September 2020
technicolor.com INTRODUCTION
Richard Laurent Moat Carozzi
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER Background Background ► Joined in March 2018 ► Joined in November 2019 ► Previous experience ► Previous experience o Deputy CFO Publicis (2017-2018) CEO Eir Limited (2014-2018) o o CFO and COO Lagardère Sports & o CFO Eir Limited (2012-2014) Entertainment (2011-2017) o Deputy CEO and CFO EE Limited o Head of Investor Relations and Head of Group Financial Control Lagardère Group o 17 years with Orange 12 years with Lagardère Group ► Education o ► Education o St Catharine’s College, Cambridge Ecole Normale Supérieure Cachan o London Business School o o Université Panthéon Sorbonne
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C3 - Restricted Natixis A BRIGHT FUTURE AHEAD FOR TECHNICOLOR (1/2)
BALANCE SHEET ISSUES SOLVED ► Long term financial stability secured thanks to comprehensive financial restructuring FOLLOWING ► New capital structure will enable Technicolor to once again operate at full speed ► New money cash injection of c. €420m (net of costs and commissions) & debt reduction of SUCCESSFUL €660m through two capital increases RESTRUCTURING ► Revamped capital structure addressing financing needs, including full normalisation of payment PLAN terms with suppliers
► Demonstrated resilience to the crisis during the first half of the year ONGOING RECOVERY ► Production Services: most affected due to suspension of live action shooting. However impact was mitigated thanks to increased demand in Animation and resilience of FROM THE COVID 19 Advertising CRISIS ► DVD Services: Impacted by lack of new film releases following cinema closures. However this was partly compensated by strong back catalog demand ► Connected Home: Consumer demand for better broadband and wifi helped drive strong demand in the United States. Asian activities are now back to normal following some initial supply shortages
SIGNIFICANT ► Strong focus on the delivery of previously announced cost savings through the Strategic Plan COST SAVINGS ► On track to achieve total savings in excess of €160 million this year and €300 million by 2022 ACHIEVED WITH ► To date, €67 million of cost savings related to the Strategic Plan announced in 2020 have MORE TO COME been achieved, with detailed plans in place to achieve the remainder ► Focus is further enhanced by new management’s strong track-record in delivering cost savings
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C3 - Restricted Natixis A BRIGHT FUTURE AHEAD FOR TECHNICOLOR (2/2)
STRENGTHENED ► Refreshed Board of Directors since June 2019 to better align with Technicolor’s activities GOVERNANCE ► New CEO with track record of business transformations and industry experience key to accelerate Technicolor’s value creation ► Strong support from Lenders to the restructuring has been conditioned upon improved transparency and enhanced reporting requirements toward all stakeholders
► Renewed focus on margin improvement, cash generation and pursuit of sustainable growth FOCUS ON CASH ► Production Services: capture future explosive growth in demand for premium GENERATION IN ALL content: film, episodic and animation / push for margin improvement in Advertising THREE DIVISIONS ► DVD services: continued transformation through contract renegotiations to increase cash flow generation and business model resiliency ► Connected Home: focus on broadband gateway and Android TV, significant opportunities in Europe to target largest cable and broadband providers
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C3 - Restricted Natixis EXCITING OPPORTUNITIES AS A GLOBAL LEADER
PRODUCTION DVD CONNECTED SERVICES SERVICES HOME
Worldwide leadership Worldwide in DVD, In Broadband and in VFX for Films Blu-ray, UHD, and CD Android TV
Global market share in 70% Top box office films 65% Global market share 19% Broadband
Visual effects shots for Market leading supply Global market share in 150k 65% film & episodic per year chain services Android TV
GROWTH PREDICTABILITY LEADERSHIP
Source: Company information; Management estimates. 5 Note: Figures as of 31/12/2019
C3 - Restricted Natixis WHAT WE HAVE STARTED DOING
► Exploit burgeoning demand for VFX content: secure volume agreements with key players in film and episodic PRODUCTION ► Optimise headcount allocation to individual projects SERVICES ► Advertising: improve margins/continue agency disintermediation ► Maximise use of resources in India
