basis. In particular this item includes: n financial trading assets/liabilities for Central Counterparty activities: measurement at fair value of open transactions not settled at the reporting date on the derivatives market in which Cassa di Compensazione e Garanzia S.p.A. operates as a central counterparty. The fair value valuation of such positions is determined on the market price of each individual financial instrument at the closing of the financial year; since

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2020 UNIVERSAL REGISTRATION DOCUMENT