technicolor - 2020 Universal Registration Document

RISKS, LITIGATION, AND CONTROLS RISK FACTORS

TAX CREDITS EVOLUTION

Risk identification

Risk monitoring and management

Some states, provinces or countries like Canada, the United Kingdom, France and Australia have developed incentive programs for film, television/streamers and/or advertising productions (primarily for the benefit of the division’s clients). These production incentive programs offer financial incentives, such as refundable tax credits, tax rebates or grants, based on the eligible production costs incurred in the production location. As a result, Technicolor has installed its main Production Services activities in certain locations attractive to its customers. Any material changes 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. While the Group has been effective in optimizing the geographical footprint of its Production Services activities accordingly, and expect that it will continue to do so, there can be no assurance that the Group will not be adversely affected by changes in location-based production incentives, which is likely to expose the Group to potential loss of revenue.

Technicolor maintains an active watch on any potential material changes to the location-based production incentive landscape and strives to be agile in ramping up and down the facilities in the strategic geographies to respond to customers’ preferences for where production services are done. The Tax and Public Affairs Departments of Technicolor work diligently to scrutinize the production tax incentive evolution and to provide guidelines to the operations regarding eligible criteria and administrative constraints. The Group has also established and continues to nurture longstanding relationships with local governments and trade organizations in order to be a leading participant early in any discussions regarding the evaluation and implementation of any changes in production incentives.

3

55

TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2020