technicolor - 2018 Registration document

6 FINANCIAL STATEMENTS STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018

Assessment of investments in subsidiaries Note 7 to the financial statements

RISK IDENTIFIED Shares in subsidiaries represent one of the most significant line items of the December 31, 2018 balance sheet with a net amount of €2,752 million, which represents 75% of total assets. They are recorded at their historical acquisition cost and impaired based on their value in use. As indicated in Note 7 to the financial statements, the value in use of investments in subsidiaries is determined case by case based on the portion of equity represented by the shares or on the recoverable value. If the carrying amount exceeds the value in use, an impairment loss is set up for the difference. The economic environment in which the Group operates is rapidly changing. The subsidiaries can therefore experience changes in their activity with a negative impact on operating income and on their forecast. As indicated in note 1.1 of the financial statements, Technicolor concluded in July 2018 the sale to InterDigital of its Patent Licensing business and announced in February 2019 being in exclusive negotiations with InterDigital for the divestiture of its Research & Innovation activity. This transaction would amend the contingent consideration to be received on the sale of the Patent Licensing business by reducing by 50% the future expected cash receipts. Consequently, as of December 31, 2018, the value of Thomson Licensing SAS shares was determined based on its recoverable value, including the last two events impacting the estimate of the earn-out relating to the Patent Licensing disposal. In this context and given the significant amount of shares in subsidiaries in Technicolor accounts, we considered the valuation of shares in subsidiaries to be a key audit matter OUR RESPONSE To assess the reasonableness of the value in use of the shares in subsidiaries, based on the information communicated to us, our work mainly consisted in: Verifying that shares in subsidiaries acquisition of the period are recorded at their acquisition cost; • Analysing the procedures used by the Group to realise impairment tests, examining how these impairment tests are performed and verifying the • relevance of the method used depending on the share tested; For the shares valuated based on the portion of equity they represent,, verifying that the equity retained agrees with the accounts of the entities that • were audited or the subject of analytical procedures and that adjustments proceeded on equity, if need be, are documented properly; For the shares valuated on their recoverable value, obtaining the cash flow forecasts established by the Management and appreciating their • consistency, or verifying the concordance of the hypothesis used by the Management with the Expert reports; Testing the arithmetical accuracy of the value of shares calculation. • We also assessed the appropriateness of information disclosed in the note 7 of financial statements. Specific verifications We have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law. INFORMATION GIVEN IN THE MANAGEMENT REPORT AND IN THE OTHER DOCUMENTS WITH RESPECT TO THE FINANCIAL POSITION AND THE FINANCIAL STATEMENTS PROVIDED TO SHAREHOLDERS We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors and in the other documents with respect to the financial position and the financial statements provided to Shareholders. We attest the fair presentation and the consistency with the financial statements of the information relating to payment deadlines mentioned in Article D. 441-4 of the French Commercial Code (Code de commerce). REPORT ON CORPORATE GOVERNANCE We attest that the Board of Directors’ report on corporate governance sets out the information required by Articles L. 225-37-3 and L. 225-37-4 of the French Commercial Code.

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TECHNICOLOR REGISTRATION DOCUMENT 2018