| 6. FINANCIAL
STATEMENTS |
6.3. NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
6.3.2. Notes to the consolidated balance
sheet
6.3.2.1. Property and equipment
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6.3.2.2. Intangible assets
Due to the sale of the Group’s clearing activities in 2003, the goodwill
related to these activities is disposed of.
The remaining goodwill included in intangible assets can be detailed
as follows:
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6.3.2.3. Investments in associates/joint ventures
Reported under 'acquisitions and capital contributions' is the acquisition
of a 32.5% participation in the ordinary share capital of LCH.Clearnet
Group Ltd. These ordinary shares have been received in exchange for
the Group's shares in BCC/Clearnet and London Clearing House on 22nd
December 2003. The subsequent disposal of 7.6% of ordinary shares
is included under "disposals". The remaining 24.9% investment in LCH.Clearnet
Group Ltd (see table below) fully reflects the amount of goodwill
paid. This goodwill will be amortised over its estimated useful life
of 20 years.
An unrealised gain of €65.3 million is netted on the ordinary shares
of LCH.Clearnet since it is related to an inter-company transaction.
On 24th July, 2003 the Group increased its interest in NQLX LLC from
50% to100%. From that date the net assets of NQLX LLC are fully consolidated
(see details below). Prior to that date, the Group's investment was
stated at net equity value.
The effect of this is reported in the line "Transfer to investments
in Group companies".
Other movements in the reporting period mainly consist of effects
of currency exchange rate differences. The composition of this caption
is as follows:
Interests in joint ventures
AtosEuronext SBF
The Group holds a 50% interest in AtosEuronext SBF.
The following summary of the asset, liabilities, revenues and expenses
is based on the consolidated accounts of AtosEuronext SBF for the
year ended 31st December 2003. To determine the Group’s share in accordance
with its accounting principles, certain restatements were made to
the net assets of AtosEuronext SBF.
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6.3.2.4. Other investments (non-current)
LCH.Clearnet Group Ltd (RCPS)
In addition to the ordinary shares received in LCH.Clearnet Group
Ltd (see note 6.3.2.3), the
Group received 16.6% of Redeemable Convertible Preference Shares (RCPS)
in LCH.Clearnet Group Ltd.
The intention is that these shares are redeemed or converted into
ordinary shares and sold in coming years. Since they do not carry
any voting power, the RCPS are regarded by their substance as available-for-sale
securities.
The RCPS bear a dividend of the higher of six-month Euro LIBOR plus
125 basis points and the dividends actually paid on ordinary shares.
An unrealised gain of €43.5 million is included in the other payables
as a deferred gain since this gain relates to an intercompany transaction.
Sicovam Holding S.A.
The Group has a 9.60% interest in Sicovam Holding S.A., this company
mainly holds a 13.1% interest in Euroclear plc.
Euroclear plc
Represents a direct interest of 2.35% in Euroclear plc, following
the sale of 20% of BCC/Clearnet, Necigef B.V. and Niec B.V. to Euroclear
plc in 2002.
This investment is an available-for-sale financial instrument that
has been adjusted for impairment, as further disclosed in note 6.3.1.11.
London Clearing House
17.7% of the outstanding shares of the London Clearing House (LCH)
were contributed into LCH.Clearnet Group Ltd during the reporting
period. |
6.3.2.5. Other receivables (non-current)
On 1st July 2003 a subordinated loan agreement of €60 million has
been signed with BCC/Clearnet (now LCH.Clearnet S.A.) which was drawn
on 18th December 2003. The Group receives interest based on EONIA
plus 2.5%. The loan is expected to be reimbursed in the coming months.
The €21.4 million drawn under the GBP 18 million loan facility to
CBOT are repayable in three yearly instalments and are collateralised
by a GBP 15 million bank guarantee. An upfront interest of 10.91%
equivalent to approximately 6.0% per annum has been received.
The receivable on AtosEuronext SBF in the comparative period relates
largely to the sale of IT connections in 2001.
The remaining amount to be received as at 31st December 2003 of €5
million is reported as "current receivable" and will be received in
2004. |
6.3.2.6. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable to
the following items:
The majority of deferred tax assets and liabilities have an expected
term longer than 5 years. |
6.3.2.7. Investments (current)
The equity securities mainly include an investment in ATOS Origin
S.A. (0.74% of its outstanding shares). The carrying amount of this
investment increased by €8.9 million following adjustment of revaluation
to reflect higher market value of shares at year-end 2003. Lower market
value at year-end 2002 had led to a €15.7 million negative revaluation
of the investment.
Other investments include short-term time deposits with a term over
3 months which are not readily convertible to cash or which are not
subject to an insignificant risk of changes in value.
