Non-Financial Annual Report

NON-FINANCIAL ANNUAL REPORT

2018 TABLE OF CONTENTS SOCIAL AND PERSONNEL ISSUES 29  General employment data 30 A WORD FROM THE CHAIRMAN AND CEO 4  Employees with disabilities 32  Organization of work 33 INTRODUCTION 6  Health and safety 34  Social relations 37 COMPANY PROFILE 8  Training 38  Ethical Code 11  Accessibility for people with disabilities 40  Presence in the world 11  Equality 40  Portfolio 14  Strategy and objectives 15 RESPECT FOR HUMAN RIGHTS 41  Governance and organization 16  Factors and trends that could affect our progress 16 FIGHT AGAINST CORRUPTION AND BRIBERY 43  Environment and sector: risks and opportunities 17  Contributions to foundations and non-profit organizations 44  Supply chain 19 SOCIETY 45 ENVIRONMENTAL ISSUES 22  Commitment to local development 46  Pollution 24  Subcontracting and suppliers 47  Carbon offsetting 25  Consumers 49  Circular economy 25  Mechanisms for handling claims 51  Sustainable use of resources 26  Tax information 53  Climate change 27  Protection of biodiversity 28 TABLE OF CONTENTS LAW 11/2018 - GRI 54 INDEPENDENT REVIEW 59 The global fragrance market is growing, with some areas developing at an especially high rate, and this trend is expected to continue in the coming years. However, we A WORD FROM THE will face certain challenges, such as the slowdown in our core European market, a growing competitive spectrum with emerging brands not rooted in the world of fashion which are showing a strong capacity to connect with younger consumers, and CHAIRMAN AND CEO the digital revolution. The world is being transformed by this digital revolution, which does not, however, affect all industries in the same way. In any case, there is no category that is exempt from this transformation, especially in the need to adapt the way we communicate with new generations.

Omnichannel communications, permanently connected consumers who value experience at the point of sale and look for innovation, a growing concern for health and greater environmental awareness are trends that are shaping our future strategy and our organization.

In this new environment, and with our strategy in mind, we have adapted our organization to deliver creativity and innovation that goes beyond product excellence and storytelling, to build brands that will make our consumers fall in love with them.

We maintain our commitment to building a sustainable future, with the aim of ex- 05 tending this concept to the entire value chain of the business.

Our Ethical Code, as well as the policies developed as part of its framework, guarantee and promote equality between men and women and reflect our commitment to the defense of human rights, to respect for individual and collective freedoms, to non-discrimination and to respect for people. A WORD FROM THE CHAIRMAN AND CEO Puig has always been a company committed to giving back to society a part of what we receive from it. In this regard, we launched the Invisible Beauty project at the hands of Ashoka, a renowned third sector partner, a project sponsored entirely by the Puig Foundation.

The collective talent of our teams who are dedicated to their work and full of ambition is one of our main assets. In Puig, our people represent... Commitment. Entrepre- neurial spirit. Authenticity.

As a family business, we are able to set long-term goals and face up to future challenges. Our enduring excellence speaks for itself.

Marc Puig 01 Chairman and CEO INTRODUCTION

This document containing the company’s Non-Financial Annual Report has been drafted in line with the requirements established by Law 11/2018 of December 28, 2018 on non-financial information and diversity approved on December 13, 2018 by the Congress of Deputies modifying the Commercial Code, the revised text of the Capital Companies Act and Law 22/2015 on Account Auditing, in matters of non- fi-nancial information and diversity.

The data contained in this Non-Financial Annual Report corresponds to Puig, S.L. and its subsidiary companies, hereinafter Puig. Those cases for which the infor-mation 07 is outside of this scope are duly specified.

The Non-Financial Annual Report is an annual document and this is the first year in INTRODUCTION which Puig has drafted this report.

For general queries about this report, our different stakeholders may contact the Communications Department at Plaça Europa, 46-48. 08902, L’Hospitalet de Llobre- gat, Barcelona, or at [email protected].

