technicolor - 2018 Registration document

FINANCIAL STATEMENTS

NOTE 2 SCOPE OF CONSOLIDATION

RESEARCH & INNOVATION ACTIVITY On February 11, 2019, the Group announced being in exclusive negotiations with InterDigital for the divestiture of his Research & Innovation activity. This transaction would amend the contingent consideration to be received on the sale of the Patent Licensing business by reducing by 50% the future cash receipt and cancel the Research Cooperation Agreement as described above (see note 13 – Subsequent events).

In 2018 financial statements, the Research & Innovation activity is classified in the Discontinued Operations together with the Patent Licensing business, as the sale is considered highly probable according to IFRS 5. 2017 financial statements have been restated accordingly. Research & Innovation’s assets and liabilities, mainly the deferred income related to the future services to be rendered, have been transferred in Assets and Liabilities held for sale.

Change in the scope of consolidation 2017

2.3

GRI [102-10] [102-49]

a maximum earn-out of €26 million over the next 3 years subject to • the performance of the business. As of December 31, 2017, the earn-out was estimated to U.S.$10 million (€9 million at May 17, 2017 exchange rate). A purchase price allocation has been performed to identify tangible and intangible assets and liabilities. As a result, a customer relationship for €2 million with a useful life of 5 years was identified. Final goodwill of €13 million is primarily related to synergies that Technicolor anticipates following the integration of this business into the Connected Home segment.

LG SET-TOP BOX BUSINESS On May 17, 2017, Technicolor acquired from LG Electronics its set-top box business through an Asset Purchase Agreement. This acquisition is included into the Connected Home segment. The purchase price consisted of: an upfront payment of U.S.$15 million (€14 million at May 17, 2017 • exchange rate); a price adjustment for U.S.$3 million (€2 million at May 17, 2017 • exchange rate) to be refunded by LG Electronics in January 2018;

The purchase price allocation is as follows:

Fair Value

(in million euros converted at May 17, 2017 exchange rate)

Net asset acquired Property, plant and equipment

1

Intangible assets

2 5 8

Working Capital and other assets and liabilities

Total net asset acquired

Purchase price paid (before price adjustment)

14

Price adjustment

(2)

Earn-out payments’ estimates

9

6

TOTAL PURCHASE CONSIDERATION

21 13

Goodwill

In 2018, reassessment of earn-out liability led to a decrease of €5 million recognized in non-current result. No other significant acquisition occurred in 2017. Investments in associates & joint ventures 2.4 The Group has €2 million investments accounted for using the equity method or joint-ventures (see main entities in note 15).

The consolidated financial statements include transactions made by the Group with associates and joint ventures. These transactions are performed in normal market conditions. In 2018, and 2017, there is no significant transactions with the Group associates and joint ventures.

All investments are private companies; therefore, no quoted market prices are available for its shares. Neither associate nor joint venture is individually material to the Group.

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TECHNICOLOR REGISTRATION DOCUMENT 2018