TECHNICOLOR_REGISTRATION_DOCUMENT_2017

- 6 FINANCIAL STATEMENTS Notes to the Parent Company Financial Statements

PROVISION & CONTINGENCIES NOTE 11. Detail of provision 11.1. PROVISIONS

Provisions are recorded at the balance sheet date when the Company has an obligation as a result of a past event and when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. The obligation may be legal, regulatory or contractual or it may represent a constructive obligation deriving from the Company’s actions where, by an established pattern of past practice, published policies or a sufficiently specific current statement, the Company has indicated to other parties that it will accept certain responsibilities, and as a result, has created a valid expectation on the part of those other parties that it will discharge those responsibilities. The recorded provision represents the best estimate of the expenditure required to settle the obligation at the closing date. If a reliable estimate cannot be made of the amount of the obligation, no provision is recorded but details of the obligation are disclosed in the notes to the financial statements. RESTRUCTURING PROVISIONS Provisions for restructuring costs are recognized when the Company has a constructive obligation towards third parties, which results from a decision made by the Company before the closing date and supported by the following items: the existence of a detailed and finalized plan identifying the sites concerned, the location, the role and the approximate number of headcounts ■ concerned, the nature of the expenses that are to be incurred and the effective date of the plan; and the announcement of this plan to those affected by it. ■ The restructuring provision only includes the costs directly linked to the plan. Restructuring costs encompass estimated shut-down costs, the impact of shorter useful life for property and equipment and the costs linked to employees’ lay-off. POST-EMPLOYMENT OBLIGATIONS The costs for employee pensions retirement at Technicolor are accounted for progressively as employees acquire their rights to benefits. The valuation method applied takes into account future changes in payroll obligations. Post-employment benefits are accounted for when rights to benefits are acquired and payment thereof becomes probable. Such payments and provisions are based on the estimated salaries and seniorities of employees at their date of departure. Actuarial assumptions are as follows: discount rate: 1.6%; ■ projected long-term inflation rate: 2%; ■ salary rate of increase: 3.5%. ■ The Company records its commitments for jubilee awards (médailles du travail), in compliance with the ANC Recommendation n° 2013-02 issued on November 7, 2013. These charges are recognized separately from retirement provisions and actuarial differences are booked immediately in the statement of operations.

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TECHNICOLOR

REGISTRATION DOCUMENT 2017