technicolor - 2020 Universal Registration Document

FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 4 - Goodwill, intangible & tangible assets

Year ended December 31, 2020

2019

(in million euros)

Capital gains and losses Litigations and others

14

(17)

(6)

2

OTHER INCOME (EXPENSE)

8

(15)

Capital gains for the period ended December 31, 2020, include mainly: a final and definitive earn-out payment of $9 million (€8 million) derived from the negotiated termination of its strategic partnership with Deluxe; •

€5 million of gain on disposal of Thailand subsidiary, mainly derived from reclassification of conversion reserves. • In 2019, the other expenses mainly include a loss on a small business disposal from the Connected Home Business.

Goodwill, intangible & tangible assets

NOTE 4

Goodwill

4.1

Business combinations are accounted for using the acquisition method at the acquisition date, which is the date on which control is transferred to the Group. The Group measures goodwill at the acquisition date as: the fair value of the consideration transferred; plus • the recognized amount of any previously owned non-controlling • interests in the acquiree; plus if the business combination is achieved in stages, the fair value • of the pre-existing equity interest in the acquiree; less the net recognized amount (generally fair value) of the identifiable • assets acquired and liabilities assumed. Under option, for each business combination, any non-controlling interest in the acquiree is measured either at fair value (thus increasing the goodwill) or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Once

control is achieved, further acquisition of non-controlling interest or disposal of equity interest without losing control are accounted as equity transaction. Goodwill is recognized in the currency of the acquired subsidiary/associate and measured at cost less accumulated impairment losses and translated into euros at the rate effective at the end of the period. Goodwill is not amortized but is tested annually for impairment. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination, are expensed as incurred. Any contingent consideration payable is measured at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration are recognized in profit or loss, except if contingent consideration is classified in equity.

6

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TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2020