02 Puig, S.L. is a family business based in Barcelona which was founded in 1914. Dedica- ted to the fashion and fragrances sectors, it is currently managed by the third generation of the Puig family.

COMPANY PROFILE OUR OVER 100 YEARS OF HISTORY

Antonio Puig Castelló founds Antonio Puig, S.A.

Launch of Milady lipstick (first lipstick made in Spain).

Launch of Agua Lavanda Puig, the brand’s signature perfume. Construction of the new factory and headquarters of the company in Travessera de Gràcia (Barcelona).

Launch of L’Air du Temps by Nina Ricci, an enduring success.

Antonio, Mariano, José María and Enrique Puig Planas, the second generation of the family, join the company.

Mariano Puig Planas approves the construction of a factory in the industrial park of Besós to meet the demands of the company’s international expansion.

Puig establishes its first offices in the United States. Launch of Moana, bath and shower segment leader.

Creation of the Paco Rabanne perfumery division in France. Launch of the Agua Brava fragrance.

Launch of Calandre, the first perfume for women by Paco Rabanne. . Launch of Azur, which will eventually become a long-standing leader in the female fragrance market.

Creation of the Puig affiliate in the United Kingdom.

Creation of Paco Rabanne Pour Homme, a fragrance that will revolutionize men’s perfumery. Launch of Estivalia, which consolidates the sophisticated image of Puig products.

Construction of the company’s perfume factory in Chartres (France). Opening of the Puig affiliate in Panama. 09 Quorum, the company’s most international line, wins the prize for the best packaging design at the FiFi Awards (New York).

Puig acquires the rest of the Paco Rabanne business, which includes the fashion and accessories division. COMPANY PROFILE COMPANY Launch of the first perfume by the designer Carolina Herrera.

Acquisition of the fashion division Carolina Herrera New York.

Launch of 212 by Carolina Herrera New York. Agreement to produce the Antonio Banderas perfumes and launch of Diavolo. Puig is established in Chile.

Acquisition of the Nina Ricci perfume and fashion business. Mariano Puig, CEO of the company, hands over the reins of the company to the Board of Directors. Puig enters the markets of Southeast Asia and Oceania.

Acquisition of the Spanish perfume group Myurgia, which includes brands such as Adolfo Dominguez, Agatha Ruiz de la Prada and Mango. Puig establishes a joint venture with Chalhoub in the Middle East.

Puig signs an agreement to develop the perfumes of Comme des Garçons. Sales outside Spain exceed 50% of the total business.

Puig and Prada create a joint venture to manufacture and produce the Italian brand’s perfumes.

Marc Puig is named CEO.

Marc Puig becomes Chairman and CEO. Launch of 1 Million by Paco Rabanne, which becomes a worldwide success. Agreement with the singer Shakira to sell her perfumes.

Opening of affiliates in Russia and Brazil.

Puig acquires a majority share in the French fashion firm Jean Paul Gaultier.

Inauguration of the new headquarters on the Champs-Élysées in Paris. Launch of the masculine fragrance Invictus, by Paco Rabanne. Harvard University develops a case study on Puig.

Puig celebrates its 100th Anniversary. Inauguration of Puig Tower, the new corporate headquarters of the company in Barcelona.

Puig acquires Penhaligon’s and L’Artisan Parfumeur.

Puig incorporates Jean Paul Gaultier fragrances into its own brand portfolio.

