technicolor - 2019 Universal registration document

FINANCIAL STATEMENTS OTHER OPERATING INFORMATION

5.1.2

INVENTORIES

ACCOUNTING ESTIMATES AND JUDGMENTS: The management takes into consideration all elements that could have an impact on the inventory valuation, as declining sales forecasts, expected reduction in selling prices, specific actions engaged as rework or incentive plans, and obsolescence of products or slow rotation.

Inventories are valued at acquisition or production cost. The production costs include the direct costs of raw materials, labor costs and a part of the overheads representative of the indirect production costs, and exclude general administrative costs. The cost of inventory sold is determined based on the weighted average method or the FIFO (first in – first out) method, depending on the nature of the inventory. When the net realizable value of inventories is lower than its carrying amount, the inventory is written down by the difference.

2019

2018

(in million euros) Raw Materials Work in progress

83 10

102

14

Finished goods and purchase goods for resale

172

175 291 (23) 268

Gross Value

265 (22) 243

Less: valuation allowance TOTAL INVENTORIES

5.1.3

TRADE ACCOUNTS RECEIVABLES

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.

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 IFRS 9 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.

6

2019

2018

million euros)

Trade accounts and notes receivable

531

703 (26) 677

Less: valuation allowance

(24) 507

TOTAL TRADE ACCOUNTS AND NOTES RECEIVABLE

As of December 31, 2019 and 2018 trade accounts receivable include past due amounts respectively for €94 million and €91 million for which a valuation allowance was recorded for an amount of €(23) million and €(22) million. The credit risk exposure on the Group’s trade receivables corresponds to the net book value of these assets €507 million as of December 31, 2019 compared to €677 million as of December 31, 2018.

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