GAUMONT: Half-year consolidated results as of June 30, 2017

Neuilly-sur-Seine, July 27, 2017

Gaumont's Board of Directors, which met on July 25, 2017 under the chairmanship of Nicolas Seydoux, approved the financial statements to June 30, 2017 and proceeded to cancel the 1,284,112 shares repurchased during the public share buyback offer which closed on June 26, 2017. Following this cancellation, Gaumont SA's share capital is now composed of 3,119,723 shares.

CONSOLIDATED HALF-YEAR RESULTS as of June 30, 2017

Two significant events occurred in the first half of 2017:

• the sale to Pathé of Gaumont's 34% minority stake in Les Cinémas Gaumont Pathé, completed on May 16, 2017 for €380 million. The gain recognized in the consolidated financial statements to June 30, 2017 totaled €143.9 million, net of fees. Half of the price had been paid as of the completion date, the balance is interest-bearing and deferred over three years;
   
• the public share buyback offer conducted by Gaumont, the result of which was announced by the AMF (the French Financial Markets Authority) on June 30, 2017. Gaumont repurchased 1,284,112 of its shares at a unit price of €75. The share settlement took place on July 6, 2017. The share repurchase commitment was recognized in the financial statements to June 30, 2017. In accordance with IFRS, treasury shares totaling €97 million, including acquisition costs, have been deducted from consolidated equity.

• REVENUE FOR THE FIRST HALF OF 2017

Consolidated revenue for the first half of 2017 amounted to €56.8 million, versus €75.5 million as of June 30, 2016.

• Cinema production

Revenue for the cinema production business amounted to €40.9 million as of June 30, 2017, versus €65.3 million as of June 30, 2016:

• revenue from film distribution in French movie theaters stood at €11.6 million as of June 30, 2017, versus €21.0 million as of June 30, 2016. In the first half of 2017, 4.7 million cinema tickets were sold for the seven movies released. Of these, 1.3 million tickets were sold for A Bag of Marbles, 1.2 million for Step by Step, and just under 900,000 for 50 is the New 30. The animated film Ballerina, released in theaters in December 2016, sold 1.8 million tickets for its distribution as a whole, 500,000 of which were in 2017;
   
• revenue from video distribution and video on demand in France amounted to €6.3 million as of June 30, 2017, versus €4.9 million as of June 30, 2016. Sales of new films are relatively unchanged for the period, with solid results for Ballerina, released on video and VoD in April 2017. Sales of catalog titles have risen, particularly following the agreement signed with Netflix for around 20 films;
   
• sales of broadcasting rights to French television channels totaled €7.8 million as of June 30, 2017, versus €21.6 million as of June 30, 2016. No presales were recorded during the first half of 2017, compared with €7.8 million for The Visitors: Bastille Day at the end of June 2016. Sales of catalog titles to historical television channels were lower than for the previous year, which was an excellent year, while sales to digital channels increased. More than 100 movies were sold in the first six months of the year;
   
• international sales of rights totaled €12.9 million as of June 30, 2017, compared with €15.5 million as of June 30, 2016. These were mainly driven by Ballerina - which sold more than 10 million cinema tickets outside France - and A Bag of Marbles. Sales of catalog films were in line with the previous period.

• Television production

Revenue for the television production business amounted to €13.3 million as of June 30, 2017, versus €7.7 million as of June 30, 2016.

First-half of 2017 revenue mainly came from the delivery to Netflix in the United States of Season 2 of F is for Family, released on its online platform on May 31, 2017. Most of the drama and cartoon series will be delivered in the second half of 2017 or in early 2018. This includes Season 3 of Narcos, which will be delivered to Netflix this summer ahead of its online release in early September.