Puig increases its shareholding in the Eric Buterbaugh Los Angeles perfumery, becoming majority shareholder. Puig and Christian Louboutin announce a long-term license agreement under the Christian Louboutin Beauté 03 brand to boost its beauty business. Puig becomes the majority shareholder of the Dries Van Noten fashion house. COMPANY PROFILE COMPANY 11 - PARIS Puig headquarters in Paris are loca- are headquarters in Paris Puig in the ted on the Champs-Élysées, ele- an heartTriangle, Golden the of gant and distinguished neighbor hood housing the most important and luxury brands. international des Champs-Élysées 65-67, avenue 75008, Paris. +33 171704545 BARCELONA Puig Tower, our corporate head- our corporate Tower, Puig in Plaça Europa, is located quarters, new business hub. Barcelona’s 46-48 Europa, Plaza de Llobregat, 08902, L’Hospitalet Barcelona. +34 934007000 Puig has two headquarters: has two Puig Puig values are the foundations which allow us to carry out our activity the way we we allow us to carry which out our activity the way the foundations are values Puig to its to project that corresponds the image company enable the and which want identity. ETHICAL CODE of all expected that the guidelines on behavior establishes Code has an Ethical Puig obligations to these committed are employees All of the company’s its collaborators. acts The company new recruits. to them and to given are courses training and regular the mechanisms establi- through the rules from deviation is any if there accordingly itself. shed in the code of this infringements reporting any details the mechanism for Code Ethical The Puig an indepen- reportsThis channel to the Chair of the Audit directly Committee, code. total confidentiality. to guarantee dent expert, in order All of them of the code. infringements regarding received In 2018, 11 inquiries were and resolved. been duly investigated have to our sup- to the code this commitment launched to extend In 2018, a campaign was 100% of the supply to ensure during 2019 This campaign will be extended ply chain. to it.chain adheres PRESENCE IN THE WORLD - EXCELLENCE PERFORMANCE As a family business, we we business, As a family a position to set in are long- and at the term objectives advantage take time same of opportunities when they - arise. excellen Our enduring Puig, At itself. for ce speaks is synonymous excellence vision. with... Long-term ability to The sense. Common Efficiency. challenges. face We believe that everything believe We better and can be done even and we results, with better - continuous to committed are those aspects of ly improving in which each of the company involved. us are FLEXIBILITY We are not afraid of change of change not are afraid We able to adapt are to and we and oppor challenges any We arise. thattunities may curiosity and we encourage adapt in to the world always and work. live which we RESPECT We treat others with equali- treat We and dignity and courtesy, ty, the im- consider always we pact of our decisions. The collective talent of our The collective to dedicated teams who are and full of ambi- their work to tool tion is an essential some of and market create the most personality-rich on the planet. fragrances Puig, represent... people At - Entrepreneu Commitment. rial spirit. Authenticity. PEOPLE TRUST We have faith in others and faith have We competent are assume they and honest and that is why act trustand we in honorably and capabili- the intentions ties of our colleagues. INTEGRITY We always try to act the ri- always We the law, respecting ght way, the esta- Code, the Ethical and policies norms, blished - pro and external internal cesses. We put heart our We and soul pas- feel We our work. into the quality of our sion for the success of our products, of our the dreams company, Puig, passion customers. For Innovation. is... Creativity. Emotion. Audacity. PASSION These three words project to the world the values that define who we are. Values Values are. that we define who project the values to the world words These three and a long-term, profitable style that helps us create guides us and that define a Puig sustainable business project. are: Our values Throughout our history we have established our own way of doing things, of facing of facing things, of doing way our own established Throughout our history have we words: our image.Our spirit and of projecting challenges in three can be summarized 10

COMPANY PROFILE Puig owns four factories, all located in Europe, which in 2018 produced a total Since 2015 Puig has two prestigious niche brands in its portfolio, which follow a di- of 166 million units. fferent business model to the rest of the fragrances business. These two brands are distributed through their own stores and specialized distributors.

These brands are:

3 IN SPAIN 1 IN FRANCE PENHALIGON’S L’ARTISAN PARFUMEUR

1 Cathedral Piazza, 1, rue Charles Tellier BARCELONA CHARTRES 3rd-4th Floor 123 Victoria Street, Zone industrielle de Beaulieu Carrer Potosí, 21, 1, rue Charles Tellier London SW1E 5BP (United Kingdom). 28000 Chartres (France). 08030 Barcelona (Spain). Zone industrielle de Beaulieu 28000 Chartres (France). VACARISSES Carrer Berlin, 12 (Pol. Industrial Can Torrella), Puig owns several fashion brands with the following locations: 08233 Vacarisses, Barcelona (Spain).