► Renegotiate remaining studio contracts on improved terms generating more predictable income streams DVD SERVICES ► Explore potential of adjacent businesses ► Maximise “cash cow” potential of the business
► Continue to pivot from Video to Broadband CONNECTED HOME ► Exploit growth in Android TV ► Focus growth on scale customers using platform model
► Streamline the business model in each function TRANSVERSAL FUNCTIONS ► Reduce organisational complexity ► Centralise functions where appropriate
FINANCIAL ► Combined impact of new capital structure and strict focus on profitable growth and PERFORMANCE financial discipline will provide a sustainable future for Technicolor
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KEY TRANSACTION PRINCIPLES
GROSS DEBT EVOLUTION NEW MONEY CASH INJECTION OF c. €420M (net of the estimated €37m expenditures related to the € 1,440m(2) different issuances), under a debt format, to fund the company’s operational needs and repay the $110m bridge facility set up in March 2020 by July 31st, 2020 €400m fully underwritten by a group of lenders under € 1,140m(2) the existing Term Loan B and RCF creditors and € 20m provided by Bpifrance Participations Maturity of this new financing will be June 2024 Term € 982m(2) Reinstated Loan B € 572m(2) DEBT REDUCTION OF €660M across the Term Loan B TLB/RCF and the RCF on a pari passu basis Debt reduction to be implemented through (i) a €330m rights issue backstopped by TLB/RCF creditors with commitment by Bpifrance Participations(1) to participate pro rata its current shareholding and (ii) a New RCF € 250m € 457m(3) €330m reserved capital increase to TLB/RCF creditors financing Bridge $ 110m repaid REINSTATED TLB/RCF DEBT OF € 572M(2) extended to December 2024 with a bullet repayment Wells Fargo $125m $125m 22-Jun1 -2020 Pro forma2 situation REPAYMENT OF THE $110M BRIDGE FACILITY Notes: (1) Bpifrance Participations will subscribe to the rights issue in cash pro rata its current shareholding (~7.5%) for an aggregate amount of ~€ 25.5m. MATURITY EXTENSION OF THE $125M Wells (2) Rounded figure based on EUR/USD of 1.13. The amount of nominal debt in the current Fargo facility to December 2023 situation was estimated as of 22-Jun-20, assuming a 100% drawdown of the Wells Fargo facility (3) Including expenditures relating to the Issuances to be borne by the Company (estimated at 37 million euros) 8
C3 - Restricted Natixis CAPITAL INCREASE – KEY TERMS
TOTAL CAPITAL INCREASE OF € 660M IN 2 TRANCHES
RIGHTS ISSUE TRANCHE
Amount € 330m (i.e. 50% of total capital increase)
Price € 2.98 per share
Underwriting Term Loan B and RCF lenders by way of set-off of claims
Use of proceeds Cash proceeds to be used to repay Term Loan B and RCF at par
Participation Commitment by Bpifrance Participations to participate in the rights issue pro rata its current shareholding Undertaking Bpifrance Participations to maintain 1 board seat
RESERVED CAPITAL INCREASE
Amount € 330m (i.e. 50% of total capital increase)
Price € 3.58 per share
Subscribers Term Loan B and RCF lenders pro rata by way of set-off of claims at par
Use of proceeds No cash proceeds (by way of set-off of claims only)
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C3 - Restricted Natixis OVERVIEW OF THE PRO FORMA SHAREHOLDING STRUCTURE(1)
0% SUBSCRIPTION RATE(2) 50% SUBSCRIPTION RATE (2) 100% SUBSCRIPTION RATE (2)
46.6%
70.0% 93.5% 70.0% 93.5%
53.4%
30.0% 30.0% 6.5% 6.5%
Existing Shareholders Creditors
Notes: (1) Post reserved capital increase and rights issue, assuming full exercise of the warrants attributed to creditors and no exercise of the warrants attributed to shareholders; (2) by existing shareholders; Some creditors are also existing shareholders. Bpifrance has committed to subscribe in the rights issue pro forma its current ownership. Existing shareholders could increase their stake by 5.2% of the capital ex- post in case of a full exercise of their warrants. 10
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SIGNIFICANT MEDIUM TO LONG TERM OPPORTUNITIES
KEY MID-TO-LONG TERM GROWTH MID-TERM OPPORTUNITIES OPPORTUNITIES
DVD PRODUCTION SERVICES SERVICES
► Long tail of demand for home entertainment ► Capture future explosive growth in demand for premium content: film, episodic and animation ► DVD services needs to be transformed to further increase business model resiliency and cash flow generation
CONNECTED CONNECTED HOME HOME
► Business at an inflection point, set to benefit from ► Focus on broadband gateway and Android TV: two years of repositioning, and margins are poised Significant white space in Europe to target largest to increase significantly cable and broadband providers
