TECHNICOLOR_REGISTRATION_DOCUMENT_2017

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

NET FINANCIAL EXPENSE 2.2.4 The Group’s net financial result from continuing operations was a loss of €97 million in 2017 compared to a loss of €154 million in 2016. Net interest expense Net interest expense amounted to €43 million in 2017 compared to €81 million in 2016, reflecting a lower level of debt (€317 million of net repayments in 2016 and €50 million in 2017) and lower average interest rates due to the 2016 and 2017 refinancing. For further information, please refer to note  8 to the Group’s consolidated financial statements. Other financial income (expense) Other financial expense amounted to €54 million in 2017 compared to €73 million in 2016. This decrease reflected a lower IFRS adjustment (accelerated amortization of issuing fees from debts early paid) than last year and better foreign exchange results in Brazil and UK. INCOME TAX 2.2.5 The Group total income tax expense from continuing operations, including both current and deferred taxes, amounted to €112 million in 2017 compared to €30 million in 2016. The current income tax charge was mainly attributable to current taxes due in France, India, Canada, UK, Australia and Poland. Net deferred tax expense was €100 million in 2017 compared to €15 million in 2016. In 2017, a valuation allowance on deferred tax assets in France was recognized for €113 million due to the change in the projections of our Licensing activities from a 14 to a 5-year tax planning in France as a result of the announcement in December 2017 of advanced negotiations related to the disposal of our Patent Licensing business. Net deferred tax assets in the United States amounted to €50 million as of December 31,2017, comparable to 2016 despite the change in the tax rate from 35% to 21% following the recent enacted U.S. tax reform.

Restructuring costs In 2017, the Group continued its efforts to reduce costs through facility closures and headcount reductions, which generated restructuring costs. Restructuring costs for continuing operations amounted to €43 million in 2017, or 1.0% of revenues resulting principally from facility closures in the Connected Home segment as well as cost streamlining actions in the DVD Services business. In 2016, restructuring costs for continuing operations amounted to €44 million, or 1.0% of revenues, mainly related to cost reduction on Research & Innovation Division and to actions on operational efficiency improvement for North American assets of Cinram on DVD Services Division. Net impairment losses on non-current operating assets In 2017, Technicolor recorded a net impairment charge of €9 million, mainly related to intangible asset write-offs in the Connected Home segment, compared to a net impairment charge of €13 million in 2016, of which €9 million related to intangible asset write-offs in the Connected Home segment. For more information, please refer to notes 4.4 to the Group’s consolidated financial statements. Other Income (expense) Other income (expense) was a loss of €11 million in 2017, compared to a profit of €1 million in 2016. For further information, please refer to note 3.3 to the Group’s consolidated financial statements. Profit (loss) from continuing operations before tax and net financial expense Loss from continuing operations before tax and net financial expense amounted to €10 million in 2017, or (0.2)% of revenues, compared to a profit of €76 million, or 1.6% of revenues in 2016 as gross margin decrease is partially offset by decrease of selling & marketing expenses and general & administrative expenses. For further information, please refer to note 3 to the Group’s consolidated financial statements.

37

TECHNICOLOR

REGISTRATION DOCUMENT 2017