TECHNICOLOR_REGISTRATION_DOCUMENT_2017

- 6 FINANCIAL STATEMENTS

Notes to the consolidated financial statements

Trade accounts receivables 5.1.3. The trade receivables are part of the current financial assets. At the date of their initial recognition, they are measured at the fair value of the amount to be received. This generally represents their nominal value because the effect of discounting is generally immaterial between the recognition of the instrument and its realization. The Group assesses at each balance sheet date whether there is any objective evidence that a trade receivable is impaired. If any such evidence exists, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows.

2017 708 (24) 684

2016 826 (20) 806

(in million euros)

Trade accounts and notes receivable

Less: valuation allowance

TOTAL TRADE ACCOUNTS AND NOTES RECEIVABLE

Trade accounts receivable include €71 million and €79 million which are past due respectively as of December 31, 2017 and December 31, 2016 for which no valuation allowance was recorded as the amount is still considered recoverable. Other current assets & liabilities 5.1.4. ESTIMATION OF ACCRUED ROYALTY INCOME

The credit risk exposure on the Group’s trade receivables corresponds to the net book value of these assets (€684 million as of December 31, 2017 compared to €806 million as of December 31, 2016).

In the normal course of its business, the Group may use certain Technology protected by patents owned by third parties. In the majority of cases, the amount of royalties payable to these third parties for the use of this Technology will be defined in a formal Licensing contract. In some cases, and particularly in the early years of an emerging Technology when the ownership of Intellectual Property rights may not yet be ascertained, management’s judgement is required to determine the probability of a third party asserting its rights and the likely cost of using the Technology when such assertion is probable. In making its evaluation, management considers past experience with comparable Technology and/or with the particular Technology owner. The royalties payable are presented within the captions “Other current liabilities” and “Other non-current liabilities” in the Group’s balance sheet. DERECOGNITION OF ASSETS A receivable is derecognized when it is sold without recourse and when it is evidenced that the Group has transferred substantially all the significant risks and rewards of ownership of the receivable and has no more continuing involvement in the transferred asset.

2017

2016

(in million euros)

Value added tax receivable

33 18 37 23

26 24 48 18

Research tax credit and subsidies

Prepaid expenses

Accrued royalty income

Other

145

168

OTHER CURRENT OPERATIONAL ASSETS

256 (40) (49) (25) (220) (334)

284 (37) (71) (30) (366)

Taxes payable

Accrued royalties expense Payables for fixed assets

Other

OTHER CURRENT OPERATIONAL LIABILITIES

(504)

207

TECHNICOLOR

REGISTRATION DOCUMENT 2017