technicolor - 2020 Universal Registration Document

RISKS, LITIGATION, AND CONTROLS INTERNAL CONTROL

These audits were carried out in accordance with the methodology and procedures set by the Internal Audit Department (inline with the International Standards for the Professional Practice of Internal Auditing), including in particular: quick adjustments to the audit schedule by providing additional • advisory and assurance services during the unprecedented Pandemic (Covid-19) by liaising with business to ensure proper control and add value in organization’s operations were maintained; performance of tests (walkthroughs and detailed testing) and • interviews with the control owners and reviewed on a risk-based approach;

the issuance of a report after the audit, which lists recommendations • for improvements to be considered by the site/department, in accordance with a precise action plan and deadlines. The Internal Audit Department report is an excellent communication tool and plays an important role in the continuous improvement of controls within the Group. In 2021, the Internal Audit Department will continue to focus on processes and efficiency improvements, testing of operational effectiveness of key controls and enhancing the overall review process.

Internal control procedures relating to the preparation 3.2.4 and treatment of accounting and financial information GRI Economic performance]

3

The internal control related to the preparation and treatment of accounting and financial information relies on the Controlling organization with its processes and controls (budgetary process, monthly reporting and forecasting, quarterly reporting of financial and operational performance review) as well as on the Group’s Accounting Department (regrouping accounting standards and methods and share services centers teams) and the Internal Audit Department. Under the authority of the Group’s Chief Financial Officer, the dedicated teams are responsible for: the establishment of the Group’s consolidated financial statements • and Technicolor’s statutory accounts; the preparation of the budget and the analysis of its execution through • monthly management and performance reporting; and the implementation of the Group’s accounting and Controlling • methods, procedures and standards and their adaptation in accordance with changes. The Group’s financial organization follows its operational organization, based on four segments (Production Services, Connected Home, DVD Services and Corporate & Other), organized in several activities. Each one of these businesses and activities is under the responsibility of a Controller and is assisted by a controlling support team, in charge of budget, reporting follow-up, performance analysis and estimates. Accounting operations within the legal entities are for the most part managed through two internal shared services centers. The accounting teams work according to Group accounting standards and methods and liaise with the Controlling organization through Services Level Agreements. BUDGETARY PROCESS The budgetary process is mandatory for all of the Group’s segments and businesses. It includes a multi-steps bottom-up thorough review process including:

in October discussion of macro-assumptions between Group CEO, • Group CFO and BDs’ CEOs: market analysis and projections, analyses trends, costs base structure, customers and suppliers base analysis, and capex needs. It includes also key strategic initiatives and their financial impact; in November preparation of bottom up 3 year Budget by BDs and • presentation to Group CEO and Group CFO; in December additional review meetings between Group CEO, • Group CFO & Division’s CEOs to focus on specific issues if necessary; approval by Senior Executive management and corporate finance • teams of proposed Action Plans and budgets prepared at the business level; approval of the budget by the Board of Directors; at the latest, • at the beginning of the following year; split of the budget into monthly periods and by legal entities to serve • as a reference for the Group’s monthly reporting. In the context of the budgetary procedure, Key Performance Indicators (KPIs) are presented by each business, and analyzed and monitored on a monthly basis. PERIODIC PERFORMANCE REVIEW The Controlling organization reviews the Group financial performance periodically: on a monthly basis: • the reporting on actual performance is managed by the Controlling • organization and a detailed review, performed during the closing period of the financial accounts (analysis of variance vs. budget, previous forecast and last year), is presented to management including a review of risks and opportunities of each business vs. Budget;

69

TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2020