WILL FUND FUTURE GROWTH WILL FUEL FUTURE GROWTH
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C3 - Restricted Natixis €300M OF TOTAL RUN-RATE COST SAVINGS TARGETED, MORE THAN €160M EXPECTED TO BE REALIZED IN 2020
STRONG FOCUS ON THE DELIVERY OF Run-Rate Cost Savings Initiatives PREVIOUSLY ANNOUNCED COST SAVINGS THROUGH THE STRATEGIC PLAN €300m ► Well on track to achieve total cost savings in excess of €160m this year and €300m by 2022
€150m Further additional initiatives TO DATE, €67M COST SAVINGS RELATED TO THE STRATEGIC PLAN ANNOUNCED IN 2020 HAVE BEEN ACHIEVED ► Detailed plans are in place to achieve the remainder
€160m €150m Panorama 1 RESTRUCTURING COSTS ACCOUNTED FOR €41M AT CURRENT RATE
2020E 2022E Cost Savings Target
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C3 - Restricted Natixis 2020 COSTS SAVING IMPLEMENTATION PLAN
IMMEDIATE ACTION TO REDUCE INDIRECT SECURE OPEX REDUCTION TARGET FOR 2020 COSTS AND IMPROVE WORKING CAPITAL
► Headcount freeze ► Execution plan in place for each detailed element of €160m 2020 opex reduction action (c.1.300 people have already left the business at end of June with ► CEO purchase order approval process plans for 1,600 by end Q3)
► Significant reduction in travel and subsistence ► Further P&L review with BUs with focus on maximising spending across all business units profitability and cash generation in 2020 and beyond
► Commissioned benchmark study with focus on ► Spans and layers review: BearingPoint input Transversal Functions to achieve further significant savings across HR/IT/Finance/Legal ► Tighter control over working capital with new controls reduced ► Strategic real estate review underway to further rationalise the global portfolio
► Launched indirect vendor cost reduction programme with support from Accenture, target to achieve 10% reduction
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C3 - Restricted Natixis SHORT AND MEDIUM-TERM OUTLOOK
After a strong first quarter and a second quarter demonstrating a better than expected In €m, post IFRS 16 1 Continuing Operations Outlook resilience, Technicolor expects: ► Adjusted EBITDA of €169 million and 2019a 2020e 2022e Adjusted EBITA of €(64) million in 2020 ► Adjusted EBITDA of €425 million and Adjusted EBITA of €202 million in 2022 Adj. Continuing EBITDA 324 169 425
Technicolor expects 2020e continuing FCF Adj. Continuing EBITA 42 (64) 202 within a range of €(115)m to €(150)m and €259m in 2022
Following the entry in SFA procedure, a faster than expected shortening of payment Continuing FCF2 (8) (115)-(150) 259 terms has been requested by suppliers, potentially leading to an acceleration of early payments in 2020 and 2021 but mitigating factors will help 2021 to remain on target ► The group’s liquidity needs overall (1) In the June 22nd press release, forecast costs related to remain unchanged Covid-19 were accounted as non-recurring (therefore not part of EBITDA & EBITA). Going forward these costs will be reintegrated in the EBITDA and EBITA of the Group. Despite this reintegration, Technicolor confirms the outlook for To be noted that positive impacts of the financial EBITDA & EBITA previously provided. restructuring being implemented by Technicolor have not been included in our outlook (2) Before financial results and tax. Free cash flow defined as: Adj. EBITDA – (net capex + restructuring cash expenses + change in pension reserves + change in working capital and other assets & liabilities + cash impact of other non-current result + net financial interests + foreign exchange result + other financial results and income tax). 15
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PRODUCTION SERVICES – A WORLDWIDE LEADER IN THE CREATION OF EXTRAORDINARY ENTERTAINMENT EXPERIENCES
FILM & EPISODIC ADVERTISING ANIMATION & GAMES POST PRODUCTION
MARKET # 1 # 1 # 2 # 2 POSITIONS POSITION POSITION POSITION IN ANIMATION POSITION
Industry-leading artists, cutting- From ideation to creative High-quality, end-to-end Partnership with clients from edge technology, tools and execution computer-generated imagery camera capture on-set to VFX, workflows Campaigns from traditional TV (CGI) animation services from colour and sound post Capabilities include pre- ads to branded experiences concept art to final deliverables production for theatrical, streaming and TV DESCRIPTION visualization / virtual production, Immersive experiences Innovative workflow and asset building, texturing, clients flexibility VFX, animation, design, animation, rigging, rotoscoping, A leading provider of CG experiential and interactive, color Dailies, digital intermediates, lighting, match move and services to video game and finishing video post, sound post, compositing producers localization, marketing services