Money market funds and other short-term interest and investments to
an amount of €14.0 million have been transferred to the caption “Cash
and cash equivalents”. |
6.3.2.8. Receivables re clearing activities
Due to the sale of the Group’s share in BCC/Clearnet, the receivables
re clearing activities were de-consolidated in 2003. |
6.3.2.9. Other receivables
The non-trade receivables contain a loan to AtosEuronext SBF of €5
million, with an interest rate based on 6 months Euribor plus 25 basis
points and is due in 2004. |
6.3.2.10. Cash and cash equivalents
As per 22nd December 2003 the clearing activities were sold to LCH.Clearnet
Group Ltd. The current investments with respect to the clearing activities
are deconsolidated from that moment.
Short-term interest investments, including deposits booked in the
caption "Investments (current)", have an average maturity of one month.
Investments in euros have an average effective interest rate of 2.06%
(31st December 2002: effective interest rate 3.10%) and investments
in pounds sterling have an average effective interest rate of 3.65%
(31st December 2002: effective interest rate 4.04%). |
6.3.2.11. Capital and reserves
The line “Realised currency exchange rate difference” consist of a
release of €12.9 million due to the disposal of assets with the sale
of BCC/Clearnet and London Clearing House in 2003.
Issued capital
Movements in shares issued were as follows:
The authorised share capital of Euronext N.V. amounts to €200,000,000
representing 200,000,000 ordinary shares with a par value of €1 per
share. On 28th January 2002 Euronext N.V. and Bolsa de Valores de
Lisboa e Porto (BVLP) merged. With this merger Euronext issued 4,838,822
shares at €20.63.
In 2002, 1,140,750 new shares were issued to the Stichting Option
Plan SBF which are regarded as own shares in the consolidated accounts.
Share premium
The share premium at the end of the period reflects the difference
between the value attributed to the shares received from SBF, BXS
and AEX and the nominal value of the shares issued by Euronext N.V..
It also reflects the difference between the market price of the Euronext
shares at acquisition date of the BVLP shares (€20.63) and the nominal
value of these Euronext shares, totalling to €95 million.
Currency exchange differences
The assets and liabilities of foreign (non euro) operations, including
the goodwill paid, are translated to euro at foreign exchange rates
according to the Euronext's accounting principles, resulting in negative
currency exchange differences of €58.8 million.
Reserve own shares
The movement in the reserve of €0.5 million during the reporting period
relates to the transactions in Euronext N.V. shares conducted by the
liquidity provider on behalf of the Group under the Share Buy Back
Program. This Program was approved at the General Meeting on 22nd
May 2003 and launched by the Managing Board on 16th October 2003.
The Program's main intention is the stabilisation of the share price.
As at 31st December 2003 Euronext holds 138,461 shares under the Program
with a cost of €1.8 million (2002: 104,379 shares).
The details as stipulated in article 378 BW2 of the Dutch Law regarding
transactions in own shares are included in note 12: transactions in
own shares.
Additionally, as at 31st December 2003 the reserve for own shares
comprises 1,454,241 shares (2002:1,454,241) held by Euronext N.V.'s
subsidiaries. 1,117,871 shares are held by the Stichting Option Plan
SBF, a consolidated entity, as at balance sheet date (2002: 1,140,750).
The movement schedule for the reporting year is as follows:
Dividends
In relation to 2003 financial year the Managing Board and the Supervisory
Board have recommended a dividend of €0,50 per qualifying ordinary
share (in total €60 million), to be distributed in 2004. Since this
proposal has not been approved prior to year-end it has not been provided
for in the balance sheet.
The dividends in relation to the past years were as follows:
Earnings per share
Basic earnings per share
The calculation of basic earnings per share is based on the net profit
attributable to ordinary shareholders and a weighted average number
of ordinary shares outstanding during the period, calculated as follows:
Net profit attributable to ordinary shareholders
Weighted average number of ordinary shares (diluted)
(*)Number of options based on Euronext N.V.
shares: 7.02 Euronext N.V. shares for I SBF share.
In the reporting year no options expired and none were granted.
SBF stock option scheme
The SBF option scheme was adopted by the Board of Directors of SBF
(the former name of Euronext Paris S.A.) on 30th May 2000.
Each option is exercisable for one share of Euronext Paris S.A.
The exercise price of each option is €39.47 (7.02 times €5.62) for
one share of Euronext Paris S.A. All options were granted in 2000
and may be exercised after 27th June 2002 insofar as the entitled
employee is still employed by the Group or in case the holder of the
options is no longer employed by the Group under certain conditions.
The options expire on 27th June 2007. It is stipulated that after
exercising of the options, the shares in Euronext Paris S.A. that
will be acquired by the option holders are converted into shares of
Euronext N.V.. Each share of Euronext Paris S.A. will be converted
to 7.02 shares Euronext N.V.. As at 31st December 2003 this results
in 1,090,690 options on shares of Euronext N.V. and an exercise price
of €5.62 for a share of Euronext N.V..
Euronext Paris S.A. held at 31st December 2003 174,234 (31st December
2002: 177,494) of its own shares, being 2% (31st December 2002: 2.1%)
of the total issued shares of Euronext Paris S.A. of 8,549,256 at
a cost of €5,707,000. These shares are held for the completion of
the SBF option scheme.
