TECHNICOLOR_REGISTRATION_DOCUMENT_2017

3 - RISKS, LITIGATION AND CONTROLS Risk factors

Economics, political and social conditions Risk description Any deterioration of macroeconomic environment may adversely affect consumer confidence, disposable income and spending, and result in decreased volumes for certain of the Group’s products or increased demand for lower-end products at the expense of higher-end products. For example, Technicolor is well implemented in Latin America through the Connected Home segment, and the economical uncertainties in this area may negatively impact the revenue and results. 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 contemplated exit of United Kingdom from the European Union may have negative impacts on the Group performance in this geography. Risk Management Risks concerning the economic, regulatory and social environment are managed by each business, 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. FINANCIAL RISKS 3.1.3 [G4-2] GRI Indebtedness Risk description Substantial level of indebtedness of the Group At December 31, 2017, the Group had €1,103 million of total gross nominal debt (corresponding to €1,097 million in IFRS, taking into account the fair value adjustment) comprising mainly term loan debt for a total nominal amount of €1,064 million (€1,058 million in IFRS) which consists of the “Term Loan Debt” issued by Technicolor SA in 2016 and 2017 and maturing in 2023 and a €90 million term loan from the European Investment Bank (see note 8.3 to the consolidated financial statements). The Group has three committed revolving credit facilities to support its working capital needs: a €250 million revolving credit facility (the “RCF”), a €35 million bilateral committed credit line and a committed receivables facility (the “Committed Receivables Facility”) under which it may borrow up to €105 million on the basis of the amount of receivables available.

Risk management To manage this risk and keep up to date on market trends and influence the industry, the Group monitors detailed market indicators to regularly review and adjust its market forecasts and mid-term scenarios and the corresponding Technology evolutions. Executive members of the Group receive frequent updates on market, Technology and consumer trends, and meet to review external and internal innovation trends and programs on a regular basis, based on external market, Technology and business intelligence. All the main research initiatives are regularly assessed by a Steering Committee. In addition, a smaller part of the research resources is allocated to exploratory programs in order to investigate Technology breaking opportunities. The innovation teams are organized into 4 laboratories to maintain and develop excellence in the strategic areas: Imaging Science, Immersive, Artificial Intelligence and Home Experience laboratories. Competition [G4-DMA Market presence] GRI Risk description The Group’s products and services are subject to intense competition. Although the Group has leading positions in many of its market segments, the competitors are sometimes part of groups which are significantly larger than Technicolor, and thus may have greater resources, including greater financial, technical, marketing and other resources. These groups may include customers who already have, or may develop, in-house capabilities to supply the products or services which Technicolor offers, such as Studio customers who have in-house production services. If the Group’s competitors or customers use their greater size and resources to place additional competitive pressure on Technicolor, the Group’s operations may be materially adversely affected. Furthermore, rapid technological innovation and changing business models may allow new participants to enter into certain markets, who may in turn offer alternative products, technologies and services potentially at lower costs, thereby decreasing the market share size or market of current market participants. Risk Management To identify changing market conditions and minimize the exposure to related risks, the Group regularly reviews the market and competitive landscape and the market positioning throughout the year, frequently reviews the Strategic Plan/objectives and adjusts when appropriate based on changing market conditions.

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TECHNICOLOR REGISTRATION DOCUMENT 2017