TECHNICOLOR_REGISTRATION_DOCUMENT_2017

6 - FINANCIAL STATEMENTS

Notes to the consolidated financial statements

Interest rate risk 8.2.2.2. Technicolor is mainly exposed to interest rate risk on its deposits and indebtedness. The Group’s policy is for all subsidiaries to borrow from, and invest excess cash with, the Group Treasury Department, which in turn satisfies the net cash needs by borrowing from external sources. Subsidiaries that are unable to enter into transactions with Group treasury because of local laws or regulations borrow from or invest directly with local banks in accordance with the policies and rules established by the Treasury Department.

Interest rate risk is measured by consolidating the Group’s deposit and debt positions and performing sensitivity analysis. The vast majority of the Group’s non-current debt is currently at floating interest rate. Sensitivity of the Group’s interest charges to interest rate movements is shown hereafter. INTEREST RATE OPERATIONS No interest rate hedging operations are outstanding at December 31, 2017.

EFFECTIVE INTEREST RATES The average effective interest rates on the Group’s consolidated debt are as follows:

2017

2016 6.31% 6.41%

Average interest rate on borrowings Average interest rate after currency swaps

3.84% 3.64%

The average effective interest rate in 2017 on the Group’s consolidated deposits was 1.41% (1.30% in 2016). These deposits

variable rate financial assets and liabilities. The Group has no significant fixed rate financial assets and liabilities held at fair value. The average percentage of the Group’s debt in 2017 and 2016 at floating rates is shown below. The Group considers all debt with interest rates fixed for remaining periods of less than one year to be at floating rate. A threshold of one year is pertinent as it represents the limit between current and non-current debt.

generally have a maturity of less than 1 month. SENSITIVITY TO INTEREST RATE MOVEMENTS

Interest rate movements impact the price of fixed rate financial assets and liabilities held at fair value and the interest income and expense of

2017 1,143

2016 1,209

(in million euros) Average debt

Percentage at floating rate*

91%

99%

At December 31, 2016 includes €576 million of floating rate debt for which the reference rate has a 1% floor *

The Group’s average deposits in 2017 amounted to €254 million, 100% at floating rate. The Group’s debt primarily consists of its Term Loan Debt in U.S. dollars and in euros the interest rates on which are based on LIBOR with a floor of 0%, EURIBOR with a floor of 0% and €90 million is at a fixed rate of 2.542%.

The Group’s deposits are primarily in U.S. dollars and in euros. The Group believes a 1% fluctuation in interest rates is reasonably possible in a given year and the tables below show the maximum annual impact of such a movement.

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TECHNICOLOR REGISTRATION DOCUMENT 2017