EURONEXT_Registration_Document_2017

5

OPERATING AND FINANCIAL REVIEW

Overview

Currency Risk The Group’s net assets are exposed to the foreign currency risk arising from the translation of assets and liabilities of subsidiaries with functional currencies other than the Euro. The following table summarises the assets and liabilities recorded in GBP functional currency and the related impact of a 10% in/decrease in the currency exchange rate on balance sheet:

2017

2016

In thousands

Assets

£17,975

£52,191

Liabilities

£(3,310)

£(6,007)

Net currency position

£14,665

£46,184

Absolute impact on equity of 10% in /decrease in the currency exchange rate

€1,650

€5,405

The following table summarises the assets and liabilities recorded in US$ functional currency and the related impact of a 10% in/decrease in the currency exchange rate on balance sheet:

2017

2016

In thousands

Assets

$182,147

$-

Liabilities

$(20,207)

$-

Net currency position

$161,940

$-

Absolute impact on equity of 10% in /decrease in the currency exchange rate

€13,470

€-

In addition, the Group is exposed to credit risk with its customers on trade receivables. Most customers of the Group are leading financial institutions that are highly rated.

Most operating revenue and expenses in the various subsidiaries of the Group are denominated in the functional currency of each relevant subsidiary. The Group’s consolidated income statement is exposed to foreign currency risk arising from receivables and payables denominated in currencies different from the functional currency of the related entity. Credit Risk The Group is exposed to credit risk in the event of a counterparty’s default. The Group’s exposure to credit risk primarily arises from the investment of cash equivalents and short termfinancial investments. The Group limits its exposure to credit risk by rigorously selecting the counterparties with which it executes agreements. Credit risk is monitored by using exposure limits depending on ratings assigned by rating agencies as well as the nature andmaturity of transactions. Investments of cash and cash equivalents in bank current accounts and money market instruments, such as short term fixed and floating rate interest deposits, are strictly restricted by rules aimed at reducing credit risk: maturity of deposits is lower than six months, counterparties’ credit ratings are permanently monitored and individual counterparty limits are reviewed on a regular basis. In addition to the intrinsic creditworthiness of counterparties, the Group’s policies also prescribe the diversification of counterparties (banks, financial institutions, funds) so as to avoid a concentration of risk. Derivatives are negotiated with leading high-grade banks. The Group granted two loans in the total amount of €6.0 million, recorded as non-current other receivable. The loans have a maturity of five years and bear interest rate of EURIBOR six months plus an average margin of 4.5%. The credit risk is closely monitored by analysing financial information.

5.1.14 SIGNIFICANT ACCOUNTING POLICIES Euronext Consolidated Financial Statements included in this Registration Document have been prepared and presented in accordance with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and adopted by the European Union. See also Note 3 of the Consolidated Financial Statements, on ‘Significant accounting policies and judgements’. 5.1.15 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. All assumptions, expectations and forecasts used as a basis for certain estimates within Euronext Financial Statements represent good faith assessments of its future performance for which Euronext management believes there is a reasonable basis. These estimates and assumptions represent Euronext’s view at the times they are made, and only then. They involve risks, uncertainties and other factors that could cause Euronext actual future results, performance and achievements to differ materially from those estimated or forecasted. The estimates and underlying assumptions are reviewed on an on-going basis.

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2017 REGISTRATION DOCUMENT