technicolor - 2018 Registration document

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

LIQUIDITY AND CAPITAL RESOURCES

Discontinued operations Net operating cash used in discontinued operations was €4 million in 2018 compared to €85 million generated in 2017. This variation was mainly attributable to the disposal of our Patent Licensing business presented in discontinued operations in 2017. NET CASH USED IN INVESTING ACTIVITIES Continuing operations Net investing cash used in continuing activities was €156 million in 2018 compared to €151 million in 2017, and included: net capital expenditures, which amounted to €162 million in 2018 • (compared to €145 million in 2017), due to cash expended relating to tangible and intangible capital expenditures. In 2018, net capital expenditure amounted to €81 million in the Entertainment Services segment and were mainly related to intangible asset spending and production capacity increase and €79 million in the Connected Home segment, mainly due to capitalized R&D projects; acquisition of businesses (net of cash acquired), which amounted to • €1 million in 2018, compared to €25 million in 2017. In 2017, it corresponded mainly to the acquisition of the LG Electronics set-top-box business for €15 million. proceeds from sales of equity holdings, which amounted to €5 in • 2018 compared to €11 million in 2017 (net of cash in companies disposed of). In 2017 and 2018, it corresponds mainly to additional payments related to the disposal of Digital Cinema in 2016. Discontinued Operations Net cash generated in discontinued operations was €115 million in 2018 compared to €1 million net cash used in 2017. In 2018, it was mainly related to the initial payment regarding the disposal of our Patent Lisencing business in July.

NET CASH USED IN FINANCING ACTIVITIES Continuing operations Net financing cash used in continuing activities was €96 million in 2018 compared to €29 million in 2017. In 2018, the net cash used was mainly related to the prepayment of the loan from European Investment Bank ("EIB") for €90 million and normal scheduled repayments for €3 million. The net cash used in 2017 was primarily for repayment of borrowings for a net amount of €603 million, consisting of prepayment of the Old Term Loan Debt for €553 million, normal scheduled repayments for €10 million and other repayments for €40 million. In addition to New Term Loan Debt issued in December 2016, €275 million and U.S.$300 million maturing 2023 were issued in March 2017, as well as a loan from the European Investment Bank (“EIB”) for €90 million in January 2017. For more information, please refer to note 11.2 to the Group’s consolidated financial statements. Discontinued operations Net cash used in discontinued operations was €6 million in 2018 compared to €3 million generated in 2017. Financial resources 2.3.3 Gross financial debt totaled €1,024 million (IFRS value) at the end of 2018, compared with €1,097 million at the end of 2017. At December 31, 2018, financial debt consisted primarily of €978 million of term loans issued in 2016 and 2017. At December 31, 2017, financial debt consisted primarily of €1,058 million of term loans issued in 2016 and 2017. Financial debt due within one year amounted to €20 million at the end of both 2018 and 2017. At December 31, 2018 the Group had €291 million of cash and deposits, compared with €319 million at December 31, 2017. For more detailed information on the Group’s debt, please refer to note 8.3 to the Group’s consolidated financial statements.

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TECHNICOLOR REGISTRATION DOCUMENT 2018