EuropaCorp : HALF-YEARLY FINANCIAL REPORT TO SEPTEMBER 30, 2022

HALF-YEARLY FINANCIAL REPORT

TO SEPTEMBER 30, 2022

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A - ACTIVITY REPORT FOR THE FIRST HALF OF 2022/2023

1. EuropaCorp Group results

The first half of the 2022/2023 fiscal year was marked by the shooting of DogMan, Luc Besson's next film, the release of Arthur Malediction, and the sustained operation of the catalog, which generated the cash needed to meet the deadlines of the Safeguard Plan while maintaining a high level of cash for the Group.

The consolidated accounts for the first half of the 2022/2023 fiscal year of the EuropaCorp group, drawn up in accordance with IFRS, show consolidated revenues of €13.2 million, compared to €17.3 million for the first half of the previous fiscal year. This 24% decrease is mainly due to lower Television & SVOD sales in the absence of significant rights openings linked to pre-financing.

In general, the Group points out that its revenues are linked to the release schedule of its films under different modes of exploitation, the timing of which may lead to significant variations in revenues per channel from one half-year to the next. Revenues and earnings for a given half-year are therefore not indicative of annual revenues and earnings.

As a result of the decline in revenues, the operating margin fell by 25% to €6.7 million compared with €9.0 million in the first half of the previous year. However, the margin rate remained stable at 51% compared with 52% in the first half of 2021/2022, with the activity once again focused on the exploitation of the high- margin catalog.

Overhead costs amounted to €(6.5) million for the six months ended September 30, 2022, a slight improvement compared to the level of overhead costs for the first half of the previous year at €(6.7) million.

Other operating income and expenses amounted to €(0.2) million, mainly related to the sale of Digital Factory, compared to €0.4 million in the first half of the previous year, which included reversal of provisions for risks and expenses.

After taking these items into account, operating income was breakeven, compared with €2.7 million for the six months ended September 30, 2021.

The financial result for the first half of the year is positive at €0.3 million thanks to significant exchange gains linked to the EUR/USD evolution, compared to €(1.4) million in the first half of 2021/2022. It breaks down as follows:

• €(1.3) million: cost of financial debt related to the Senior debt, spread over 9 years by the Safeguard Plan;
• €2.9 million: a positive foreign exchange result linked to the evolution of the €/$ exchange rate over the period;
• €(1.4) million: other financial costs, including in particular the amortization of the costs of setting up the credit line and the rent expense reclassified as financial interest (IFRS 16).

The current result before taxes was positive at €0.3 million, i.e. 3% of the turnover.

After taking into account tax income of €0.4 million (including deferred taxes related to temporary differences in depreciation and amortization of €0.5 million), compared to €(3.2) million as of September 30, 2021, the Group's share of net income for the first half of the year is positive at €0.6 million.

Cash flow from operations for the first half of the year was €8.2 million compared to €10.5 million for the first half of the previous year. This is mainly due to the decrease in receipts from French television channels, which correlates with the decrease in Television & SVOD sales over the period.

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2. Activities

2.1 Production and distribution of motion pictures

2.1.1 International Sales

International sales amounted to €7.2 million, or approximately 55% of total revenues. They increased by €1.4 million compared to the first half of the previous fiscal year, thanks in particular to the significant royalties received on Lucy and Taken 3.

2.1.2 Theatrical distribution

Theatrical distribution, marked by the release of Arthur Malediction in June 2022, recorded revenues of €0.4 million. The film attracted nearly 200,000 admissions in France.

2.1.3 Video & VOD

Video & VOD activity in France and the United States amounted to €0.5 million, compared to €0.7 million last year, and mainly concerned VOD in France.

2.1.4 Sales of television rights (Television & SVOD)

Television & SVOD sales in France and the United States amounted to €3.9 million in the first half of 2022/2023, or 30% of revenues. They are down by €(6.0) million compared with the first half of 2021/2022, which included in particular the opening of rights linked to the pre-financing of Valerian and the City of a Thousand Planets, Anna and Coexister, against only that of American Renegades this year.

2.1.5 Production and distribution of television films and series

Revenues from the TV Series amounted to €0.2 million following settlements received on the series Taken, compared with €(0.3) million on this same series at September 30, 2021.

2.2 Other activities

The Other activities item generated a total of €1.1 million compared to €1.2 million in the first half of the previous fiscal year. This item includes revenues from partnership and licensing agreements, music publishing and post-production activities.

3. Cost of sales

Cost of sales (operating expenses excluding overheads) amounted to €(6.4) million compared with €(8.3) million for the first half of FY 2021/2022.

The decrease in this item of €1.9 million is mainly explained by the decrease in amortization and depreciation charges for €3.4 million, which amounted to €(3.1) million compared to €(6.5) million as of September 30, 2021, to be compared with the decrease in revenues for the period, partially offset by an increase in third- parties expenses (participation). The operating margin rate was stable at 51% compared to 52% at September 30, 2021.

4. Investments made

Concerning investments in films, the Group invested €1.3 million, mainly on the film DogMan, compared

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€1.1 million in the first half of 2021/2022.

5. Financial structure

As of September 30, 2022, net debt amounted to €21.7 million compared to €26.4 million as of March 31, 2022. This decrease is mainly due to the payment of the second instalment under the Safeguard Plan concerning the repayment of the Senior debt for €12 million (of which €2 million interest), partially offset by the cash flows generated by the catalog and cost control. The Group's cash position therefore only decreased by €6.3 million to €54.3 million at September 30, 2022.

6. Important events during the first half of the year

• Sale of the Digital Factory subsidiary

EuropaCorp's post-production activities were grouped under the "Digital Factory" label and included all image and sound post-production operations. Wishing to refocus on its core business, which is the production and distribution of films and series worldwide, EuropaCorp signed an agreement on September 29, 2022 to sell its Digital Factory subsidiary to the Atlantis audiovisual group, a major player in post- production in France.

7. Important events since the closing date

N/A

8. Risk factors and related party transactions

The risk factors are of the same nature as those set out in Chapter 3 of the Annual Report and do not present any significant changes.

Amounts relating to financial and market risks as of September 30, 2022, are set out in note 3.11 "Financial instruments" to the interim consolidated financial statements in this report.

Related party transactions are described in note 5.2 to the interim consolidated financial statements in this report.

9. Perspectives

As announced by Apollo Films, Luc Besson's DogMan, starring young American actor Caleb Landry Jones (winner of the Best Actor Award at Cannes in 2021) and American star Marisa Berenson, will be released in French theaters on April 19, 2023, distributed by EuropaCorp Distribution and Apollo Films.

This 20th feature film by Luc Besson, who also wrote the screenplay, is produced by LBP (Luc Besson Production), in coproduction with EuropaCorp.

EuropaCorp has also completed the coproduction, in partnership with Docsville Studios, of the documentary Rainbow Warrior, which ambitiously relates the story of the impact of French nuclear testing in the Pacific. This work is in line with the editorial line of documentaries to be produced by EuropaCorp, which focuses on three themes: environment, cinema and urbanity.

It will be distributed worldwide by Fremantle.

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EuropaCorp has also signed a codevelopment / coproduction agreement for the adaptation into a series of one of its greatest successes, Lucy, with the Los Angeles-based company Village Roadshow.

In addition, the Group intends to shortly put several significant projects already developed into production, as soon as the associated financing is secured, including a major franchise film. These projects, which are currently being pre-financed, concern films, series and documentaries, considering both EuropaCorp's DNA and the evolution of the market.

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