technicolor - 2019 Universal registration document

OPERATING AND FINANCIAL REVIEW AND PROSPECTS RESULTS OF OPERATIONS FOR 2018 AND 2019

Net financial expense 2.2.4 The Group’s net financial result from continuing operations was a loss of €64 million in 2019 compared to a loss of €51 million in 2018. NET INTEREST EXPENSE Net interest expense amounted to €49 million in 2019 compared to €40 million in 2018, reflecting mainly the negative impact of higher credit line drawings and lower interest income. For further information, please refer to note 8.5 to the Group’s consolidated financial statements. OTHER FINANCIAL INCOME (EXPENSE) Other financial charges amounted to €15 million in 2019 compared to €11 million in 2018 mostly related to a lower foreign exchange result. Income tax 2.2.5 The Group total income tax expense from continuing operations, including both current and deferred taxes, amounted to €4 million in 2019 compared to €54 million in 2018. The current income tax charge was mainly attributable to current tax due in India, Mexico, Poland and the United States. Net deferred tax was an income of €7 million in 2019 compared to an expense of €55 million in 2018. In 2018, this was mainly due to the depreciation of deferred tax assets in the United States. Profit (loss) from continuing 2.2.6 operations Loss from continuing operations amounted to €195 million in 2019 compared to a loss of €224 million in 2018. Profit (loss) from 2.2.7 discontinued operations The result from discontinued operations amounted to a loss of €21 million in 2019 compared to a profit of €157 million in 2018, as 2018 was positively impacted by the Patent Licensing gain on disposal for €210 million.

NET RESEARCH AND DEVELOPMENT EXPENSES Net research and development (“R&D”) expenses amounted to €114 million in 2019, or 3.0% of revenues, compared to €127 million in 2018, or 3.2% of revenues. For more information, please refer to note 3.3.1 to the Group’s consolidated financial statements. RESTRUCTURING COSTS In 2019, the Group continued its efforts to reduce costs through facilities optimization and headcount reductions, which generated restructuring costs. Restructuring costs for continuing operations amounted to €31 million in 2019, or 0.8% of revenues, including €10 million for Connected Home, pursuant to the three-year transformation plan, €8 million for DVD Services, mainly resulting from distribution sites optimization, and €11 million for Production Services on cost streamlining actions. In 2018, restructuring costs for continuing operations amounted to €62 million in 2018, or 1.6% of revenues resulting principally from cost streamlining actions in the Connected Home segment as well as site closures in the U.S. for Post Production and DVD Services. NET IMPAIRMENT LOSSES ON NON-CURRENT OPERATING ASSETS In 2019, Technicolor recorded a net impairment charge of €61 million, compared to a net impairment charge of €81 million, mainly coming from a depreciation of DVD Services business goodwill in both years. For more information, please refer to notes 4.5 to the Group’s consolidated financial statements. OTHER INCOME (EXPENSE) Other income (expense) was a loss of €17 million in 2019, compared to a loss of €24 million in 2018. For further information, please refer to note 3.3.3 to the Group’s consolidated financial statements. Loss from continuing operations before tax and net financial expense amounted to €127 million in 2019, or (3.3)% of revenues, compared to a loss of €119 million, or (3.0)% of revenues in 2018 mostly explained by lower gross margin of €48 million and higher general and administrative expenses by €31 million partly offset by lower R&D costs of €13 million, lower restructuring costs of €31 million, lower net impairment losses on non-current operating assets of €20 million, and lower other expense for €7 million. For further information, please refer to the Group’s consolidated financial statements (please refer to note 6.1.1) PROFIT (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX AND NET FINANCIAL EXPENSE

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TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2019