ALCALÁ Calle Francisco Rabal, 194, COMPANY PROFILE 28806 Alcalá de Henares, Madrid (Spain).

CAROLINA HERRERA NINA RICCI 12 13 Headquarters | 501 7th Ave Headquarters | 39, avenue Montaigne New York, NY 10018 (USA). Puig international presence is managed through: 75008 Paris (France).

Flagship Store | 954 Madison Flagship Store | 39, avenue Montaigne PROFILE COMPANY Avenue, New York, NY 10021. 75008 Paris (Francia).

20 AFFILIATES (A) AND 6 REGIONAL OFFICES (RO)

1. Argentina (A) 14. Middle East (Dubai) (RO) JEAN PAUL GAULTIER PACO RABANNE 2. Asia Pacific (RO located in Singapore) 15. Netherlands (A) 3. Austria (A) 16. Oceania (RO) Headquarters | 325, rue Saint-Martin, Headquarters | 17, rue François 1er 4. Belgium (A) 17. Panama (RO) 75003 Paris (France). 75008 Paris (France). 5. Brazil (A) 18. Peru (A) 6. Canada (A) 19. Portugal (A) 7. Chile (A) 20. Russia (A) 8. Colombia (A) 21. Saudi Arabia (A) 9. France (A) 22. South East Asia (RO located in Singapore) 10. Germany (A) 23. Spain (A) DRIES VAN NOTEN 11. Italy (A) 24. Switzerland (A) 12. Malaysia (RO) 25. United Kingdom (A) Headquarters | Godefriduskaai 36, 2000 Antwerp (Belgium). 13. Mexico (A) 26. United States (A) Flagship Store | Het Modepaleis Nationalestraat 16, 2000 Antwerp (Belgium). Local fragrances DAVID BUSTAMANTE PORTFOLIO SPAIN MALÚ Licenses DON ALGODÓN Puig owns a broad portfolio of brands positioned in different sectors and busi- SPRINGFIELD ness categories: PAULA ECHEVARRÍA MANU CARRASCO

FASHION Our brands BRUMMEL VICTORIO & LUCCHINO Our brands NINA RICCI SPORTMAN CAROLINA HERRERA ANOUK Lifestyle Brands PACO RABANNE AZUR JEAN PAUL GAULTIER ZINNIA DRIES VAN NOTEN FLEUR DE JOUR FRAGRANCES HERO SPORT SEX SYMBOL Licenses CHRISTIAN LOUBOUTIN BEAUTÉ LATAM COMME DES GARÇONS PARFUMS Licenses JULIANA PAES Niche Our brands PENHALIGON’S Our brands LAVANDA AÑEJA COMPANY PROFILE L’ARTISAN PARFUMEUR ERIC BUTERBAUGH LOS ANGELES ROYAL REGIMENT

TOILETTRIES 14 Premium Licenses PRADA PARFUMS 15 Our brands LAVANDA PUIG Our brands NINA RICCI HENO DE PRAVIA

CAROLINA HERRERA PROFILE COMPANY Prestige PACO RABANNE JEAN PAUL GAULTIER STRATEGY AND OBJECTIVES International fragrances 2018 saw the launch of the 2020 Strategic Plan, Da Vinci Plan. It is based on a 2025 Licenses ANTONIO BANDERAS vision which has led to a review and redefinition of the company’s purpose. SHAKIRA UNITED COLORS OF BENETTON Puig wants to continue to be a company capable of building brands the consumer falls in love with and which express themselves as fragrances in a unique way. Lifestyle Brands Regional fragrances ADOLFO DOMINGUEZ To achieve this, we aim to build brands and provide consumers with experiences in Licenses AGATHA RUIZ DE LA PRADA PACHA the most creative and exclusive way in our industry and we will be the most visionary company, providing innovation in the fragrance sector, while offering personal and professional growth to our employees, in an environment that respects the values of Our brands AGUA BRAVA a family business. QUORUM Our ambition for 2025 is to build a portfolio of brands that lays the foundations for growth above the market average and allows us to be unique in our category through innovation, achieving revenues of 3 billion euros. GOVERNANCE AND ORGANIZATION ENVIRONMENT AND SECTOR: RISKS AND OPPORTUNITIES