BRANDS
SELECTED PROJECTS
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C3 - Restricted Natixis PRODUCTION SERVICES IMPERATIVES
POSITION EXTEND UPSTREAM IN FURTHER DIVERSIFY INCREASE UTILIZATION OURSELVES TO SCALE ADVERTISING VALUE REVENUE MIX TO OF INDIA TALENT BASE STREAMING/EPISODIC CHAIN BALANCE MAJOR STUDIO TO EXPAND MARGINS VFX AND ANIMATION CLIENTS AND EMERGING BUSINESSES STREAMING PLATFORMS
FILM AND EPISODIC ADVERTISING ANIMATION & GAMES POST PRODUCTION
► Scale Streaming and ► Expand number of direct- ► Capture long-term ► Continue to innovate and Episodic VFX to-brand relationships growth in Feature implement cloud-based businesses to capture Animation segment by workflows to improve ► Grow business in highest growth segment broadening customer utilization and experiential marketing of the market base efficiencies using creative technology ► Service high-end local expertise (e.g., ► Expand offering and ► Scale business in higher content productions immersive experiences, capacity in Games to margin, just-in-time virtual avatars) enlarge addressable digital make-up and ► Continue investment in market and move up the related VFX services technology to improve value chain into more delivered as part of the efficiency and optimize scalable services Post-Production workflows, driving top- workflow and bottom-line growth
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C3 - Restricted Natixis WHAT MAKES PRODUCTION SERVICES A MARKET LEADER
1 2 3
Combination of explosive Only company which has Larger number of smaller growth in demand and new the capabilities, scale and projects in episodic will use cases customer trust to meet this provide greater resilience demand and visibility of growth
4 5 6
Continue to successfully Growing operating Breadth of services leverage Indian presence leverage and significant highlighted during COVID- to drive profitability and cash generation ahead 19 with increased demand top-line in Animation and resilience of Advertising
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C3 - Restricted Natixis DVD SERVICES: COMMANDING MARKET POSITION IN LONG TAIL BUSINESS, FOCUSING ON TRANSITION TO VOLUME-BASED PRICING
END TO END SERVICES PROVIDED DOMINANT MARKET SHARE WITH BUSINESS MODEL SHIFT TO ADAPT TO LEADING BLUE CHIP CUSTOMERS FURTHER GAINS PURSUED TO DECLINING MARKET
► Manufacturing: packaged media ► Long term strategy sees HES ► Decline in volumes has impacted mastering, replication, assembly, kitting dominate as “last man profitability of business in past and packaging services standing” industry provider for years optical discs
► Supply Chain Services: Direct to ► Ongoing shift to ‘volume and retail / direct-to-customer distribution, ► Executed over multiple years via activity’ based contracts leveraging warehousing, transportation new customer contracts as well the dominant ‘last man standing’ management and reverse logistics as external growth position
2019 Market Share(1) ► Focused management team rationalizing operations and creating efficiencies in 2020 and into Others 3YP 15%
10% ► Seeking to leverage precision polycarbonate moulding and bonding, 10% in the microfluidics diagnostic 65% space, bringing unparalleled capacity and production resilience
Source: Future Source, Digital Entertainment Group , Company estimates. 20
C3 - Restricted Natixis 1. Addressable market defined as DVD, BD and CD replication volume in NA, EU and AU; excluding Sony PlayStation, Nintendo and Adult / Illegitimate volumes. SHIFT TO VOLUME AND ACTIVITY BASED PRICING MITIGATES VOLUME DECLINE AND DRIVES MARGINS
DVD SERVICES VOLUMES KEY TAKEAWAYS PER CONTRACT STATUS
Strengthened leadership position bolsters commercial leverage with customers Capability to retain existing business and acquire new business underlined to customers in uncertain times due to unique multi-continent 39% production BCP assurance Implementation of volume & activity based 61% pricing mechanisms
Volumes Automatic contractual unit price increase Complexity
Renegotiated Pending Multiple successful contract renegotiations were announced in 2019, and similar efforts with other customers are ongoing 21 Source: Company information.
