TECHNICOLOR_REGISTRATION_DOCUMENT_2017

- 2 OPERATING AND FINANCIAL REVIEW AND PROSPECTS Results of operations for 2016 and 2017

Volume data for Connected Home (in million euros)

FY 2017

FY 2016

Change [1)

Total revenues

2,419 1,364

2,637 1,380

(6.8)%

o/w

North America

+1.6%

Europe, Middle-East & Africa

434

592

(26.7)%

Latin America Asia-Pacific

324 297

409 256

(21.4)% +16.8%

Change at constant currency (1)

ANALYSIS OF ADJUSTED 2.2.2 EBITDA For the purpose of analyzing the Group’s performance, and in addition to its published results presented in accordance with IFRS, Technicolor publishes an Adjusted EBITDA. This indicator excludes factors the Group considers to be non-representative of Technicolor’s normal operating performance. For a comprehensive definition of adjusted indicators and a description of their limitations as performance indicators please refer to section 2.2.9: “Adjusted Indicators” of this Chapter.

Corporate & Other Corporate & Other now includes Research & Innovation activities and Trademark Licensing business in addition to unallocated corporate functions. Following the transfer, Corporate & Other recorded revenues of €22 million in 2017 compared to 25 million in 2016, primarily driven by the Trademark Licensing business.

FY 2017

FY 2016

Change (1)

(in million euros)

Total Adjusted EBITDA from continuing operations

291 230 137 (76)

359 238 218 (97)

(19.0)% (3.1)% (37.1)% +21.4%

Entertainment Services Connected Home Corporate & Other

Change at current currency (1)

Entertainment Services Consolidated Adjusted EBITDA for the Entertainment Services segment amounted to €230 million in 2017, down 3.1% at current currency and down 1.2% at constant currency compared to 2016. Production Services contribution to the Adjusted EBITDA ■ increased in 2017.The division achieved, significant profitability improvement in the second half of 2017, resulting in an Adjusted EBITDA stable compared to the prior year. Production Services’ scale and the pipeline of projects allowed the Group to proactively reallocate resources to mitigate production gaps and maintain the utilization rate at a high level. In DVD Services , Adjusted EBITDA was slightly down, but ■ margins were broadly stable in 2017 versus 2016, as reductions in volumes and revenues were offset by fixed costs reductions and efficiency gains, leading to a solid improvement in margin as a % of sales in the second half.

Adjusted EBITDA from continuing operations amounted to €291 million in 2017, down 17.2% at constant currency compared to 2016. The Adjusted EBITDA margin amounted to 6.9%, down by 90 points year-on-year, due to the Connected Home segment. This margin squeeze was attributable to the memory cost impact. This margin squeeze was attributable to the memory cost impact. Including the contribution from the discontinued operations, the Adjusted EBITDA of Technicolor amounted to €371 million, a significant decline compared to 2016 as the Patent Licensing business generated €79 million of profit compared to €206 million in 2016. Technicolor implemented several cost-cutting measures in the second half of 2017 to reflect the more challenging environment. As a result of these initiatives, Technicolor already reported lower selling and administrative expenses, down 7.5% year-on-year at current currency.

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TECHNICOLOR

REGISTRATION DOCUMENT 2017