technicolor - 2019 Universal registration document

3 RISKS, LITIGATION, AND CONTROLS RISK FACTORS

LABOR FORCE AVAILABILITY

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GRI [103-1 Employment] [103-2 Employment] Risk identification

Risk monitoring and management

Given the seasonality of its business, the division relies heavily on temporary labor resources during peak periods in many of its facilities. The availability and cost of these resources can vary based on the general employment environment in the local area, competition from other employers of temporary labor, as well as regulatory actions such as minimum wage requirements. Overall in 2019, Technicolor employed 4,415 full-time equivalent temporary labor resources depending on the time of the year. Insufficient temporary labor resources could result in the inability to adequately meet customer service levels, and likewise minimum wage increases could lead to a higher than expected cost of temporary labor. More generally, work slowdowns or stoppages could also have a material adverse effect on the division’s business, financial condition, results of operations or prospects.

For temporary labor, the division utilizes a multi-faceted approach to minimize potential risks of labor shortage, including maintaining relationships with multiple staffing agencies in each major operating area, establishing and maintaining direct relationships with local seasonal workers, and proactively seeking alternative labor pools wherever possible.

PHYSICAL SECURITY

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GRI [103-1 Customer privacy] [103-2 Customer privacy] Risk identification

Risk monitoring and management

The DVD Services Division is exposed to physical security risks via its contractual obligations to protect customers’ content across all supply chain services provided by the division, from receipt and storage of content masters, to replication into optical media, and through the successful delivery of finished products into retail, which in some cases requires dedicated security escorts in higher risk territories. The division’s customers make substantial investments in creation and marketing of content, and any illegal copies and/or stolen finished goods can result in material economic loss for the customer. Therefore, any physical security failures by the division contributing to such losses may result in financial penalties, loss of customer contracts and damage to the Group’s image and reputation.

Rigorous security policies and controls have been implemented by a dedicated Loss Prevention Department and are enforced on all sites that handle customer content. Risk assessments and associated mitigation actions are performed annually and upon environmental change. Employees are provided with security awareness training and are a part of the division’s security network. Several customers and industry associations regularly audit these security procedures on a recurring basis (see Cyber and physical content security section). Against the theft of packaged media, the facilities are guarded by effective perimeter controls, alarms and extensive surveillance devices. All personnel and visitors are subject to strict security access controls, and upon exit, all are searched using hand held metal detectors and/or full body scanners, and all personal belongings are inspected. All third-party service providers (such as transportation and janitorial services providers) are thoroughly vetted to ensure compliance with Technicolor security standards. Overall, the DVD Services Division and the Group take insurance coverage for theft of products (including Property and Cargo policies).

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TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2019