C3 - Restricted Natixis GOING FORWARD: MAXIMISING THE LONG TAIL
KEY LEVERS FOR FUTURE GROWTH AND MARGIN IMPROVEMENT
VOLUMES / ► Continued market share gains whenever possible / sensible. Currently pursuing opportunities in European market MARKET SHARE ► Increase mix of higher margin Blu-Ray / UHD in total volume base
CUSTOMERS / ► Continue to aggressively complete key customer price renegotiations / increases39% 36% PRICING ► Improve distribution economics and implementation of volumetric downside protection mechanisms
► Continue optimizing the operating platforms at a faster pace than volume / revenue decline25% COST OPTIMISATION ► Reduce CAPEX and contract related cash outflows, and both fixed and discretionary spend ► Capitalise on ongoing consolidation of studio operations for efficiency gains
DIVERSIFICATION ► Explore further expansion of polycarbonate precision ‘lab-on-chip’ manufacturing and profitable supply chain services
COST-OPTIMIZATION, PRICING, AND DIVERSIFICATION MITIGATES VOLUME DECLINE AND UNDERPINS PROFITABILITY
Source: Company information. 22
C3 - Restricted Natixis CONNECTED HOME: LEADER IN BROADBAND AND ANDROID TV, FOCUS ON MARGIN IMPROVEMENT AND CASH FLOW GENERATION
CONNECTED HOME OVERVIEW DIVERSIFIED CUSTOMER BASE
FY19 Revenue by Client Size KEY CUSTOMERS
<€50MM 28%
► and steady structural decline in STB, Supportive Continued Growth in broadband >€100MM with the exception of Android TV 61% Market ► DRAM prices are now back to pre-crisis levels Trends €50–100MM 11% +7% (8%)
6,2 7,6 8,9 6,9 Broadband STB (€bn) (€bn) 2018 2021 2018 2021 BEST-IN-CLASS R&D AND SUPPLY CHAIN CAPABILITIES
► Complex Radio Frequency Integrations ► Continue growing Broadband ► Complex software Integration with third parties Management ► Focus video R&D on Android TV market, maintaining global market ► Quality products which Interface with end consumers and NSP leadership R&D / networks simultaneously Initiatives To ENGINEERING Secure Future ► Leading position in Android set top boxes, mitigating the overall ► Orchestrate complex program executions leading to NPls Profitable decline in Connected Home market Growth ► 1M+ unites delivered per year Broadband 19% Android TV 65%19% €2,218M ► Product and component supply management Market Share Market Share ► Forward / reverse logistics and Refurbishment management 2019 2019 2019A SUPPLY ► After sales quality management for continuous performance improvements #1 worldwide #1 worldwide revenues CHAIN ► Worldwide reach in all aspects
Source: Company information, Ovum, Digital Entertainment Group, Gartner Market Statistics. 23
C3 - Restricted Natixis BUSINESS TRANSFORMATION TO DRIVE IMPROVED PROFITABILITY
FROM TO
► Customers with Scale (Selectivity) CUSTOMERS ► All possible customers 250+ ► Proactive Go to Market: 1 (Selecting Relevance 50+ Account Planning and Scale) ► Reactive: Any RFQs CUSTOMERS ► Clear segment priorities CUSTOMERS
PORTFOLIO ► Platform Based ► Project Oriented based on STRATEGY ► Lead new Video: Android TV 2 customer requests (From Project to ► Lead Broadband: Docsis 3.1, Fiber, Wi-Fi 6 Platforms in ► Any segment/technology technologies with scale) ► Final products adapted to type of customers
► Productivity: Doubling the productivity (50% ► Present in all markets (NAM, OPEX reduction in 4 years, 70% achieved) COMPETITIVE LATAM, Europe, APAC) ► Supply Chain: Performance and Resilience 3 DIFFERENTIATION ► Present in all Segments (Video, ► Engineering: Best Product quality, Product (From Good to Great ) Broadband and IoT) Cost and Time-to-market ► Proximity
► SUPPLIERS ► Multiple ODM partners 1,300 Value oriented engagement c.300 4 (Partnership ► Original Development Center and Scale) ► Mostly Transactional SUPPLIERS /System-in-Chip partnerships SUPPLIERS
