technicolor - 2018 Registration document

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

RESULTS OF OPERATIONS FOR 2017 AND 2018

Profit (loss) 2.2.6

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 compared to the definition as per Technicolor’s Credit Agreements and is used in calculating applicable financial covenants. These adjustments for 2018 and 2017 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 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, of an amount of €(167) million in 2018, are added back to the Profit (Loss) from continuing operations before tax and net finance costs (EBIT) to compute the Adjusted EBIT from continuing operations. The same adjustments had an impact of €(63) million in 2017. 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.

from continuing operations Loss from continuing operations amounted to €224 million in 2018 compared to a loss of €168 million in 2017. Profit (loss) from 2.2.7 discontinued operations The result from discontinued operations totaled a profit of €157 million in 2018 compared to a loss of €5 million in 2017, mostly related to the Patent Licensing gain on disposal for €210 million and partially offset by lower Patent Licensing activity before disposal. Net income (loss) 2.2.8 of the Group Net loss totaled €67 million in 2018 compared to a loss of €173 million in 2017. Net income attributable to non-controlling interests amounted to a profit of €1 million in 2018 compared to a loss of €1 million in 2017. Accordingly, the net loss attributable to the shareholders of Technicolor SA amounted to €68 million in 2018 compared to €172 million in 2017. Net losses per share, basic and diluted, were €0.16 in 2018 compared to €0.42 in 2017. 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, 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

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TECHNICOLOR REGISTRATION DOCUMENT 2018