TECHNICOLOR_REGISTRATION_DOCUMENT_2017

6 - FINANCIAL STATEMENTS

Notes to the consolidated financial statements

Leverage covenant Total gross debt of the Group at December 31, 2017 must be no more than 4.00 times the Adjusted EBITDA of the Group for the twelve months ending December 31, 2017.

various actions regarding indebtedness, investments and material changes in the general nature of the business. These restrictions are subject in each case to certain exceptions and limitations. In particular, the Group is subject to restrictions on its ability to, among other things and subject to certain exceptions: make restricted payments, if certain ratios are not met, in excess of ■ certain cumulative amounts, including payment of dividends, distributions, share purchases or redemptions, investments other than permitted investments, repayment of subordinated debt; incur additional financial debt in excess of certain cumulative ■ amounts and if certain ratios are not met and with certain carve outs; and make certain investments in joint ventures not controlled by the ■ Group and in which the Group has no veto right on material decisions, except to the extent the Group’s consolidated leverage ratio is under a threshold which decreases over time and subject to a certain cumulative amount and with certain carve-outs.

Gross Debt ■

€1,099 million €371 million

Covenant Adjusted EBITDA* ■

Gross Debt/Covenant Adjusted EBITDA Ratio ■ 2.96 * Adjusted EBITDA in respect of the leverage covenant definition Since 2.96 is less than the maximum allowed level of 4.00, the Group meets this financial covenant. OTHER RESTRICTIONS In addition to certain information provision covenants, the agreements governing the Debt Instruments include certain negative covenants that restrict the ability of Technicolor SA to undertake

Net Financial income (expense) 8.4. (in million euros)

2017

2016

Interest income Interest expense

3

4

(46) (43)

(85) (81)

Net interest expense (1)

Net interest expense on defined benefit liability (note 9.2.2.1)

(7) (6)

(8)

Foreign exchange gain/(loss)

(15) (50) (73)

Other (2)

(41) (54) (97)

Other financial income (expense)

NET FINANCIAL INCOME (EXPENSE)

(154)

In 2017, interest expense includes €2 million (€16 million in 2016) due to the difference between the effective interest rate and the nominal rate of the debt. (1) In 2017, it includes the partial reversal of the IFRS adjustment of €(27) million triggered by the Old Term Loan Debt prepayment (see note 8.3.3.4). (2)

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TECHNICOLOR REGISTRATION DOCUMENT 2017