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C3 - Restricted Natixis CONNECTED HOME – PRODUCT PORTFOLIO HAS BEEN REPOSITIONED TO FOCUS ON ATTRACTIVE MARKETS
DECREASING WEIGHT OF VIDEO ACTIVITIES
In % of Connected Home revenues
2017 2019
Video (NAM) 6% 37% Broadband
19% 19% 62% 41%
Video
GRADUAL REPOSITIONING ON GROWING ACTIVITIES ON WHICH TECNICOLOR IS THE WORLDWIDE MARKET LEADER
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C3 - Restricted Natixis CONNECTED HOME: A TRANSFORMED MARKET LEADER
1 2 3
CPE is a sizable market Pronounced shift of the Consumers’ need for a with strategic value for business away from video high-quality broadband and service providers and and investment in the wifi service at home Technicolor has distinct growing segments: enhanced by the lockdown competitive advantages Broadband Gateways and Android TV
4 5 6
Reduced volatility of the Further margin expansion Foundation set to realize business with recent opportunities from customer the benefits of aggressive indexation on component selectivity, product portfolio opex cost reduction and prices now factored into rationalization and sourcing significant investments over client contracts efficiencies the past two years
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H1 2020 KEY FIGURES FROM CONTINUING OPERATIONS
REVENUES of €1,433 million, after a strong first quarter, activities have demonstrated good resilience to the Covid-19 crisis in the second quarter
► Production Services activities were most affected due to the halting of live action shooting, impacting Film and Episodic Visual Effects and Post Production. Increased demand in Animation and resilience in Advertising helped mitigate the Post IFRS 16 impact of Covid-19; ► DVD Services were hit by the lack of new film releases following cinema closures, partly compensated by strong back catalog demand; ► After facing supply shortages, Connected Home’s Asian activities are now back to normal. Consumer demand for better broadband and wifi helped drive strong demand in the United States.
ADJUSTED EBITDA of €53 million, down 49% at constant rates, was impacted by lower business volumes in Film & Episodic Visual Effects and in DVD Services related to Covid-19 business interruption, partly compensated by operational and financial improvements across all divisions, particularly visible in Connected Home where EBITDA grew 126% compared to H1 2019
ADJUSTED EBITA of €(67) million was lower by €(23) million, mitigated by lower D&A and reserves
FCF* of €(286) million was lower by €(24) million at current rate
(*) Free cash flow defined as: Adj. EBITDA – (net capex + restructuring cash expenses + change in pension reserves + change in working capital and other assets & liabilities + cash impact of other non-current result + net financial interests + foreign exchange result + other financial results and income tax).
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C3 - Restricted Natixis H1 2020 KEY FIGURES BY BUSINESS UNIT (€M)
REVENUES ADJUSTED EBITDA ADJUSTED EBITA
YoY margin margin 1,764 9 1,433 104 -18.8% 5.9% -44 -67 13 40.2% 24 19 20 2.5% 4.4% 2.4% 9 953 2.5% 53 -31 839 3.7% -12.0% -51
-17 81 374 18.8% 54 6.4% 302 -15 -19.3% -29 1 2 0.5% 0.8% 428 279 -10 -7 -34.8% -5
H1 19 H1 20 H1 19 H1 20 H1 19 H1 20
Production Services DVD Services Connected Home Corporate & Other
Notes: EBITDA and EBITA figures are presented including IFRS 16 impact, figures are presented at current rates. 29
C3 - Restricted Natixis FREE CASH FLOW FROM CONTINUING OPERATIONS H1 20 VS. H1 19
Free Cash Flow from continuing operations: H1 20 vs H1 19
(262) (280) (286)
+34 +9 +2 +10 (8) (191) (1) (7) (206) (51)
