technicolor - 2020 Universal Registration Document

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

ACCOUNTING ESTIMATES AND JUDGMENTS The Group reviews annually goodwill and other indefinite-lived intangible assets for impairment in accordance with the accounting policy. Technicolor’s management believes its policies related to such annual impairment testing are critical accounting policies the recoverable involving critical accounting estimates because determining amount of GRU requires (i) determining the appropriate discount rate to be used to discount future expected cash flows of the cash-generating unit and (ii) estimating the value of the Operating Cash Flows including their terminal value, the growth rate of the revenues generated by the assets tested for impairment, the operating margin rates of underlying assets for related future periods and the royalty rates for trademarks. In addition to the annual review for impairment, Technicolor evaluates at each reporting date certain indicators that would result, if applicable, in the calculation of an additional impairment test in accordance with the Group accounting policy. Management believes the updated assumptions used concerning sales growth, terminal values and royalty rates are reasonable and in line with updated market data available for each GRU.

Value in use is the present value of the future cash flow expected to be derived from an asset or CGU/GRU. For determining the recoverable value, the Group uses estimates of future pre-tax discounted cash flows generated by the asset including a terminal value when appropriate. These flows are consistent with the most recent budgets approved by the Board of Directors of the Group. Estimated cash flows are discounted using pre-tax long-term market rates, reflecting the time value of money and the specific risks of the assets. For the purpose of the impairment test in 2019, lease expenses have been included in the estimates of future cash flows while right-of-use assets have been excluded from the asset tested. An impairment loss corresponds to the difference between the carrying amount of the asset (or group of assets) and its recoverable amount and is recognized in “Net impairment losses on non-current operating assets” for continuing operations unless the impairment is part of restructuring plans, or related to discontinued operations in which case it is recognized in “Restructuring expenses”. In accordance with IAS 36, impairment of goodwill cannot be reversed.

Production Services

Connected Home

DVD Services

Discontinued operations

Total

(in million euros)

2020 Impairment loss on goodwill

-

-

(66)

-

(66)

Impairment losses on intangible assets Impairment losses on tangible assets

(3) (9)

(1) (2) (3)

-

(1) (2) (3)

(5)

(7)

(20) (91)

Impairment losses on non-current operating assets

(12)

(73)

Impairment reversal on intangible assets

-

-

-

-

-

NET IMPAIRMENT LOSSES ON NON-CURRENT OPERATING ASSETS

(12)

(3)

(73)

(3)

(91)

2019 Impairment loss on goodwill

-

- - - - -

(53)

-

(53)

6

Impairment losses on intangible assets Impairment losses on tangible assets

(1)

(3) (3)

(1)

(4) (4)

-

-

Impairment losses on non-current operating assets

(1)

(59)

(1)

(61)

Impairment reversal on intangible assets

-

-

-

-

NET IMPAIRMENT LOSSES ON NON-CURRENT OPERATING ASSETS

(1)

-

(59)

(1)

(61)

TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2020 227