technicolor - 2018 Registration document

FINANCIAL STATEMENTS

NOTE 9 EMPLOYEE BENEFIT

9.2.3

ANALYSIS OF THE CHANGE IN BENEFIT OBLIGATION AND IN PLAN ASSETS

Medical Post-retirement benefits

Pension plan benefits

Total

2018 (573)

2018

2018 (579)

2017 (593)

2017

2017

(in million euros)

Benefit obligation at opening

(6)

(7)

(600)

Current service cost

(2)

(3)

- -

- -

(2)

(3)

Interest cost

(12)

(12)

(12)

(12)

Remeasurement – actuarial gains/(losses) arising from: changes in demographic assumptions •

6

-

- - - - - - -

- - - - - 1 - - - - - - - - - -

6

-

19

(5) (6)

19

(5) (6)

changes in financial assumptions •

experience adjustments •

3

3

Past service cost, including gains/(losses) on curtailments

1

1

1

1

Benefits paid

38 (3)

36

38 (3)

36 22

Currency translation adjustments Others (Change in Pension system) (1)

21

6

(12)

6

(12)

Benefit obligation at closing

(518) (231) (287)

(573) (256) (317)

(6)

(6)

(523) (231) (293)

(579) (256) (323)

Benefit obligation wholly or partly funded Benefit obligation wholly unfunded Fair value of plan assets at opening

-

(6)

(6)

197

196

197

196

Interest income

5

5 8 7

- - - - - - -

5

5 8 7

Remeasurement gains/(losses)

(14)

(14)

Employer contribution

7

7

Benefits paid

(19)

(16) (15)

(19)

(16) (15)

Currency translation adjustments Others (Change in Pension system) Fair value of plan assets at closing

2

2

12

-

12

178

197

178

197

RETIREMENT BENEFIT OBLIGATIONS (382) In 2017, the other changes mainly come from a change in the pension system in Belgium. There is no impact on the total Retirement obligation as the increase in the Defined (1) Benefit Obligation is set off by an equivalent increase in the plan assets. (340) (376) (6) (6) (346)

In the U.S., Technicolor’s policy is to contribute on an annual basis in an amount that is at least sufficient to meet the minimum requirements of the U.S. law. The average yearly contribution is 5 million of U.S. dollars (€4 million at 2018 average rate). Periodically an asset-liability analysis is performed in which the consequences of the strategic investment policies are analyzed in terms of risk-and-return profiles. In the U.S., as the pension plan is frozen, the investment strategy aims • to increase the funded ratio toward termination liability while simultaneously attempting to minimize the volatility of the funded ratio (currently funded ratio is above 75%). Asset mix is fully based on bonds and cash equivalents. Over the past several years, the return of the plan has on average exceeded the expected return. In the UK, the funded status is above 75%. Asset mix is based on 35% • of insurance contracts that cover obligations with pensioners, 45% of bonds and cash equivalents, 16% of equity instruments, and 4% of properties. The annualized performance of the plan exceeds the expected return on a 3-year basis.

The Group expects the overall 2018 benefits paid to be equal to €33 million for defined benefits plans, of which €20 million directly by the Company to the employees and €13 million by the plans.

6

PLAN ASSETS 9.2.4 Funding policy and strategy 9.2.4.1

When defined benefit plans are funded, mainly in the U.S. and in the UK, the investment strategy of the benefit plans aims to match the investment portfolio to the membership profile. In the UK, contributions are negotiated with the Trustees as per the triennial valuation. Trustees are advised by an external leading global provider of risk management services regarding investment policy. The average yearly funding contribution is £2 million (€2 million at 2018 average rate).

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TECHNICOLOR REGISTRATION DOCUMENT 2018