FCF H1 19 EBITDA Net Net ∆ WC/OAL ∆ WC/OAL Rendering Financial Tax Pensions FCF H1 20 Forex impact FCF H1 20 as published adj capex restructuring 2019 2020 & other @LYR @CR
€(18)m
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C3 - Restricted Natixis
A NEW FINANCIAL FRAMEWORK FOR LONG-TERM SUSTAINABILITY
JULY 5: JULY 20: JULY 20: JULY 28: EARLY SEPT. : SAFEGUARD PLAN ALL RESOLUTIONS APPROVED AT RECEIPT OF THE APPROVAL OF THE RECEIPT OF THE APPROVED BY THE THE SHAREHOLDER GENERAL FIRST TRANCHE OF ACCELERATED BALANCE OF THE MAJORITY OF ALL MEETING ~€240 MILLION OF FINANCIAL NEW MONEY FACILITY VOTING CREDITORS THE NEW MONEY SAFEGUARD BY THE FOR AN AMOUNT OF C. ► Restructuring plan, including €330m FACILITY PARIS COMMERCIAL €180 MILLION ► € 420m new financing rights issue and €330m reserved and deleveraging capital increase, approved by the COURT through € 660m of debt EGM reimbursement and/or equitization ► Existing shareholders will receive free warrants enhancing their ► Addressing the liquidity opportunity to participate in needs of the group and Technicolor’s recovery and long- providing a new term value creation framework for long-term sustainability for all ► Lenders will receive free warrants in Technicolor consideration of the lending of the stakeholders €420m new financing
SUCCESSFUL RESTRUCTURING PLAN providing a framework for long-term sustainability for the company’s businesses, employees, customers and suppliers
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C3 - Restricted Natixis KEY STEPS (TIMETABLE)
4 August 7 August 11 August Early 2020 2020 2020 September Publication of the Ex-rights date and Start of the Second drawdown of prospectus start of rights trading subscription period the New Money facility supplement period for the remainder, i.e. ~€180m
9 September 11 September 16 September 22 September 2020 2020 2020 2020 End of the rights End of subscription Results of the Rights Admission to trading trading period period Issue and settlement
Steps completed Next steps 33
C3 - Restricted Natixis NET NOMINAL DEBT/CASH EVOLUTION
January June 30st st Increase In m€ 1 2020 Decrease 2020
(50) 417
Gross 1 670 1 302 Nominal Debt
+368 Net Debt 1237 1607 at Nominal value
January FCF New cash CF Disco Others June In m€ 1st 2020 Continuing from Debt 30st 2020
(61) 65 63 353
Cash (286) position (9)
(2) 34
C3 - Restricted Natixis NET NOMINAL DEBT/CASH EVOLUTION
AVAILABLE AMOUNT LIQUIDITY AT JUNE 30, 2020 (IN € MILLION) CASH ON HAND OF €63 MILLION Cash on hand at June 30, 2020 63
Committed credit facilities:
Technicolor SA Revolving Credit 0 Facility (€250m matures Dec 2021)
Wells Fargo credit line ($125m 65* matures December 2023)
LIQUIDITY €128m
* The availability of this credit line varies depending on the amount of receivables.
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C3 - Restricted Natixis KEY FIGURES – GROUP
H1 Forex vs. LY vs. LY 2020 2019 impact at constant rate (a) (b) (c=a+b)
(in € million) Current rate LY rate LY rate Current rate LY rate
Revenues 1,433 1,423 1,764 (331) (18.8)% (9) (341) (19.3)% Adjusted EBITDA 53 53 104 (52) (49.6)% +0 (51) (49.2)% in % of Revenues 3.7% 3.7% 5.9% D&A & Reserves (*) w/o PPA (120) (119) (148) +28 +19.1% +1 +29 +19.8% amortization Adjusted EBITA (67) (66) (44) (23) (53.5)% +1 (22) (50.4)% PPA amortization (22) (21) (27) +6 +21.5% +0 +6 +23.0% Non-recurring EBIT (106) (104) (17) (89) ns +2 (87) ns EBIT (194) (191) (88) (106) ns +3 (103) ns Net Result Continuing (264) (260) (143) (121) (84.6)% +4 (117) (81.6)% Net Result Discontinued (1) (0) 4 (5) na +0 (4) na
Net Result Group (Group share) (265) (261) (139) (126) (90.4)% +4 (121) (87.2)%
FCF Continuing (286) (280) (262) (24) (9.3)% +7 (18) (6.7)% Net Debt (IFRS) (1,601) (1,595) (1,333) (267) (20.1)%
(*) Risk, litigation and warranty reserves.
