technicolor - 2020 Universal Registration Document

6 FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 5 - Other operating information

2020

2019

(in million euros) Raw Materials Work in progress

63

83 10

4

Finished goods and purchase goods for resale

153

172

Gross Value

220 (25) 195

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.

2020

2019

(in million euros)

Trade accounts and notes receivable

445 (20) 425

531

Less: valuation allowance

(24) 507

TOTAL TRADE ACCOUNTS AND NOTES RECEIVABLE

As of December 31, 2020 and 2019 trade accounts receivable include past due amounts respectively for €79 million and €94 million for which a valuation allowance was recorded for an amount of €(20) million and €(24) million. The credit risk exposure on the Group’s trade receivables corresponds to the net book value of these assets €425 million as of December 31, 2020 compared to €507 million as of December 31, 2019.

5.1.4

OTHER CURRENT ASSETS & LIABILITIES

ESTIMATION OF ACCRUED ROYALTY INCOME In the normal course of its business, the Group may use certain technology protected by patents owned by third parties. In the majority of cases, the amount of royalties payable to these third parties for the use of this technology will be defined in a formal licensing contract. In some cases, and particularly in the early years of an emerging technology when the ownership of Intellectual Property rights may not yet be ascertained, management’s judgement is required to determine the probability of a third party asserting its rights and the likely cost of using the technology when such

assertion is probable. In making its evaluation, management considers past experience with comparable technology and/or with the particular technology owner. The royalties payable are presented within the captions “Other current liabilities” and “Other non-current DERECOGNITION OF ASSETS A receivable is derecognized when it is sold without recourse and when it is evidenced that the Group has transferred substantially all the significant risks and rewards of ownership of the receivable and has no more continuing involvement in the transferred asset. liabilities” in the Group’s balance sheet.

TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2020 230