technicolor - 2020 Universal Registration Document

FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 8 - Financial assets, financing liabilities & derivative financial instruments

Risk on investments in Foreign Subsidiaries The Group’s general policy is to examine and hedge on a case by case basis the currency risk on its investments in foreign subsidiaries. The variations in the euro value of investments in foreign subsidiaries are booked under “Cumulative translation adjustment” in the Group’s consolidated statement of financial position. At December 31, 2020, no hedges of this type were outstanding.

Sensitivity Analysis The Group’s main exposure is the fluctuation of the U.S. dollar against the euro. The Group believes a 10% fluctuation in the U.S. dollar versus the euro is reasonably possible in a given year and thus the table below shows the impact of a 10% increase in the U.S. dollar versus the euro on the Group’s Profit from continuing operations before tax and net finance costs and on the currency translation adjustment component of equity. A 10% decrease in the U.S. dollar versus the euro would have a symmetrical impact in the opposite amount. These calculations assume no hedging is in place.

Total

2020 (in million euros)

Transaction

Translation

(9)

(17)

(26) 107

Profit from continuing operations before tax and net finance costs (1)

Equity Impact (cumulative translation adjustment) (2)

Profit impact: (1) transaction impact calculated before hedging by applying a 10% increase in the U.S. dollar/euro exchange rate to the (i) net U.S. dollar exposure (sales minus purchases) • of affiliates which have the euro as functional currency and to the (ii) net euro exposure of affiliates which have the U.S. dollar as functional currency; translation impact calculated before hedging by applying a 10% increase in the U.S. dollar/euro exchange rate to the profits of the affiliates with the U.S. dollar as functional • currency. Equity impact: calculated by applying a 10% increase in the U.S. dollar/euro exchange rate to the net investments in foreign subsidiares that are denominated in U.S. dollar. (2)

Interest rate risk 8.2.2.2 Exposure to interest rate risk Technicolor is mainly exposed to interest rate risk on its deposits and indebtedness.

At December 31, 2020 the portion of the Group’s financial debt exposed to floating interest rates, before taking into account hedging operations, is as shown below. The portion after taking account hedging operations is the same because the Group’s interest rate hedges mature in less than 1 year and the Group considers all debt for which the interest rate is fixed for less than 1 year to be at floating rate.

2020

(in million euros)

Debt

1,142 89%

Percentage at floating rate

In 2020 the Group’s deposits were entirely at floating rate.

Sensitivity to interest rate movements The Group believes a 100 basis point fluctuation in interest rates is reasonably possible in a given year and the table below shows the maximum annual impact of such a change. Maximum impact over one year on the net exposure as of December 31, 2020 of a variation versus current rates (1)(2) (in million euros) Impact on cash net interest Impact on equity before taxes Impact of interest rate variation of +1% (6) (6) Impact of interest rate variation of (1)% 1 1 At December 31, 2020 3-month EURIBOR and 3-month LIBOR were (0.545)% and 0.23838% respectively. (1) After taking into account interest rate hedging operations. (2) Interest rate risk management At December 31, 2020, the Group has outstanding interest rate hedging operations the characteristics of which are given in note 8.6.1.

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