Euronext - 2020 Universal Registration Document

GLOSSARY, CONCORDANCE TABLES & ANNEX

Share-Based payments The employee payments based on shares, granted by the parent company London Stock Exchange Plc are counted by recording cost in the income statement for the portion of the share allocation plan, determined at fair value, on the allocation date, and considering terms and conditions to which ones these instruments have been given. In order to comply with LSE Group policies, starting from 1 January 2016 the debit has been included in current liabilities (until 31 December 2015 the debt was included in the shareholders equity as dedicated reserve). In addition to the cost of the share allocation plan, the Income Statement records the portions of severance indemnity that the company will have to settle or recognise at the end of the accrual period, recording a corresponding increase in the related liabilities. The employment benefit expense recognised in profit or loss is determined by the fair value of the options granted or shares awarded at the date of grant and recognised over the relevant vesting period. Revenues The main source of the Group’s revenue is through fees for services provided. Revenue is measured based on the consideration specified in a contract with a customer. Amounts deducted from revenue relate to discounts, revenue share arrangements whereby as part of an operating agreement amounts are due back to the customer and pass-through costs where the Group has arrangements to recover specific costs from its customers with no mark up. The Group recognises revenue as services are performed and as it satisfies its obligations to provide a product or service to a customer. Further details of the Group’s revenue accounting policy are set out below: Capital Markets Revenues in the Capital Markets segment are generated from Primary and Secondary market services. Primary market initial admission and the ongoing listing services represent one performance obligation and the Group recognises revenue from initial admissions and further issues over the period the Group provides the listing services. All admission fees are billed to the customer at the time of admission to trading and become payable when invoiced. Primary market annual fees, secondary markets membership and subscription fees are generally paid in advance on the first day of the membership or subscription period. The Group recognises revenue on a straight-line basis over the period to which the fee relates, as this reflects the extent of the Group’s progress towards completion of the performance obligation under the contract. Revenue from secondary market trading and associated capital market services is recognised as revenue on a per transaction basis at the point that the service is provided.

Where there is no longer any expectation of recovery of a receivable the full amount is written off. The Group will continue to seek recovery and any subsequent amounts recovered against amounts previously written off are recognised in profit or loss. Contract Liabilities Revenue relating to future periods is classified as a contract liability on the balance sheet to reflect the Group’s obligation to transfer goods or services to a customer for which it has received consideration, or an amount of consideration is due, from the customer. Contract liabilities are amortised and recognised as revenue over the period the services are rendered. Provisions for Risks and Charges A provision is recognised where there is a present obligation, whether legal or constructive, as a result of a past event for which it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the present value of the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, i.e. the present value of the amount that the Group would rationally pay to settle the obligation at the balance sheet date or to transfer it to a third party. All provisions are discounted where the time value of money is considered material. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance expense. Employees Benefits Pursuant to Article 2120 of the Civil Code, benefits provided after the end of employment including severance indemnity owed to employees, are recognized in the Financial Statements as their actuarial value. Following the entry into force of the 2007 Finance Act and related decrees, the severance indemnity (TFR), maturing 1 January 2007 can no longer be retained by the companies that employ more than 50 employees but must be paid to a pension fund or, alternatively, into an open treasury fund opened at INPS, according to the option exercised by the employees themselves. This implies that accruals calculated after 1 January 2007 are part of a defined contribution plan because the Company’s obligation is satisfied by the payment of contributions to pension funds or INPS. The liability regarding the severance indemnity prior to the date mentioned above shall instead continue to represent a defined benefit plan to be valued applying the actuarial method based on the provisions set forth in IAS 19. Liabilities are posted in the Financial Statements at their current value determined by an independent accountant based on the actuarial theories using the so-called “projected unit credit method.” Actuarial gains/losses arising from the valuation of obligation are recognized in the statement of comprehensive income with their fiscal effects.

G

333

2020 UNIVERSAL REGISTRATION DOCUMENT