As at 31st December 2003 the total number of Euronext N.V. shares
that would be required in connection with this option plan, if all
options are exercised, is 1,090,690. The Stichting option plan SBF
has been granted 1,140,750 Euronext N.V. shares.
The Stichting option plan SBF takes care of the transfer of the exercised
options in SBF shares to shares of Euronext N.V..
Euronext stock option scheme 2001
As at 13rd March 2001, the Managing Board of Euronext N.V. decided
to put in place, prior to the first day the shares of Euronext N.V.
were listed, a stock option plan for the employees of Euronext Amsterdam
N.V. and Euronext Brussels S.A. and their subsidiaries in the Netherlands
and Belgium, and the employees of BCC/Clearnet working in the Netherlands
and Belgium. The stock options allowed to employees of BCC/Clearnet
have continued also after the sale of that entity.
The Euronext Employees stock option plan 2001 was adopted by the Managing
Board of Euronext N.V. on 13rd March 2001 and reviewed and approved
by the Supervisory Board in meetings held on 13rd March and 19th April
2001. The Euronext Employees stock option plan 2001 is directly related
to the initial public offering and listing of the Euronext shares
on 5th July 2001. Each option granted by Euronext N.V. entitles the
option holder to purchase one Euronext share at the exercise price
of €24 for employees of Euronext Brussels S.A. and for certain management
employees and Directors of Euronext Amsterdam N.V., or €21.60 for
other employees of Euronext Amsterdam N.V.. The options can be exercised
between 5th July 2004 and 5th July 2011 if the entitled employee is
still employed by the Group or in case the holder of the options is
no longer employed by the Group under certain conditions.
Treasury shares will be used as the options are exercised.
Euronext stock option scheme 2002
The Euronext Employees stock option plan 2002 was adopted by the Managing
Board of Euronext N.V. on 5th June 2002 and reviewed and approved
by the Supervisory Board on 20th June 2002. Each option granted by
Euronext N.V. pursuant to the plan entitles the option holder to purchase
one Euronext share held by Euronext N.V. itself at the exercise price
of €21.08. The options can be exercised between 16th September 2005
and 16th September 2009 if the entitled employee is still employed
by the Group or in case the holder of the options is no longer employed
by the Group under certain conditions. The number of outstanding options
as at 31st December 2003 is 561,972.
Treasury shares will be used when options are exercised. |
6.3.2.12. Minority interests
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6.3.2.13. Interest-bearing loans and borrowings
In November 2001, Euronext (UK) plc entered into a credit facility
agreement for an amount of €409 million (£250 million) to partly finance
the acquisition of LIFFE (holdings) plc.
At 31st December 2003, the remaining balance of this loan becoming
due and repayable on 12nd November 2004 was booked in the current
loans and borrowings for an amount of €213 million (£150 million).
No guarantees were provided for this loan.
On 12nd February 2004, the Group fully repaid this outstanding £150
million banking loan following the issue of a £250 million fixed-rate
bond maturing on 16th June 2009 (see also note
6.3.9).
In addition to the bank financing of the acquisition of LIFFE, Variable
Rate Guaranteed Unsecured Loan Notes due 2007 were issued. These loan
notes (for an amount of €8.4 million [£5.9 million]) are redeemable
at holders' request, but by 2007 at the latest, and are presented
in the current loans and borrowings at 31st December 2003. No guarantees
were provided for this loan. |
6.3.2.14. Employee benefits provisions
Liability for defined benefit obligations
The Group contributes to defined benefit and defined contribution
plans. In some of the locations, especially the Netherlands, the obligations
are funded via pension funds of the Group. Normal retirement ages
vary from 60 to 65 years. In 2002 and 2001, in some countries, the
Group introduced early retirement plans for employees, meeting certain
conditions for the total employment term.
Movements in the net liability recognised in the balance sheet
Expense recognised in the income statement
Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages):
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6.3.2.15. Other provisions
The other provisions can be specified as follows:
The provision for the revenue guarantee issued on the occasion of
the sale of BCC/Clearnet has been created as a charge against the
gain on this transaction and relates to revenues for the years 2004
and 2005 (see also note 6.3.6.5). |
6.3.2.16. Clearing deposits
Clearing deposits related to margins deposited by clearing members
with the clearing houses of Euronext N.V.. The Group paid a floating
interest rate on these amounts. The amounts received were partially
invested in short-term interest investments and partially placed on
deposits with banks.
Due to the sale of the Group’s share in BCC/Clearnet the clearing
deposits were deconsolidated in 2003. |
6.3.2.17. Other payables
An amount of €43.5 million of deferred gain on sale of associates/joint
ventures is reported as non-trade payables in relation with the sale
of the Group’s share in BCC/Clearnet and London Clearing House (see
also note 6.3.2.3: “Investments
in associates/joint ventures”). |
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