Euronext - 2020 Universal Registration Document

GLOSSARY, CONCORDANCE TABLES & ANNEX G

the amount in the initial recognition, decreased/increased by: principal repayments; the amortisation of the difference between the amount paid and the amount reimbursable on expiry, represented by initial costs/incomes. The amortisation is calculated based on the effective interest rate method, which considers this costs/income; profits/losses from a concession. At the close of each financial period or interim position, financial assets measured at amortised cost are subject to impairment with the recognition of the expected credit losses. Gains and losses are recognised in profit or loss when the asset is disposed of or impaired: n For debt instruments held at FVOCI, after the initial recording, accrued interest is shown in the income statement according to the actual interest rate of the transaction. Financial assets measured at fair value through other comprehensive income are measured at fair value on the basis of the closing prices published on the active market. Capital gains and losses resulting from changes in the fair value are shown directly in the shareholders’ equity, in a specific valuation reserve, except for impairment losses. In case of sale before maturity, the gains and losses from a valuation pending in the shareholders’ equity reserve are shown in the income statement “Gain/loss deriving from disposal or repurchase of financial assets”. Gains and losses on equity instruments held at FVOCI are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established. Equity instruments designated at fair value through OCI are not subject to impairment assessment. Impairment: The Group adopts a forward-looking approach to estimate impairment losses on financial assets. An expected credit loss (“ECL”) is calculated based on the difference between the contractual cash flows due and the expected cash flows. The difference is discounted at the asset’s original effective interest rate and recognised as an allowance against the original value of the asset. n At the close of each financial period or interim position, financial assets measured at amortised cost are subject to impairment with the recognition of the expected credit losses (over a 12 month time frame or based on the financial instrument’s entire life, should the credit risk rise significantly in relation to the financial asset’s initial recognition – lifetime expected losses). They are classified under three categories (defined as stages) for impairment purposes, in ascending order according to the deterioration in credit quality. n The first category – (Stage 1) – includes financial instruments that have not undergone a significant increase in the credit risk since initial recognition. n The second category – (Stage 2) – includes financial instruments that have undergone a significant increase in credit risk, which is measured by taking into account the indicators set by the accounting standard and the relevance these have for the Company. n The third category – (Stage 3) – includes all impaired positions.

Expected credit losses over a 12-month time frame are recognised for financial instruments in the first category. For financial instruments in the other two categories, expected losses are determined over the course of the financial instrument’s entire life cycle (lifetime expected losses). n Financial assets at FVOCI – debt instruments held at FVOCI comprise high-quality government bonds that have a low credit risk and equity instruments. The Group’s policy is to calculate a 12-month ECL on these assets. If there is a significant increase in credit risk, then a lifetime ECL will be calculated. A significant increase in credit risk is considered to have occurred when contractual payments are more than 30 days past due. Equity instruments are not impaired. n Financial assets at FVPL – no ECL is calculated for assets held at FVPL as any exposure to credit risk would be reflected in the instrument’s fair value and recognised immediately in profit or loss. Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Cash and Cash Equivalents Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term highly liquid deposits with a maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group’s cash management. If these items are in Euro, they are recorded at the nominal value which equals the fair value, while if they are denominated in another currency, they will be recorded at the exchange rate current at the end of the period. Trade and Other Receivables Trade receivables are initially recognised at the amount of the consideration that is unconditionally due and subsequently at amortised cost, less any expected credit loss. The Group’s approach to calculating expected credit loss allowances is described in the financial instruments policy. Other receivables are initially recognised at fair value and subsequently at amortised cost, less any loss allowance as described above. Fees receivable are recognised when the Group has an unconditional right to consideration in exchange for goods or services transferred, but no fee invoice has been formally issued. Amounts are transferred to trade receivables when a formal invoice has been issued.

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2020 UNIVERSAL REGISTRATION DOCUMENT