GAUMONT : Full-year consolidated results as of December 31, 2017

Neuilly-sur-Seine, February 15, 2018

The Gaumont Board of directors, which met on February 15, 2018 under the chairmanship of Nicolas Seydoux, approved the financial statements for the year ended December 31, 2017.

FULL-YEAR CONSOLIDATED RESULTS as of December 31, 2017

Two strategic events occurred in 2017:

• the sale to Pathé of Gaumont's 34% minority stake in Les Cinémas Gaumont Pathé completed on May 18, 2017 for €380 million. The gain recognized in the consolidated financial statements totaled €143.9 million, net of fees. Half of the sales price was paid on the date of the sale. The balance, accruing interest, was deferred over three years. On July 20, 2017, Pathé made an early payment of €63.3 million for the first deferred payment installment, initially set for June 29, 2018;
   
• 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 for €96.3 million. Gaumont's Board of directors, which met on July 25, 2017, decided to cancel the treasury shares purchased during the public share buyback offer. Following this cancellation, Gaumont SA's share capital is now composed of 3,119,723 shares.

• 2017 REVENUE

Consolidated revenue for 2017 amounted to €177.0 million, versus €188.7 million in the previous year.

• Cinema production

Revenue from the cinema production business amounted to €96.9 million in 2017, compared to €114.0 million in 2016:

• revenue from film distribution in French movie theaters stood at €30.7 million in 2017, compared to €30.9 million in 2016. The 13 films released in 2017 sold 12.2 million tickets, including 3 million for C'est la Vie !, 2 million for See You up There, and 1.3 million, 1.2 million and 1.6 million, respectively, for A Bag of Marbles, Step by Step and Santa & Co, which was still on release in 2018, selling a total of almost 2 million tickets. Of the year's films, 4 were nominated at the 2018 Césars, with 36 nominations in total;
   
• revenue from video and video on demand distribution in France amounted to €11.6 million in 2017, versus €11.0 million in 2016. Physical video sales were stable, with almost 1 million video units sold. Digital sales (VOD and SVOD) rose, mainly due to the agreement signed with Netflix for around 20 catalog films;
   
• sales of broadcasting rights to French television channels amounted to €18.6 million in 2017, compared with €37.1 million in 2016.  No pre-sales were recorded in 2017, compared with €12.3 million in 2016 for The Visitors: Bastille Day, Odd Job and Heartstrings. 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 200 films were sold during the year;
   
• international sales of rights stood at €30.9 million in 2017, compared with €30.3 million in 2016. This was mainly driven by Ballerina, which sold more than 10 million tickets outside France, followed by C'est la Vie !, A Bag of Marbles, Santa & Co and The Death of Stalin, which enjoyed huge success upon its first global release in the United Kingdom last October. Sales of catalog films were in line with the previous period;
   
• sales of spin-off products, music rights and archive images amounted to €5.1 million in 2017, compared to €4.8 million the previous year.
   

• Television production

Revenue from the production of television programs totaled €74.6 million in 2017, compared to €67.7 million in 2016.

Sales of American series accounted for €67.8 million of revenue in 2017, versus €57.9 million in 2016. The 3^rd season of Narcos and the 2^nd season of F is for Family were delivered to Netflix for online release in September and May 2017 respectively.

Revenue related to French television dramas and cartoon series came to €6.8 million in 2017, compared to €9.8 million in 2016, and includes sales of:

• the six-episode drama The Art of Crime, broadcast on France 2 in November 2017;
• the first episodes of the cartoon series Belle and Sebastian to M6 and Trulli Tales to Disney.