• RESULTS FOR THE FIRST HALF OF 2017

Gaumont's net income reached €130.5 million as of June 30, 2017, versus €6.4 million as of June 30, 2016. It comprises:

• operating income after share of net income of associates, which stood at €134.2 million as of June 30, 2017, versus €7.2 million as of June 30, 2016, consisting of:
   
  • operating income from cinema production and distribution, excluding overheads, which totaled €8.7 million as of June 30, 2017, versus €19.4 million as of June 30, 2016,
     
  • operating income from the television production business in France and in the United States, excluding overheads, which amounted to -€1.2 million as of June 30, 2017, versus €0.1 million as of June 30, 2016,
     
  • operating income from movie theater operations, which totaled €9.6 million as of June 30, 2017, versus €10.1 million as of June 30, 2016. This includes the €8.4 million contribution from Les Cinémas Gaumont Pathé prior to its sale, in addition to trademark royalties of €1.8 million,
     
  • the gain on disposal of the 34% minority stake in Les Cinémas Gaumont Pathé for €143.9 million;
     
• net financial income, which was a loss of €5.6 million as of June 30, 2017, compared with €3.9 million for the same period in the previous year. This amount is 50% composed of borrowing costs in France and the United States, and 50% unrealized foreign exchange losses related to production activities in North America, denominated in US dollars;
   
• net tax income of €1.8 million, consisting of a current tax expense of €1.0 million and deferred tax income of €2.8 million.

• EQUITY AND BORROWINGS

Consolidated equity (Group share) stood at €313.3 million as of June 30, 2017, versus €277.3 million as of December 31, 2016. This net increase is the result of opposite effects: increases of €6.7 million from the exercise of stock options and €130.5 million from net income, including the gain on disposal of the stake in Les Cinémas Gaumont Pathé, offset by reductions due to a €4.3 million dividend payout and the repurchase of treasury shares for €97.4 million.

The Group's net borrowings had fallen significantly to €5.1 million as of June 30, 2017, versus €205.3 million as of December 31, 2016. This includes €122.1 million in cash from the sale of Les Cinémas Gaumont Pathé (50% paid for, in line with the agreements), the Gaumont SA bond for €59.6 million and self-liquidating production loans of €59.4 million, based on proceeds from pre-financing and the release of French and American series.

The financial statements to June 30, 2017 also include the balance of €190 million due from Pathé for 50% of the sale of Les Cinémas Gaumont Pathé, for which the payment will be spread equally over 3 years, and a liability of €96 million corresponding to the price of the shares acquired under the public share buyback offer, which were settled on July 6, 2017.

• OUTLOOK

Six movies are scheduled to be released in theaters by December 31, 2017:

• Barbara, directed by Mathieu Amalric and starring Mathieu Amalric and Jeanne Balibar, to be released on September 6;
• Tomorrow and Thereafter, directed by Noémie Lvovsky and starring Noémie Lvovsky, Mathieu Amalric, Denis Podalydès and Lucie Saint-Jean, to be released on September 27;
• C'est la Vie!, directed by Olivier Nakache and Eric Toledano and starring Jean-Pierre Bacri, Gilles Lellouche and Jean-Paul Rouve, to be released on October 4;
• See You up There, directed by Albert Dupontel and starring Albert Dupontel, Laurent Lafitte, Niels Arestrup and Emilie Dequenne, to be released on October 25;
• Bright Weakness, directed by Guillaume Gallienne and starring Adeline d'Hermy, Vanessa Paradis, Eric Ruff and Xavier Beauvois, to be released on November 15;
• Santa & Cie, directed by Alain Chabat and starring Alain Chabat, Audrey Tautou and Pio Marmaï, to be released on December 6.

Five television series will be delivered during the second half of 2017:

• Season 3 of Narcos, a 10-episode American drama directed by José Padilha and Eric Newman, delivered to Netflix and to be released on September 1, 2017;
• the final four episodes of The Art of Crime, a 6-episode French drama, delivered to France 2;
• the first episodes of the cartoon series Trulli Tales, delivered to the Disney Channel;
• the first episodes of the cartoon series Belle and Sebastian, delivered to M6;
• the first episodes of the cartoon series Furry Wheels, delivered to France 3.

• DATES OF NEXT FINANCIAL COMMUNICATION

A press release on the full-year consolidated results as of December 31, 2017 will be published on February 19, 2018.

APPENDIX: Half-year consolidated revenue