Universal Registration Document 2021

RISKS, LITIGATION, AND CONTROLS RISK FACTORS

Operational risks 3.1.2 [102-15]

TECHNICOLOR CREATIVE STUDIOS

CUSTOMER PROJECT MANAGEMENT

Risk identification

Risk monitoring and management

In Technicolor Creative Studios, there are dedicated processes in place for risk assessment that are regularly updated throughout the planning and execution of the projects to identify any risks and mitigating actions needed. As part of the bidding process, the allocation and planning of resources is reviewed by production management to ensure that the assessment is adequate to deliver the project plus the allocation of a contingency. During production, robust monitoring of projects, including regular cost-to-complete financial reviews, is established to ensure that work-in-progress is in line with budgets initially approved, as well as anticipate any deviations in terms of resources, quality, and delivery timing. Progress reports and management indicators are built to support this monitoring process. To ensure that quality of services is in line with customers’ expectations, initial tests and intermediary deliveries are scheduled with customers. The division also uses workflow management tools which help to coordinate reviews and deliveries with third parties and limit the dependencies risks. Further mitigating client dependencies, with fixed bid awards, contracts have well-structured change order provisions to allow for the negotiation of award increases or decreases if a client materially changes the project scope or scale or for creative retakes. With a network of production studios across the globe, Technicolor Creative Studios also has the scale and technology to optimize resource allocation and utilization if a specific project requires additional resources that were not previously anticipated or if a client changes its production schedule and/or release date for the project. Technicolor Creative Studios (TCS) is currently undertaking several initiatives to optimize technology resource sharing among the businesses ( e.g. , cloud render utilization), and to eliminate any overlapping R&D efforts by the centralization of Technology and R&D groups while roll-out of a resourcing platform called (DASH) is being performed. In addition, by increasing investment in Talent Recruitment, Learning & Development (including TCS Academies), and its Global Workforce Planning group, TCS is engaged in active risk mitigation actions to improve its position in the global labor market and secure the talent needed to deliver on its projects.

Projects in Technicolor Creative Studios vary greatly in size, with several large projects that can last 12-18 months and numerous small ones that require much quicker turnarounds. Difficulty resides in the proper anticipation and allocation of resources to deliver a production on time and on budget, mitigating gaps between projects, and managing changes by clients in their production schedules and release dates. The projects can also be executed across multiple geographies and time zones, which may create challenges for the management of such projects. If a project consumes more resources than initially planned, it may • lead to cost overruns that may be difficult to recover from our customers, given that much of Technicolor Creative Studios’ business operates under fixed-price contracts. Dependencies may also exist with the customer and/or other • service providers of the customer that can negatively impact the time available for Technicolor Creative Studios to complete a project ( e.g. , delayed delivery of elements from the client). Production failing to flag to Management when there are issues • ( e.g. , delays, unachieved quotas) may lead to negative financial impacts on the project and a potential client loss. With the current structure and go forward strategy, difficulties may be enhanced this year as management looks for ways to streamline and centralize key operational processes while delivering key projects across several regions and/or service lines.

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TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2021