technicolor - 2020 Universal Registration Document

FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED 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 2020 2019 2020 2019 2020 2019

(in million euros)

Benefit obligation at opening

(572)

(518)

(6)

(6)

(578)

(524)

Current service cost

(2) (8)

(2)

- -

- -

(2) (8)

(2)

Interest cost

(13)

(13)

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

1

(2)

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

- - - - - - - - - - - - - - - -

1

(2)

changes in financial assumptions •

(34)

(53) (10)

(34)

(53) (10)

experience adjustments •

3 4

3 4

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

2

2

Benefits paid

33 19

34

33 19

34

Currency translation adjustments Others (Change in Pension system) Benefit obligation at closing Benefit obligation wholly or partly funded Benefit obligation wholly unfunded Fair value of plan assets at opening

(10)

(10)

-

-

-

-

(558) (257) (301)

(572) (266) (306)

(5)

(6)

(563) (257) (306)

(578) (266) (312)

(5)

(6)

203

178

203

178

Interest income

4

6

4

6

Remeasurement gains/(losses)

16

20

16

20

Employer contribution

11

7

11

7

Benefits paid

(13) (13)

(15)

(13) (13)

(15)

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

7

7

-

-

-

-

208

203

208

203

RETIREMENT BENEFIT OBLIGATIONS

(350)

(369)

(5)

(6)

(355)

(375)

The Group expects the overall 2020 benefits paid to be equal to €30 million for defined benefits plans, of which €20 million directly by the Company to the employees and €10 million by the plans.

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 U.S.$7 million (€6 million at 2020 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 close to 74%). 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 close to 80%. Asset mix is based on • 33% of insurance contracts that cover obligations with pensioners, 42% of bonds and cash equivalents, 19% of equity instruments, and 6% of properties. The annualized performance of the plan exceeds the expected return on a 3-year basis.

PLAN ASSETS 9.2.4 Funding policy and strategy 9.2.4.1

6

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 £4 million (€5 million at 2020 average rate).

TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2020 253