technicolor - 2020 Universal Registration Document

OPERATING AND FINANCIAL REVIEW AND PROSPECTS LIQUIDITY AND CAPITAL RESOURCES

Financial resources 2.3.3 Gross financial IFRS debt totaled €1,142 million at the end of 2020, compared with €1,298 million at the end of 2019. At December 31, 2020 debt consisted primarily of (i) term loans issued by Technicolor USA Inc. in U.S. dollars and New York law based notes issued by Tech 6 in euros (together, the “New Money” debt), (ii) reinstated term loans issued by Technicolor SA in U.S. dollars and euros (the “Reinstated Term Loans”) comprising the remaining term loan and revolving credit facility debt following their partial conversion to equity in the Group’s financial restructuring in 2020 and (ii) lease liabilities. At December 31, 2019, financial debt consisted primarily of €980 million of term loans issued in 2016 and 2017 and lease liabilities. Financial debt due within one year amounted to €72 million at the end of 2020 and €95 million at the end of 2019. At December 31, 2020 the Group had €330 million of cash and deposits, compared with €65 million at December 31, 2019. For more detailed information please see the notes to the Group’s consolidated financial statements: for the Group’s financial restructuring see note 1.1 and for the Group’s debt, please refer to note 8.3.

NET CASH USED IN FINANCING ACTIVITIES Continuing operations Net financing cash generated in continuing activities was €522 million in 2020 compared to €91 million of cash used in 2019. In 2020, the net cash generated resulted from the new debt raised as part of the Group’s financial restructuring. In 2019, the net cash used includes mainly payment of capital leases and of operating leases (IFRS 16). For more information, please refer to note 1.1.8 and 11.2 to the Group’s consolidated financial statements. Discontinued operations Net cash used in discontinued operations was €23 million in 2020 compared to €33 million of cash used in 2019.

2

Amount at December 31, 2020 (in million euros)

Type of interest rate

First maturity Existence of hedges

New Money/Reinstated debt New Money/Reinstated debt – accrued interest

Floating

931

2021

Yes

NA

32

2021 2021 2021

No No No

Lease liabilities

Fixed

178

Other debt

Various

1

TOTAL DEBT

1,142

Floating Floating

330 102 432

0 to 1 month

No

Available cash and deposits Committed credit facilities (1)

TOTAL LIQUIDITY

Availability varies depending on the amount of receivables (please refer to note 8.2.3). (1)

2020 DEBT ISSUANCES Please refer to note 1.1 to the Group’s consolidated 2020 financial statements for a detailed description of the debt issuances undertaken by the Group in 2020 in the framework of its financial restructuring.

RATINGS The Group uses the services of rating agencies to help investors evaluate the credit quality of the Group’s debt. In September 2020, Standard & Poor’s (S&P) attributed a CCC+ rating to Technicolor SA (corporate rating), a B rating to the New Money debt and a CCC rating to the Reinstated Term Loans. All ratings have a stable outlook. In September 2020, Moody’s attributed a Caa2 rating to Technicolor SA (corporate rating), a Caa1 rating to the New Money debt and a Ca rating to the Reinstated Term Loans. All ratings have a stable outlook. None of the Group’s debt has clauses referring to the Group’s credit ratings.

PROVISIONS FOR PENSIONS AND ASSIMILATED BENEFITS

In addition to the debt position described above, the Group has reserves for post-employment benefits that it provides to its employees, which amounted to €355 million at December 31, 2020 (compared with €375 million at December 31, 2019). For more information on the Group’s reserves for post-employment benefits, please refer to note 9.2 to the Group’s consolidated financial statements. LIQUIDITY RISK For more information about the Group’s liquidity risk, please refer to note 8.2.3 of the Group’s consolidated financial statements.

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TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2020