TECHNICOLOR_REGISTRATION_DOCUMENT_2017

- 6 FINANCIAL STATEMENTS

Notes to the consolidated financial statements

Deferred tax assets are recorded: for all deductible temporary differences, to the extent that it is probable that future taxable income will be available against which these temporary ■ differences can be utilized, except when the related deferred tax asset results from the initial recognition of an asset or a liability in a transaction which is not a business combination and, at the trade date, affects neither the net income nor the taxable income or loss; and for the carry forward of unused tax losses and unused tax credits, to the extent that it is probable that future taxable income will be available ■ against which the unused tax losses and credits can be utilized. The recoverable amount of the deferred tax assets is reviewed at each balance sheet date and adjusted to take into account the level of taxable profit available to allow the benefit of part or all of the deferred tax assets to be utilized. Deferred tax assets and liabilities are valued using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred taxes are classified as non-current assets and liabilities. ACCOUNTING ESTIMATES AND JUDGMENTS Management judgment is required to determine the Group’s deferred tax assets and liabilities. When a specific subsidiary has a history of recent losses, future positive taxable income is assumed improbable, unless the asset recognition can be supported for reasons such as the losses having resulted from exceptional circumstances which are not expected to re-occur in the near future, and/or ■ the expectation of exceptional gains or ■ future income to be derived from long-term contracts. ■ The Group considered tax-planning in assessing whether deferred tax assets should be recognized. Change in net deferred taxes 6.2.1.

Deferred tax assets

Deferred tax liabilities Total, net deferred tax assets

(in million euros)

Year ended December 31, 2015

472 (46)

(247)

225 (15)

Changes impacting continuing profit or loss

31

Other movement

(3)

(1)

(4)

Year ended December 31, 2016

423

(217)

206

Changes impacting continuing profit or loss

(108) (40) 275

8

(100)

Other movement

16

(24)

YEAR ENDED DECEMBER 31, 2017

(193)

82

As of December 31, 2017, the net deferred tax assets of €82 million relates mainly to the recognition of losses carry forward in France and in the United States. Net deferred tax assets amounted to €206 million as of December 31, 2016. This decrease was primarily due to change in the projections of our Licensing activities from a fourteen-year to a five-year tax planning in France as a result of the announcement in December 2017 of the disposal of our Patent Licensing business (see note 1.1 Main events of the year).

Net deferred tax assets in the United States amounted to €50 million as of December 31, 2017, comparable to 2016 despite the change in the tax rate from 35% to 21% following the recent enacted U.S. tax reform. Although the application of the U.S. tax reform may be subject to interpretation, the Group anticipates to be mainly affected by the BEAT (Base Erosion and anti-Abuse Tax) on intercompany payments but does not expect significant impacts on its profitability.

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TECHNICOLOR

REGISTRATION DOCUMENT 2017