TECHNICOLOR 2019 CONSOLIDATED FINANCIAL STATEMENTS Audited consolidated financial statements as of December 31, 2019 1 TECHNICOLOR 2019 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF OPERATIONS 3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 4 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 5 CONSOLIDATED STATEMENT OF CASH FLOWS 7 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL INFORMATION ............................................................................................................................... 9 1.1. MAIN EVENTS OF THE YEAR ............................................................................................................................................ 9 1.2. ACCOUNTING POLICIES .................................................................................................................................................. 9 2. SCOPE OF CONSOLIDATION ....................................................................................................................... 17 2.1. SCOPE AND CONSOLIDATION METHOD ........................................................................................................................... 17 2.2. CHANGE IN THE SCOPE OF CONSOLIDATION OF 2019 ..................................................................................................... 18 2.3. CHANGE IN THE SCOPE OF CONSOLIDATION 2018 .......................................................................................................... 18 2.4. INVESTMENTS IN ASSOCIATES & JOINT-VENTURES ......................................................................................................... 19 3. INFORMATION ON OPERATIONS ................................................................................................................ 19 3.1. INFORMATION BY BUSINESS SEGMENTS ......................................................................................................................... 19 3.2. REVENUE & GEOGRAPHICAL INFORMATION .................................................................................................................... 23 3.3. OPERATING INCOME & CHARGES .................................................................................................................................. 24 4. GOODWILL, INTANGIBLE & TANGIBLE ASSETS ....................................................................................... 25 4.1. GOODWILL.................................................................................................................................................................. 25 4.2. INTANGIBLE ASSETS .................................................................................................................................................... 26 4.3. PROPERTY, PLANT & EQUIPMENT ................................................................................................................................. 28 4.4. RIGHT-OF-USE ASSETS ................................................................................................................................................ 30 4.5. IMPAIRMENT ON NON-CURRENT OPERATING ASSETS ...................................................................................................... 30 5. OTHER OPERATING INFORMATION ........................................................................................................... 33 5.1. OPERATING ASSETS & LIABILITIES ................................................................................................................................ 33 5.2. RELATED PARTY TRANSACTIONS .................................................................................................................................. 35 6. INCOME TAX .................................................................................................................................................. 35 6.1. INCOME TAX RECOGNIZED IN PROFIT AND LOSS .............................................................................................................. 35 6.2. TAX POSITION IN THE STATEMENT OF FINANCIAL POSITION .............................................................................................. 36 7. EQUITY & EARNINGS PER SHARE .............................................................................................................. 38 7.1. CHANGE IN SHARE CAPITAL .......................................................................................................................................... 38 7.2. OTHER ELEMENTS OF EQUITY ....................................................................................................................................... 39 7.3. EARNINGS (LOSS) PER SHARE ...................................................................................................................................... 40 8. FINANCIAL ASSETS, FINANCING LIABILITIES & DERIVATIVE FINANCIAL INSTRUMENTS.................. 41 8.1. CLASSIFICATION & MEASUREMENT ............................................................................................................................... 41 8.2. MANAGEMENT OF FINANCIAL RISKS ............................................................................................................................... 42 8.3. BORROWINGS ............................................................................................................................................................. 47 8.4. CASH AND CASH EQUIVALENTS ..................................................................................................................................... 49 8.5. NET FINANCIAL INCOME (EXPENSE) ............................................................................................................................... 50 8.6. DERIVATIVE FINANCIAL INSTRUMENTS ........................................................................................................................... 50 9. EMPLOYEE BENEFIT .................................................................................................................................... 53 9.1. INFORMATION ON EMPLOYEES ...................................................................................................................................... 53 9.2. POST-EMPLOYMENT & LONG-TERM BENEFITS ................................................................................................................ 53 9.3. SHARE-BASED COMPENSATION PLANS .......................................................................................................................... 59 9.4. KEY MANAGEMENT COMPENSATION .............................................................................................................................. 63 10. PROVISIONS & CONTINGENCIES ................................................................................................................ 64 10.1. DETAIL OF PROVISIONS ................................................................................................................................................ 64 10.2. CONTINGENCIES ......................................................................................................................................................... 65 11. SPECIFIC OPERATIONS IMPACTING THE CONSOLIDATED STATEMENT OF CASH-FLOWS............... 67 11.1. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES & INVESTMENTS ................................................................................... 67 11.2. CASH IMPACT OF DEBT REPRICING AND FINANCING OPERATIONS ..................................................................................... 67 11.3. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS ...................................................................................... 68 12. DISCONTINUED OPERATIONS AND HELD FOR SALE OPERATIONS ..................................................... 69 12.1. DISCONTINUED OPERATIONS ........................................................................................................................................ 69 12.2. ASSETS & LIABILITIES HELD FOR SALE ........................................................................................................................... 71 13. SUBSEQUENT EVENTS ................................................................................................................................ 72 14. TABLE OF AUDITORS’ FEES........................................................................................................................ 72 15. LIST OF MAIN CONSOLIDATED SUBSIDIARIES ......................................................................................... 73 2 CONSOLIDATED STATEMENT OF OPERATIONS The accompanying notes on pages 9 to 74 are an integral part of these consolidated financial statements. 3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME The accompanying notes on pages 9 to 74 are an integral part of these consolidated financial statements. 4 CONSOLIDATED STATEMENT OF FINANCIAL POSITION The accompanying notes on pages 9 to 74 are an integral part of these consolidated financial statements. 5 CONSOLIDATED STATEMENT OF FINANCIAL POSITION The accompanying notes on pages 9 to 74 are an integral part of these consolidated financial statements. 6 CONSOLIDATED STATEMENT OF CASH FLOWS (*) In the segment reporting information prepared according IFRS 8, the Free cash flow and the adjusted EBITDA are restated from the IT capacity use for rendering in Production