TECHNICOLOR_REGISTRATION_DOCUMENT_2017

- 3 RISKS, LITIGATION AND CONTROLS Internal control

INTERNAL CONTROL 3.3

[G4-45] [G4-46] [G4-49] [G4-SO3] [G4-DMA Assessment]

GRI

The internal control procedures mentioned in the present Chapter apply to the Company and to all its subsidiaries and are under the responsibility of each Technicolor employee. The major components underlying the preparation of this report are (i) the French Loi de sécurité financière (Law regarding Financial Security), (ii) the Ordinance No. 2008-1278 of December 8, 2008, (iii) the AMF guidelines on risk management and internal control and (iv) Article R. 225-105-1 of the French Commercial Code about disclosure of non-financial information related to Corporate Social Responsibility. In March 2011, the Company voluntarily delisted from the New York Stock Exchange (NYSE). As a consequence, it is no longer subject to the Sarbanes Oxley Act obligations. Following the delisting, the Group decided to maintain high standards of financial reporting discipline, capitalizing on the work undertaken previously. The program, called 8TIC’S, was launched at the beginning of 2011 with the objective to maintain and expand the internal control scope beyond financial reporting through a risk-based approach. The seventh annual campaign of the program has been successfully performed in the course of 2017, and a new campaign starts as of January 2018. OBJECTIVES OF INTERNAL 3.3.1 Objectives of internal control procedures The Group’s internal control framework is designed to achieve the following main objectives: application of the instructions and directional guidelines fixed by ■ the Group’s management bodies in line with the Group’s overall objectives and the inherent risks; CONTROL PROCEDURES AND IMPLEMENTATION

correct functioning of the internal processes, such as the ones ■ pertaining to the security of its assets as well as the operational, industrial, commercial and financial processes; compliance with applicable laws and regulations; ■ reliability of financial and non-financial information obtained ■ through the implementation of internal control procedures. The internal control framework aims at preventing and mitigating risks arising from the Group’s conduct of business and risks of error or fraud, in particular in areas of accounting, finance and social responsibility. As for every control system, it cannot provide an absolute guarantee that these risks are totally eliminated. Internal control methodology The internal control methodology is based on three pillars: a risk based approach which starts from the Group Risk ■ Management program (see paragraph below “Risk Management”) and allows internal control to deploy its methodology on the main Group risks. From 2011 to 2017 onwards, several new sub-processes per year have been rolled out under the new internal control program approach and 2017 marks the final step of the expansion of this referential. Going forward, this referential will be revisited and updated together with the evolution of risks; a self-assessment on controls implementation by the most ■ significant entities, totaling the vast majority of the Group scope according to the relevant indicators (Revenue, contribution to EBITDA and other financial and non-financial indicators function of each nature of risk). In 2017, about 270 control owners were designated to perform a self-assessment on 2,533 controls over 58 finance and non-finance processes; an independent testing managed by Internal Audit covering about ■ 20% of the self-assessed controls. This testing aims at providing assurance that the Technicolor internal control framework is effective. Independent testers are composed of Internal Auditors and some internal finance experts properly trained to the testing exercise.

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TECHNICOLOR

REGISTRATION DOCUMENT 2017