technicolor - 2018 Registration document

6 FINANCIAL STATEMENTS

NOTE 8 FINANCIAL ASSETS, FINANCING LIABILITIES & DERIVATIVE FINANCIAL INSTRUMENTS

Financial assets, financing liabilities & derivative financial

NOTE 8

instruments

Classification & measurement

8.1

Financial assets at fair value through profit or loss This category is used when the financial asset is not recognized at amortized cost. For these financial assets carried at fair value, changes in value are recognized in the income statement under “Other net financial income (expense)”. A financial asset is derecognized when the contractual rights to the cash flows associated with it expire or have been transferred, and substantially all the risks and rewards of ownership of the asset. FINANCIAL LIABILITIES (EXCLUDING DERIVATIVES) Borrowings are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method. Any difference between (i) net proceeds of transaction costs and (ii) redemption value is recognized in financial income over the life of the borrowings using the effective interest rate method. Borrowings are presented as current liabilities, unless the Group has an unconditional right to defer repayment of the liability beyond a period of 12 months after the balance sheet date, in which case they are presented as non-current liabilities. DERIVATIVES Derivatives are recorded at fair value. Changes in value are recognized in the income statement and/or in equity within other comprehensive income, in accordance with the principles set out in note 8.6.

FINANCIAL ASSETS (EXCLUDING DERIVATIVES)

Management determines the classification of its financial assets at initial recognition in the light of the Group’s business model for the management of financial assets, as well as the characteristics of the asset’s contractual cash flows. Financial assets at amortized cost This category is used for a financial asset when the objective is to receive its contractual cash flows, corresponding only to repayments of principal and, where applicable, interest on principal. These assets are initially recognized at fair value less any transaction costs. They are then recognized at amortized cost using the effective interest rate method. Where applicable, an impairment loss is recognized for the amount of expected credit losses at 12 months, unless the credit risk has increased significantly since initial recognition, in which case the impairment is calculated for the amount of expected credit losses over the life of the asset. For trade receivables and assets on trade contracts, the Group applies a simplified impairment method (see note 5.1.3.)

In accordance with IFRS 13 – Fair Value measurement, 3 levels of fair value measurement have been identified for financial assets & liabilities: Level 1: quoted prices in active markets for identical assets or liabilities • that the entity can access at the measurement date. Level 2: internal models with observable parameters including the use • of recent arm’s length transactions (when available), reference to

other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

Level 3: internal models with non-observable parameters. •

212

TECHNICOLOR REGISTRATION DOCUMENT 2018