technicolor - 2020 Universal Registration Document

6 FINANCIAL STATEMENTS STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

Accounting treatment of the financial restructuring Notes 1.1.1 and 8.3 to the consolidated financial statements

RISK IDENTIFIED On February 13, 2020, the Group announced the roll-out of a 3-year strategic plan (2020-2022) including a series of financial restructuring transactions. However, the emergence of the Covid-19 crisis in the first half of 2020 prevented the share capital increase, the last step in this strategic plan, and increased the Group’s liquidity requirements. Given the Group’s position, Group management believed that new sources of financing were needed, particularly from its historical financial partners or new investors and initiated a more comprehensive restructuring of the Group’s debt. To secure this financial restructuring, on May 26, 2020, the company announced the opening of a conciliation procedure after having obtained approval from the Group’s lenders on June 1, 2020. However, due to the urgency of the situation that was complicated by the impacts of the current crisis, this refinancing could not be set up. On June 22, 2020, the Paris Trade Court initiated a 1-month accelerated financial safeguard procedure for Technicolor Group. On the same date, the company and some of its creditors reached an agreement in principle on the main terms and conditions of the Group’s financial restructuring. The draft safeguard plan which formalizes the main terms and conditions of the Group’s financial restructuring was approved by the lenders’ committee ( comité des établissements de crédit et assimilés ) on July 5, 2020. On July 28, 2020, the Paris Trade Court approved the safeguard plan. the contribution of a sum equivalent to around €420 million (net of costs and fees) to cover the continuation of the 2020-2022 strategic plan, (i) taking into account the estimated impacts of Covid-19, finance the Group’s everyday operations and fully refinance the bridge loan of US$110 million payable on July 31, 2020 (the “New Money”); in consideration of the New Money funds, the lenders were granted share subscription warrants that can be exercised over a period of 3 months (ii) (the “Equity kickers”); a restructuring of the current debt, i.e. 46.5% of the credit facilities initially payable by the Company via the set-up of new term credit facilities for (iii) an amount equivalent to €574 million, ultimately maturing in 2024, in consideration for the granting of new collateral on certain Group assets (the “Debt restructuring”); the repayment of the Group’s debt in the amount of €660 million via a share capital increase, with retention of preferential subscription rights (iv) for shareholders (for €330 million) and cancellation of preferential subscription rights reserved for the lenders of the restructured credit facilities by offsetting the balance of their debts (the “Debt-equity conversion”). Furthermore, this financial restructuring also required the reorganization of the Group’s legal structure, through the set-up of three fiducies by way of security to secure the New Money for the shares held by the sub-holding companies which, after restructuring, will hold most of the Group’s subsidiaries. The Group’s management considered that all the transactions relating to the Group’s financial restructuring, i.e., the New Money, the Equity kickers, the Debt restructuring and the Debt-equity Conversion, represented a single transaction, analyzed in accounting terms as a substantial debt modification. This transaction resulted in the following accounting treatment: derecognition of the pre-existing debt; (i) recognition of the cash received; (ii) recognition at fair value of the financial instruments issued/redeemed (recognition of new liabilities and issue of equity instruments to the lenders, (iii) including the warrants), in accordance with IFRS applicable to financial restructuring transactions; and recognition of all costs attributable to the restructuring transaction according to the nature of the financing, particularly the debt issue and share (iv) capital increase. The financial restructuring is presented in detail in Note 1.1.1 – Accelerated financial safeguard and Group financial restructuring to the consolidated financial statements. Considering the major financial impacts of the financial structuring transactions for the Group and the significant judgements required by Management, particularly in determining the fair value of the financial instruments issued and the costs of this complex transaction, we considered the accounting treatment of Technicolor Group’s financial restructuring to be a key audit matter. On September 22, 2020, Technicolor finalized the implementation of its financial restructuring plan. As presented in Note 1.1.1 to the consolidated financial statements, this financial restructuring gave rise to:

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