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C3 - Restricted Natixis GROUP PROFILE – REVENUE
H1 20 H1 20 Europe, Middle East & DVD Services North America Africa 21% 29% 57%
H1 19 H1 19 30% Connected 21% Home 59% 53% 54% 24% 7% 10% 1% Asia-Pacific Production 8% Services 19%
Latin America Corporate & 6% other 1%
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C3 - Restricted Natixis DETAILS OF DEBT AT JUNE 30, 2020
June 30, 2020 December 31, 2019
Nominal Int rate Issuer Type Curr. Rate formula Maturity(*) IFRS rate** Nominal IFRS Nominal IFRS rate** hedging? Libor w/ floor of 0% + Technicolor SA Term loan USD n.a. 0% 0% Yes 259 258 259 258 2.75% Euribor w/ floor of 0% + Technicolor SA Term loan EUR n.a. 0% 0% Yes 275 274 275 274 3.00% Euribor w/ floor of 0% + Technicolor SA Term loan EUR n.a. 0% 0% No 450 448 450 448 3.50%
RCF Credit line EUR Euribor + 3.00% n.a. 0% 0% No 250 250 - -
Bridge Loan Credit line USD Base rate + 2.00% Jul-20 10.25% 24.59% No 98 96 - -
Wells Fargo Credit line USD Libor w/ floor of 1% + 2% Sep-21 3.00% 3.00% No 47 47 - -
Lease liabilities*** 7.11% 7.11% No 281 281 312 312
Other debt and accrued 0.03% 0.03% No 10 10 6 6 interest
Total Debt: €1,670m €1,664m €1,302m €1,298m
Cash: 63 63 65 65
Net Debt: €1,607m €1,601m €1,237m €1,233m
Average interest rate: 1.88% 2.70% 4.34% 4.42%
Average rate (with hedging): 1.91% 2.74% 4.38% 4.46%
(*) In Sept. 2020 the Term Loans and RCF will be partially swapped to equity and restated for the remaining amount with maturity Dec. 2024. (**) Under the "sauvegarde" the interest on the Term Loans and the RCF is suspended. (***) €256m of operating lease debt and €25m of capital lease debt. 38
C3 - Restricted Natixis DISCLAIMER
This document does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No communication and no information in respect of this transaction may be distributed to the public in any jurisdiction where a registration or approval is required. The issue, the subscription for or the purchase of Technicolor’s shares may be subject to specific legal or regulatory restrictions in certain jurisdictions. Technicolor assumes no responsibility for any violation of any such restrictions by any person.
This document, the information it includes, do not constitute an offer to sell or subscribe for, or a solicitation of an order to buy or subscribe for Technicolor securities in Australia, Canada, Japan, or the United States of America or in any other country in which such offer or solicitation would be unlawful.
The release, publication or distribution of this document may, in certain jurisdictions, constitute a breach of the applicable local laws and regulations. Consequently, persons physically present in such jurisdictions in which this document is released, published or distributed must be aware of and comply with any such local restrictions.
This announcement is an advertisement and not a prospectus within the meaning of Regulation (EU) No 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing the Prospectus Directive 2003/71/EC (the "Prospectus Regulation").
With respect to the Member States of the European Economic Area other than France and with respect to the United Kingdom, no action has been undertaken or will be undertaken to make an offer to the public of the securities referred to herein requiring a publication of a prospectus in any relevant Member State or in the United Kingdom. Accordingly, any offer of Technicolor's securities may only be made in any Member State or in the United Kingdom (i) to qualified investors as defined in the Prospectus Regulation, or (ii) in any other case exempting Technicolor from having to issue a prospectus in accordance with Article 1(4) of the Prospectus Regulation.
This document does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. With respect to the United States, Technicolor's securities have not been, and will not be, registered under the Securities Act of the United States of America, as amended (U.S. Securities Act of 1933, as amended, hereinafter referred to as the "U.S. Securities Act") and Technicolor does not intend to make a public offer of its securities in the United States. The securities of Technicolor may not be offered, sold, exercised or delivered within the territory of the United States of America, as defined by Regulation S of the U.S. Securities Act, except pursuant to an exemption from the registration or in a transaction not subject to the registration requirements thereof and any applicable states securities laws.
Warning: Forward Looking Statements: This document contains certain statements that constitute "forward-looking statements", including but not limited to statements that are predictions of or indicate future events, trends, plans or objectives, based on certain assumptions or which do not directly relate to historical or current facts. Such forward-looking statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the future results expressed, forecasted or implied by such forward-looking statements. For a more complete list and description of such risks and uncertainties, refer to Technicolor’s filings with the French Autorité des marchés financiers and, in particular, the Prospectus.
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C3 - Restricted Natixis THANK YOU
C3 - Restricted Natixis