TECHNICOLOR_REGISTRATION_DOCUMENT_2017

3 - RISKS, LITIGATION AND CONTROLS Risk factors

Foreign exchange rate fluctuations can affect the Group’s operating results The Group incurs foreign currency translation risk because a significant part of the its consolidated revenues as well as a portion of its assets are in subsidiaries that use currencies other than the euro and in particular the U.S. dollar as their functional currency. In 2017 exchange rate fluctuations of all currencies had a negative translation impact of €83 million on the Group’s revenue and no impact on profit from continuing operations before tax and net finance costs. The impact on revenues was mainly due to the U.S. dollar (average rate versus the euro dropped 2.9% in 2017 versus 2016). To the extent that the Group has costs in one currency and has sales in another, the Group incurs foreign currency transaction risk and its profit margins may be affected by changes in the exchange rates between the two currencies. Most of Technicolor’s sales are in U.S. dollars and in euro; however, certain expenses are denominated in other currencies. Although the Group may hedge against currency transaction risk, given the volatility of currency exchange rates and the occasional illiquidity in some emerging market currencies, together with the potential for changes in exchange control regulations in such emerging markets, the Group cannot ensure that it will be able to manage these risks effectively. Foreign exchange rate fluctuations have had and may in the future continue to have an adverse impact on the Group’s operating results and financial condition, especially when the euro fluctuates significantly against the U.S. dollar or other foreign currencies. The Group’s largest currency exposure is to the U.S. dollar versus the euro. A 10% increase in the U.S. dollar versus the euro, assuming no hedging was in place, would cause the Group’s profit from continuing operations before tax and finance costs to decrease by €12 million. A 10% decrease in the U.S. dollar versus the euro would have a symmetrical impact in the opposite amount. Risk management of the interest rate risk and exchange rate fluctuations Management of interest rate and exchange rate risks is done by the Group treasury in accordance with Group policies and procedures. All financial market risks are monitored continually and reported regularly to the Chief Financial Officer, the Investment Committee and the Audit Committee via various reports showing the Company’s exposures to these risks with details of the transactions undertaken to reduce them. For each type of transaction, specific limits and authorizations are approved by the Investment Committee and

controlled by the Group Internal Control Department. To reduce interest rate and currency exchange rate risk, the Group enters into hedging transactions using derivative instruments. See note 8.2.2 to the consolidated financial statements for more information about this risk and its management. Liquidity Risk description The Group's ability to access the financial markets could be limited if the Group's financial position deteriorates. The Group seeks to maintain a broad access to liquidity to meet its commitments and investment needs. To do this, the Group borrows on the banking and capital markets, which exposes it to liquidity risk in the event of total or partial closure of these markets. Liquidity risk is the risk of not being able to raise funds to meet future financial obligations. Technicolor's ability to access financial markets may be curtailed if its financial condition or general market conditions deteriorate. Such a deterioration could result in increased costs, or even a limitation, of access to the financial markets. Risk management To manage this risk, the Group's treasury management is centralized. The central treasury team manages current and forecasted financing needs and ensures the Group's ability to meet its financial commitments by maintaining a level of cash and confirmed credit facilities required for its business and to meet debt maturities. The Group pursues policies aimed at securing continued and uninterrupted access to financial markets on reasonable terms. It monitors the relative proportion of debt and equity, the outlook for the financial markets, the Group’s financial projections (in particular consolidated cash forecasts), its debt maturity schedule, the covenants in its debt documentation and its financing needs. In order to optimize the financial cost of these financings, the Group uses various sources of financing which include equity (see note 7.1), term loans (see note 8.3) and subordinated debt (see note 7.2.2). and confirmed lines of credit. For further information on liquidity risk and certain related risks, see note 8 (in particular 8.3.1) of the Group's consolidated financial statements and section 2.10 “Cash and capital”.

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TECHNICOLOR REGISTRATION DOCUMENT 2017