technicolor - 2019 Universal registration document

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

Net income (loss) 2.2.8 of the Group

These adjustments for 2019 and 2018 are directly identifiable in the Group’s consolidated financial statements, with the exception of the heading “depreciation and amortization.” The additional indicators have inherent limitations as performance indicators. Adjusted profit from continuing operations before tax, finance costs, plus depreciation and amortization (Adjusted EBITDA) and adjusted profit from continuing operations before tax and net finance costs (Adjusted EBIT) are not indicators recognized by IFRS and are not representative of the cash generated by these activities for the periods indicated. In particular, Adjusted EBITDA does not reflect the Group’s working capital needs for its operations, interest charges incurred, payment of taxes, or capital expenditures necessary to replace depreciated assets. Adjusted EBITDA and Adjusted EBIT indicators do not have standard definitions and, as a result, Technicolor’s definition of Adjusted EBITDA and Adjusted EBIT may not correspond to the definitions given to these terms by other companies. In evaluating these indicators, please note that Technicolor may incur similar charges in future periods. The presentation of these indicators does not mean that Technicolor considers its future results will not be affected by exceptional or non-recurring events. Due to these limitations, these indicators should not be used exclusively or as a substitute for IFRS measures. These adjustments, the reconciliation of which is detailed in the following table, amounted to an impact on EBIT from continuing operations of €(109) million in 2019 compared to €(167) million in 2018. Technicolor defines “Free Cash Flow” as net operating cash generated from continuing activities plus proceeds from sales of property, plant and equipment (“PPE”) and intangible assets, minus purchases of PPE, purchases of intangible assets including capitalization of development costs.

Net loss totalled €217 million in 2019 compared to a loss of €67 million in 2018. There was no net income attributable to non-controlling interests in 2019 compared to a profit of €1 million in 2018. Accordingly, the net loss attributable to the shareholders of Technicolor SA amounted to €217 million in 2019 compared to €68 million in 2018. Net losses per share, basic and diluted, were €0.56 in 2019 compared to €0.16 in 2018. Adjusted indicators 2.2.9 In addition to its published results presented in accordance with IFRS and with the aim of providing a more comparable view of the changes in its operating performance, the Group presents a set of adjusted indicators, which excludes impairment charges, restructuring charges and other income and expenses with respect to Adjusted EBIT, cloud rendering expenses and amortization charges as well as the impact of provisions for risks, warranties and litigation with respect to Adjusted EBITDA (in addition to adjustments included in Adjusted EBIT). Technicolor considers that this information may help investors in their analysis of the Group’s performance by excluding factors it considers to be non-representative of Technicolor’s normal operating performance. Technicolor uses Adjusted EBIT and Adjusted EBITDA to evaluate the results of its strategic efforts. This definition of Adjusted EBITDA is comparable to the definition as per Technicolor’s Credit Agreements and is used in calculating applicable financial covenants.

2019 excl. IFRS 16

2019

2018

Change (1)

(in million euros unless otherwise stated)

Profit (Loss) from continuing operations before tax and net finance costs/EBIT (a)

(121) (109)

(127) (109)

(119) (167)

(8) 58

Total adjustments on EBIT (b) Of which restructuring costs, net

(31)

(31)

(62)

31

Of which net impairment losses on non-current operating assets

(63) (15) (12)

(61) (17) (19)

(81) (24)

20

Of which other income/(expense)

7

Adjusted EBIT from continuing operations (a)-(b)

48

(67)

As a % of revenues

(0.3)%

(0.5)%

1.2% 218

(170) bps

Depreciation & amortization

305

234

16 31

IT capacity use for rendering in Production Services Adjusted EBITDA from continuing operations

31

31

0

324 8.5%

246 6.5%

266 6.7%

(20)

As a % of revenues

(20) bps

Change at current currency, excluding IFRS 16. (1)

38

TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2019