technicolor - 2018 Registration document

FINANCIAL STATEMENTS

NOTE 2 REVENUE

1.2.3

ACCOUNTING FOR FOREIGN CURRENCIES TRANSACTIONS

Impacts of translation of foreign currency transactions Foreign currency transactions are translated into euros at the exchange rate effective on the trade date. Receivables and payables in foreign currency are revalued at closing rate. The differences arising on the translation compared to the historical rate are recorded as translation adjustments in the balance sheet (a provision for exchange risk is recognized when unfavorable translation differences occur on receivables or debt). Realized gains and losses on foreign exchange transactions are booked under “Other net financial gain (losses)”. Corporate Treasury manages its foreign currency exposure globally and does not take foreign exchange risk on its financial debt and loans in foreign currencies. Accordingly, the Term Loan Debt in foreign currency of the holding is only used to grant loans and current accounts in the foreign currency of the foreign affiliates and finally the global exchange result is totally symmetrical and neutral in the income statement. Forward foreign currency contracts (set up between subsidiaries and the Group Treasury Department to cover their trade exposures) as well as external transactions with banks are accounted for by the Group Treasury Department. They are valued at market price at closing rate with gains and losses booked entirely in the statement of operations together with the result on the underlying hedged item. The forward points are recognized in the financial result prorate-temporis over the period of the contract. Should a derivative exceptionally not qualify as hedge (isolated open position), its market value is reported in Other current assets and liabilities, in counterparty of the deferred income/charges. Any unrealized losses are covered by a provision for exchange risk. The realized gain or loss at maturity is recognized in financial result. Information on exchange derivative instruments will be found in note 9.4.

Global treasury management Management of the Group’s market and liquidity risks is centralized in its Group Treasury Department in France in accordance with Group procedures covering, among other aspects, responsibilities, authorizations, limits, permitted financial instruments and tracking tools. All financial market risks are monitored continually and reported regularly to the Chief Financial Officer, the Investment Committee and the Executive Committee via various reports showing the Company’s exposures to these risks with details of the transactions undertaken to reduce them. To reduce interest rate and currency exchange rate risk, the Group enters into hedging transactions using derivative instruments. However Technicolor’s policy is not to use derivatives for any purpose other than for hedging its commercial and financial exposures: from an operational point of view, the Company is contracting foreign • exchange guarantees with its subsidiaries, under which subsidiaries’ transaction risk is hedged for a given period (up to twelve months or longer when justified). These commitments are described further in note 12.4; the Group treasury is then hedging the Company exposure towards • its subsidiaries with first ranking banks using currency derivative contracts. Ultimately there is no or neglectable residual remaining exposure for the Company.

Revenue

NOTE 2

2018

2017

6

(in million euros)

Intra-group invoicing Trademark royalties Other external revenues TOTAL REVENUES Including revenues in France

44

49

7 4

-

5

55 27

54

31

257

TECHNICOLOR REGISTRATION DOCUMENT 2018