The highest governing body is the Board of Directors, responsible, among other things, Although the fragrance market is expected to grow between 2% and 4%, if we obser- for approving Puig general policies and strategies and for overseeing the manage- ve the trends of each market, segment and channel, there is a risk of loss of competi- ment of the company. At present, this body is composed of the following members: tiveness in the coming years. This provides the opportunity to focus more on growth areas such as lifestyle in Latin America, travel retail and niche brands, as well as developing the category in emerging markets. VICE-CHAIR Novaquern S.L. (Manuel Puig) The consolidation of the traditional channel increases the pressure on the fight for space, which requires new innovation at the point of sale with a greater focus on the EXTERNAL BOARD MEMBERS creation of experiences.

Manel Adell The growth of the online channel will require excellence in execution and in the con- José Maria Castellano nection with the consumer. Rafael Cerezo (Consejero Coordinador) CHAIRMAN Jordi Constans Changes in consumer purchasing and consumption habits are transforming many Marc Puig Exea International BV1 (Giovanna Kampouri) categories. The trends with the greatest impact on the fragrances category are as Daniel Lalonde2 follows: interest in health and natural ingredients; connection and involvement in Exea Empresarial S.L. (Josep Oliu) the purchase and post-purchase processes; specialization and the search for greater Yiannis Petrides added value in the product; customization; new more digital business models and the search for authenticity in brands.

COMPANY PROFILE The Board has two delegate committees, both composed only of non-executive members: the Audit Committee and the Appointments and Remuneration Com- mittee. Regarding the different competitive models, Puig has demonstrated past success based on building brands, creativity and excellence in its products, earning the lo- 17 16 The day-to-day management of the company and its affiliates is carried out by yalty of its consumers. Within the traditional model, the main threat comes from its senior management and the corporate bodies of its affiliates. those competitors that operate in all three categories within the beauty sector (Fra- grances, Color Cosmetics and Treatment Cosmetics), due to the advantage that this

offers them in the fight for the space at the point of sale. This means that we must PROFILE COMPANY prioritize innovation to support the development of fragrances. FACTORS AND TRENDS THAT COULD AFFECT OUR PROGRESS The development of emerging brands, especially those with their own stores, which address new consumer trends and meet their needs, is capturing an important part The global fragrance market is growing, particularly in certain geographical areas. of the sector’s growth. This represents a challenge and an opportunity for Puig, which However, we know that a certain slowdown may be experienced in our core European will have to rethink its proposals and distribution channels. market. In response to these changes in the environment, Puig has spent several years inves- The channels are changing, there is a lack of innovation in the fragrances category ting in corporate development to increase its presence in growth areas and segments, offer in the traditional multi-brand perfumery sector; the online channel is expected as well as in acquiring skills to develop a better knowledge of the consumer and the to grow until it represents between 10 and 15% of the market by 2020, and the sin- different channels. gle-brand store channel continues to grow. In this regard, Puig acquired the fragrance houses Penhaligon’s and L’Artisan Parfu- Puig is well positioned in the traditional segment of fashion-linked fragrance brands meur in 2015, two of the most prestigious brands in the world of perfumery, which with a range of essential brands for its customers. However, the competitive spec- demonstrates the company’s commitment to developing the growing category of trum is expanding with emerging brands not rooted in the world of fashion. luxury fragrances. With these acquisitions Puig has continued the expansion of its knowledge in the management of its own stores with the consolidation of its retail There are opportunities to revitalize the core business and make the fragrance cate- unit. Since its acquisition, Penhaligon’s sales growth has been boosted by the launch gory grow, by overcoming certain barriers and critical points in the purchasing and of a new line called Portraits, a tribute to British eccentricity and aristocracy. L’Artisan consumption processes, providing greater visibility and expanding the offer.

