technicolor - 2018 Registration document

6 FINANCIAL STATEMENTS

NOTE 5 OTHER OPERATING INFORMATION

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. Further to IFRS9 implementation, the loss allowances on trade receivables are determined from expected credit losses. The Group chose the simplified approach which allows the recognition of an

allowance based on the lifetime expected credit losses at each reporting date. The expected credit losses are determined from the trade date the following way: application to non-major customer segments of each division of a • matrix determined on the Group’s historical credit loss experience. specific follow-up of the credit risk for major customers based on • their credit rating.

2018

2017

(in million euros)

Trade accounts and notes receivable

703 (26) 677

708 (24) 684

Less: valuation allowance

TOTAL TRADE ACCOUNTS AND NOTES RECEIVABLE

The credit risk exposure on the Group’s trade receivables corresponds to the net book value of these assets (€677 million as of December 31, 2018 compared to €684 million as of December 31, 2017).

Trade accounts receivable include €68 million and €71 million which are past due respectively as of December 31, 2018 and December 31, 2017 for which no valuation allowance was recorded as the amount is still considered recoverable.

5.1.4

OTHER CURRENT ASSETS & LIABILITIES

ESTIMATION OF ACCRUED ROYALTY INCOME 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.

2018

2017

(in million euros)

Value added tax receivable

46

33 18 37

Research tax credit and subsidies

1

Prepaid expenses

40 177

Other

145 233 (40) (49) (25) (158) (271)

OTHER CURRENT OPERATING ASSETS

264 (44) (42) (47) (177) (310)

Taxes payable

Accrued royalties expense Payables for fixed assets

Other

OTHER CURRENT OPERATING LIABILITIES

204

TECHNICOLOR REGISTRATION DOCUMENT 2018