technicolor - 2018 Registration document

RISKS, LITIGATION, AND CONTROLS

INTERNAL CONTROL

RISK MANAGEMENT GRI [102-15] [102-30] [102-33] [102-34]

The Internal Audit Department consists of approximately 13 auditors who have past experience in a large range of domains like information systems, engineering, finance or marketing. The team is located in several key sites for the Group: Paris (France), Los Angeles, California (U.S.), Lawrenceville, Georgia (U.S.), Montreal (Canada), Guadalajara (Mexico) and Warsaw (Poland). The Chief Audit Officer is located in Los Angeles. She reports to the Chief Financial Officer, and functionally to the Audit Committee. The Internal Audit Department conducts audits in various domains, covering operational and financial processes, at transversal or local levels, financial audits, review of contracts or projects, compliance and security audits, and follow-up audits. In direct link with the Secretary of the Investment Committee, the Internal Audit Department is regularly performing audits on post-investments. In 2018, 15 audit engagements were performed (both assurance and assistance types) compared to 23 audits in 2017. Internal control procedures 3.3.4 relating to the preparation and treatment of accounting and financial information GRI [103-2 Economic performance] 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 started evaluating its risks on a worldwide basis in 2005, with the Enterprise Risk Assessment (ERA) program. The risk management process evolved in 2010 to follow the strategic evolution of the Group. It is now under the Executive Committee responsibility using large support of the Management Committee and is called Technicolor Risk Management (TRM). The purpose of this annual four-step-process, supported by the Internal Audit Department, is to identify, assess, manage and monitor risks that may impact the Group’s ability to achieve its near and long-term objectives. Risk identification and assessment permit Technicolor to build the risk universe and prioritize the most important risks based on a ranking on impact and vulnerability; the prioritization of risks is performed by Executive Committee and Management Committee members. Consecutive to the prioritization step, the CEO appoints a risk owner for each of the top 10 risks, among members of the Executive Committee or a direct report. These risk owners assess further the risk assigned to them, monitor and mitigate them. Status reports on each top risk are presented to the Audit Committee. Internal Audit 3.3.3 GRI [102-33] [102-34] As defined in the “Internal Audit Charter”, Internal Audit performs independent and objective assurance, and consulting audits that are dedicated to adding value and improving Technicolor’s performance. It conducts risk assessments at any level within the Group, identifies and proposes improvements in financial and operational processes, and helps the organization define action plans to mitigate risks and reinforce the control environment and governance principles. The Internal Audit Department reports its results to the Group’s management. The Audit Committee reviews and approves the annual Internal Audit Plan based on the pluri-annual Internal Audit plan and is informed of the main audit results. The Internal Audit Department provides support in the Technicolor Risk Management process. Since 2013, Internal Audit and Internal Control Central Departments have been regrouped under the responsibility of the Chief Audit Executive to increase coordination and integration. It allows Internal Audit recommendations to be better embedded in the Internal Control framework, and deficiencies reported during the 8TIC’S campaign to be closely followed up by Internal Audit.

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TECHNICOLOR REGISTRATION DOCUMENT 2018