Euronext - 2020 Universal Registration Document

GLOSSARY, CONCORDANCE TABLES & ANNEX

NOTE 3

SIGNIFICANT ESTIMATES AND JUDGEMENTS, RISK MANAGEMENT AND COVID

Lease terms – The Group uses its judgement when assessing the lease term of property assets where options exist to either extend or curtail the lease term. The Group takes into account the location and likely use of the property when making its judgement (Note 21 “Lease liabilities”).

Judgements and estimates are regularly evaluated based on historical experience, current circumstances and expectations of future events. A number of areas have been impacted by Covid-19 when exercising judgements and estimates and these are identified below. Estimates For the year ended 31 st December 2020, the following areas require the use of estimates: Impairment of goodwill and intangible assets. Goodwill and intangible assets form a significant part of the balance sheet and are key assets for the Group’s businesses. The recoverable amounts of relevant cash generating units are based on value in use calculations using management’s best estimate of future performance and estimates of the return required by investors to determine an appropriate discount rate. The Group has reviewed the impact of Covid-19 on future cash flows along with the impact on the weighted average cost of capital applied to each cash generating unit and long- term growth rates. Following this review there was no direct impact to any cash generating units for Covid-19. Details are provided in Note 13 “Intangible Assets – Goodwill”. Defined benefit pension asset or liability. Defined benefit pension asset or liability are determined based on the present value of future pension obligations using assumptions determined by the Group with advice from an independent qualified actuary. Estimated service period for admission and listing services within the Primary Markets business. The Group determines the estimated period for admission services using historical analysis of listing durations in respect of the companies on our markets. The estimated service period inherently incorporates an element of uncertainty in relation to the length of a customer listing which is subject to factors outside of the Group’s control. The estimated service periods are reassessed at each reporting date to ensure the period reflects the Group’s best estimates Expected credit losses – the Group has factored into impairment reviews of financial assets the expectations of future events including Covid-19. The measured lifetime expected credit losses associated with these assets have not beenmaterially impacted. The Group continues to monitor events and review whether additional provisions will be required in future periods. Judgements In preparing the consolidated financial statements for the year ended 31 st December 2020, the following judgement has been made: Clearing member trading assets and trading liabilities – The Group uses its judgement to carry out the offsetting within clearing member balances. The carrying values of the balances are offset at what the Group considers an appropriate level to arrive at the net balances reported in the balance sheet. The Group has an aligned approach for its CCP subsidiaries to ensure the principles applied are consistent across similar assets and liabilities. The approach is reviewed on a timely basis to ensure the approach used is the most appropriate. Details of amounts offset are provided in Note 18 “Offsetting”. 3.1 3.2

3.3

Financial Risk Management Exchange Rate Risks

The Group is not exposed to significant exchange rate risks because its operations in currencies other than the euro are marginal.

Interest Rate Risks The Group is not exposed to significant interest rate risks. The borrowing in place is a long loan agreement with London Stock Exchange Group Holdings (Italy) Ltd, in force from 1 st April 2018 to 31 st March 2023 at the fixed interest rate of 1.40% per annum . There are not funding in place with third parties. Credit Risk Credit risk is the exposure of a company to potential losses arising from the non-compliance with the obligations taken on by the counterparties. Solvency risks are low as Group clients are mainly highly rated financial institutions. The Group does not show a significant concentration of the credit risk since its exposure is spread over several counterparties. Liquidity Risk Liquidity risk is the risk of being unable to satisfy the Group’s obligations, current or future, due to the lack of available funds. The Group is not exposed to significant liquidity risks. COVID The impact of the events of 2020, most noticeably the Covid-19 pandemic, acted as a catalyst for the change we are already witnessing across the financial services industry. Group continue to invest in the technologies, cyber security and process capabilities that underpin our product offerings and support our customers through volatile market conditions, ensuring our platforms are capable of managing the demands for service and connectivity across the financial system. Technology enhancements have been accelerated by the impact of Covid-19 which has propagated the widespread adoption of digital communication channels and information sharing tools. The Covid-19 pandemic has presented many challenges throughout 2020 and required a coordinated response across all businesses to ensure continuity of operations whilst maintaining the wellbeing of all colleagues. Since the beginning of the pandemic Covid-19, the group has adopted a safety protocol aimed at protecting its employees through the use of structural Smart Working which lasted throughout 2020 and is still in place. Remote working has put additional pressure on technology resources and colleagues as they learn to adapt to new working practices. 3.4

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2020 UNIVERSAL REGISTRATION DOCUMENT