• 2017 RESULTS

Gaumont's net income reached €123.0 million in 2017, compared to €18.9 million in 2016. It includes:

• operating income after share of net income of associates, which stood at €133.1 million in 2017, versus €23.2 million in 2016, consisting of:
   
  • the gain on disposal of the 34% minority stake in Les Cinémas Gaumont Pathé for €143.9 million,
     
  • operating income from cinema production and distribution, excluding overheads, which totaled €12.6 million in 2017, compared to €30.3 million in 2016,
     
  • operating income from the television production business in France and in the United States, excluding overheads, which amounted to €9.9 million in 2017, versus €11.4 million in 2016,
     
  • operating income from movie theater operations, which totaled €12.0 million in 2017, versus €23.8 million in 2016. This includes the €8.4 million contribution from Les Cinémas Gaumont Pathé prior to its sale, in addition to trademark royalties of €3.6 million;
     
• a net financial expense of €8.1 million in 2017, compared with a net expense of €5.3 million in 2016, including €4.5 million in unrealized foreign exchange losses on production activities in North America denominated in US dollars;
   
• a net deferred and current tax expense of €2.0 million in 2017, compared to net tax income of €1.1 million in 2016.

• EQUITY AND BORROWINGS

Consolidated equity (Group share) stood at €305.1 million as of December 31, 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 €123.0 million from net income, including the gain on disposal of the stake in Les Cinémas Gaumont Pathé, offset by reductions due to a €3.1 million dividend payout and the repurchase of treasury shares for €97.0 million.

The Group's net borrowings had fallen significantly to €27.7 million as of December 31, 2017, versus €205.3 million as of December 31, 2016. This mainly includes €83.7 million in cash, mostly from the partial payment received for Les Cinémas Gaumont Pathé, net of the disbursement for the public share buyback offer, the Gaumont SA bond for €60.0 million and self-liquidating production loans of €44.3 million, based on proceeds from pre-financing and the release of French and American series.

The financial statements to December 31, 2017 include the balance of €128 million due from Pathé for the sale of Les Cinémas Gaumont Pathé, to be paid in installments until 2020.

• OUTLOOK

Ten movies are scheduled to be released in theaters in 2018:

• Burn Out, directed by Yann Gozlan, starring François Civil and Manon Azem. Released on January 3, 2018, the film has generated 150,000 ticket sales to date;
• Belle and Sebastian, Friends for Life, directed by Clovis Cornillac, starring Clovis Cornillac, Félix Bossuet and Tchéky Karyo, released on February 14;
• Rolling to You, directed by Franck Dubosc, starring Franck Dubosc and Alexandra Lamy, to be released on March 14;
• The Death of Stalin, directed by Armando Iannucci, starring Jeffrey Tambor, Steve Buscemi and Olga Kurylenko, to be released on April 4;
• Mr. Know-It-All, directed by François Prévôt-Leygonie and Stephan Archinard, starring Arnaud Ducret, Alice David and Max Baissette de Malglaive;
• Raising Colors, directed by Hélène Fillières, starring Lambert Wilson, Diane Rouxel and Josiane Balasko;
• Tricky old Dogs, directed by Christophe Duthuron, starring Pierre Richard, Eddy Mitchell, Roland Giraud and Alice Pol;
• A Man in a Hurry, directed by Hervé Mimran, starring Fabrice Luchini and Leila Bekhti;
• Ailo's Journey, a documentary by Guillaume Maidatchevsky;
• The Emperor of Paris, directed by Jean-François Richet, starring Vincent Cassel, August Diehl, Olga Kurylenko and Freya Mavor.

Eight television series will be delivered in 2018:

• Narcos Season 4, a 10-episode American drama produced by Eric Newman, to Netflix;
• Season 3 of F is for Family, a 10-episode American cartoon series, to Netflix;
• The Art of Crime Season 2, a 6-episode French drama, to France 2;
• Nox, a 6-episode French drama, to Canal+;
• the last episodes of the cartoon series Trulli Tales to Disney Channel;
• the last episodes of the cartoon series Belle and Sebastian to M6;
• the cartoon series Furiki Wheels to France 3.

• DATES OF NEXT FINANCIAL COMMUNICATION

A press release on the half-year consolidated results as of June 30, 2018 will be published on July 27, 2018.

APPENDIX: Full-year and 2^nd half consolidated revenue