technicolor - 2018 Registration document

6 FINANCIAL STATEMENTS

NOTE 4 GOODWILL, INTANGIBLE & TANGIBLE ASSETS

For the DVD Services GRU, in the absence of a binding sale agreement at closing date, of an active market and of comparable recent transactions, discounted cash flow projections have been used to estimate fair value less costs to sell. Technicolor management considers that fair value less costs to sell is the most appropriate method to estimate the value of its GRU as it takes into account the future restructuring measures the Group will need to make against a rapid technological environment change. Such restructuring actions would be considered by any market participant given the economic environment of the business. The discounted cash flow of DVD Services is computed over a finite life of circa twenty years and accordingly the goodwill will be impaired over this period depending on the evolution of the fair value as determined through the discounted cash flow. The Group recorded an impairment charge of €(77) million on goodwill as of December 31, 2018. No impairment charge was recorded in 2017. For Production Services: a decrease of 1 point in the long-term growth rate assumption would • decrease the enterprise value by €138 million; a decrease of 1 point of the EBITDA margin from 2019 would • decrease the enterprise value by €131 million; an increase of 0.5 point in the WACC rate assumption would • decrease the enterprise value by €97 million. SENSITIVITY OF RECOVERABLE AMOUNTS AT DECEMBER 31, 2018 4.4.2

No impairment charge was required for year-end December 2018. For DVD Services: a decrease of 10% on SD-DVD volumes from 2022 would decrease • the enterprise value by €8 million; a decrease of 10% on Freight revenues from 2019 would decrease • the enterprise value by €16 million; an increase of 0.5 point in the WACC rate assumption would • decrease the enterprise value by €18 million; a decrease of 1 point of the EBITDA margin from 2022 would • decrease the enterprise value by €37 million; a decrease of 5% on the Blu-ray TM volume from 2022 would • decrease the enterprise value by €10 million. Following continues market decrease and assumptions review based on 2018 experiences, DVD services is presenting an impairment charge of €(77) million for the year-end December 2018. For Connected Home: an increase of 1 point in the post-tax discount rate assumption would • decrease the enterprise value by €76 million, without generating any impairment; a decrease of 1 point of the Adjusted EBITDA margin from 2018 • would decrease the enterprise value by €170 million, without generating any impairment. No impairment charge was required for year-end December 2018.

Commitments related to assets operated under operating lease 4.5

Minimum future lease commitments

Future lease commitments received

Net value of future lease commitments

(in million euros)

2019 2020 2021 2022 2023

81

1 - - - - - 1

80 62 46 31 23 63

62 46 31 23 63

After 5 years

306

305

TOTAL (1)

Minimum operating lease payments shown are not discounted. (1)

on November 2018, Technicolor signed a commitment to renew his • operationg lease until 2027 for its U.S. headquarter. The net operating lease expense in 2018 was €93 million (€97 million in rental expense reduced by €4 million in rental income).

The main operating leases relate to the headquarters in France and in the US: on November 2016, Technicolor signed a commitment for a new • operating beginning in 2018 an terminating in 2030 regarding the relocation of its headquarter in the center of Paris;

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TECHNICOLOR REGISTRATION DOCUMENT 2018