technicolor - 2019 Universal registration document

RISKS, LITIGATION, AND CONTROLS RISK FACTORS

Global market and industry risks 3.1.1 GRI [102-15]

HEALTH AND SAFETY

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GRI [103-1 Occupational health and safety] [103-2 Occupational health and safety] [403-5] Risk identification

Risk monitoring and management

Most of the Group’s employees work in office buildings, so the environment, health and safety risks are limited on this perimeter. Regarding manufacturing sites, the Group operates mainly three DVD and Blu-ray TM replication sites (two main locations in Mexico and Poland, a smaller one in Australia) and one CPE (Consumer Premises Equipment) assembling site (Brazil). The distribution centers of the DVD Services Division are also an area of exposure to the environment, health and safety risks, they are located mainly in the U.S., Mexico, Canada, United Kingdom and Australia. The current events and developments caused by the COVID-19 pandemic and guidance issued by the World Health Organization, may have potential negative impacts on the Technicolor Group. Beyond the major human impact on Technicolor employees, the Group had to close some facilities following local government geographical restrictions. The supply chain was impacted, especially in China, due to the limited capacity of Technicolor’s suppliers to produce and deliver the products. Moreover, our customers may be impacted as well, with a potential reduction in demand, particularly in Production Services and Home Entertainment Services. These elements could have a significant negative impact on the Group’s financial results given a significant uncertainty remains around the duration and magnitude of the disruption caused by this pandemic. Any deterioration in the macroeconomic environment may adversely affect consumer confidence, disposable income and spending, and result in decreased volumes for some of the Group’s products or increased demand for lower-end products at the expense of higher-end products. For example, Technicolor is well established in Latin America through the Connected Home segment, and the economic uncertainties in this area may negatively impact the revenue and results. Also, Technicolor has installed its main production services activities in certain locations attractive to its customers, for fiscal incentives. Any material change to the incentive programs available in such locations may impact significantly the decisions by customers on where they outsource production services like VFX and Animation. Furthermore, weakness in general economic conditions may result in an increasing number of the Group’s customers becoming delinquent on their obligations to the Group or being unable to pay, which in turn could result in a higher level of write-offs of receivables. Any prolonged global economic downturn may therefore have adverse effects on the Group’s operating results or financial condition. As an example, the exit of United Kingdom from the European Union may have negative impacts on the Group performance in this geography. Risk identification

Regular health & safety training are delivered to the Group’s employee as well as to the agency workers and contractors working in our locations to prevent injuries and accidents as part of global injury prevention programs. Injuries and severity rates are monitored with remediation actions. Industrial sites are regularly audited to review and assess health & safety risks and implemented preventing measures. Technicolor is closely monitoring the evolution of the COVID-19 pandemic and is taking all appropriate measures in order to support its customers throughout this difficult period and to ensure the safety of its employees. The Group is also evaluating any potential impacts to production and deliveries and will try to mitigate via alternative plans where necessary. The Group has successfully implemented work from home arrangements to ensure continuity and productivity across the group, including in Production Services. Supply chains in China have resumed activity which strongly supports Technicolor’s Connected Home division. Finally, in order to react quickly and to take all necessary measures, the Group has set up a COVID-19 task force to address daily the required actions and monitor on-going developments (1) (please refer to chapter 2, section 2.5 "Information on COVID-19"). For further details on health and safety actions conducted by Technicolor, see Chapter 5, section 5.2.5: “Safety at work” of this Universal Registration Document.

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Information supplied subsequently to the financial statements' approval by the Board of Directors' meeting of February 18, 2020. (1)

ECONOMIC AND POLITICAL CONDITIONS

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Risk monitoring and management

The Group’s presence in geographically diversified markets makes it less sensitive to adverse economic conditions in a given market. Risks concerning the regulatory, political and social environment are managed by each business and at Group level by the Strategy Committee, either in decentralized form for risks specific to a given activity, or through support functions. They are regularly reviewed in detail by Group Management as part of the Monthly or Quarterly Business Review meetings.

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TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2019