technicolor - 2019 Universal registration document

6 FINANCIAL STATEMENTS FINANCIAL ASSETS

Financial assets

NOTE 7

Financial assets include investments in subsidiaries that the Company intends to keep as well as other financial assets, such as loans. Investments are recorded at acquisition cost. When the value in use of such investments is less than their gross value, a valuation allowance is set up for the difference. Provision for current accounts and loans are made if the net financial position is negative. In

addition, a provision for risk is set aside for the surplus over the residual net negative balance. Investments in subsidiaries and associates held for the long-term are valuated, based on their value in use which is determined case by case based on the portion of equity represented by the shares, on re-evaluation of net assets or on recoverable value.

Variation of financial assets

7.1

Shares in subsidiaries

Other financial assets (1)

Total financial assets

(in million euros)

At December 31, 2018, Net

2,752 11,915 (9,163)

6

2,758 11,994 (9,236)

Cost

79

Accumulated depreciation

(73)

Acquisitions/recapitalizations (2)

158

-

230

Disposals (3)

(303) (612)

(72)

(447) (612)

Depreciation (4)

-

Reversals of depreciation provisions (5) AT DECEMBER 31, 2019, NET

153

68

221

2,148 11,770

2 7

2,150 11,777

Cost

Accumulated depreciation

(9,622)

(5)

(9,627)

In 2019, includes, net of depreciation, €2 million of cash collateral. (1) Corresponds mainly to the recapitalization of Technicolor Delivery Technologies SAS (€150 million) and Mikros Image SAS (€7 million). (2) Corresponds mainly to the impact of Gallo 8 SAS capital reduction (€151 million), to the liquidation of Thomson Television España S.A.U. (€128 million) regarding (3) Shares in subsidiaries and mainly to the sale of treasury shares regarding Other financial assets. In 2019, depreciation on shares in subsidiaries concerns mainly the subsidiaries Gallo 8 SAS (€390 million), Technicolor USA Inc. (€113 million), Technicolor Delivery (4) Technologies SAS (€37 million), Sofia SA (€25 million), Thomson Licensing SAS (€22 million) and Mikros Image SAS (€14 million). In 2019, reversal of depreciation on shares in subsidaries concerns mainly Thomson Television España S.A.U. (€128 million) and the reversal of depreciation of other financial (5) assets relates mainly to Technicolor treasury shares (€56 million).

The value in use of each of the securities is intrinsically linked to the cash flow forecasts set by the management, for each of the operational activities, controlled by the Group. The value in use of Thomson Licensing SAS was determined on the estimated fair value (future discounted cash flow increased of the cash available). This recoverable value takes into account notably the earnout

related to the sale of Patent Licensing business, dated July 2018. The depreciation of the shares equals to €22 million. A 10% decrease of the earnout would generate additional depreciation of €8 million. In relation with the shares in subsidiaries, depreciation on current accounts and loans to subsidiaries amounts to €7 million (see note 12.1).

Maturities of receivables included in other financial assets

7.2

(in million euros) 2020 2021 and later

2

-

GROSS VALUE

2

-

Depreciation NET VALUE

2

TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2019 276