1 Joined the Board in March 2019. 2 Joined the Board in March 2019. Parfumeur has revamped its image and opened a new store in the Parisian district of SUPPLY CHAIN Saint-Germain-des-Prés, as part of the new image we have given to the brand. Puig supply chain consists of three main processes: In September 2016, Puig acquired a minority stake in Granado, the famous Brazilian pharmacy that was founded by the Portuguese immigrant José Antônio Coxito Gra- 1. PLANNING nado in 1870. A pioneer in the development of high-quality natural preparations, Granado is also the owner of Phebo, one of the best-known brands of fragrances and This covers the demand and supply activities and works with data from the sales glycerin soaps in Brazil, acquired in 2004 by Christopher Freeman, Chairman of Gra- planning and operations process. This data allows us to make decisions in 16 markets, nado. At present, Granado has consolidated its position in the Brazilian cosmetic mar- which represents 80% of total sales worldwide. ket as an example of success, strength and steady performance. Puig aims to support the growth of Granado in national and international markets. Sales, marketing, planning and finance data are integrated in order to define a demand plan for operations with a horizon of 18 months. In 2018, Puig and Dries Van Noten, one of the most authentic and successful independent fashion houses, founded in Antwerp in 1986, joined together to create a strate- Based on the forecasts and inventories of each market, the planning department cal- gic alliance that establishes the foundations for the future growth of the brand. Puig culates the replenishment needs in our 15 distribution centers located in different will be the majority shareholder alongside the designer and founder of the brand, parts of the world and determines the production orders, taking into account the Dries Van Noten, who will continue to be an important minority shareholder. In ad- restrictions of critical material. The inventory is the consequence of the strategic and dition, Dries Van Noten will continue as Chief Creative Officer and Chairman of the tactical decisions that Puig makes in line with the production capacity, the distribu-

COMPANY PROFILE Board. The creative vision of Dries Van Noten is renowned within the world of fashion tion network and the target service levels. for its spectacular longevity, unprecedented success and a very loyal clientele. The distinguishing feature of Dries Van Noten is the design of exquisite garments and 2. ORDER PROCESSING 18 accessories for men and women. Puig and Dries Van Noten, both private companies, 19 share a common culture and values and are committed to organic and prudent grow- The process starts with the customer order. At Puig, more than 340,000 orders from th. This partnership comes after an exciting period of negotiation of shared objecti- 3,300 customers are processed each year. Stock is allocated to the orders according to ves and ambitions, in which a special relationship has been forged between the two customer segmentation and the prioritization rules. COMPANY PROFILE COMPANY companies and their teams. The alliance reinforces the Dries Van Noten brand and its creative voice. Our products are stored, prepared for shipment and dispatched to more than 13,000 destination points, according to the delivery terms agreed with our customers. In addition, in our effort to face up to new challenges through innovation, Puig has launched Puig Futures, a platform that aims to achieve the best consumer experien- 3. DISTRIBUTION ce, the brands most adapted to the new scenario and the most convenient purchase journeys in the sector. We will work with the best innovations in the digital area, in When the shipment is ready, our logistics operators start the distribution process, product, in technology and in new business models, finding inspiration in other rela- moving our products through their distribution networks to reach our customers, ei- ted sectors. ther directly (56% of the global volume), through local distribution centers in those affiliates that have stock (27%), or through distributors (17%). In this way, we deliver Puig Futures will operate in three areas: creation of new disruptive business models, our products to the final consumer in more than 150 countries. partnerships with other innovators and minority investment in third parties.

In 2018, we started collaborative relationships with technology companies and the cosmetics sector to develop new innovative proposals. We work mainly with suppliers close to our production centers. The suppliers located in the two countries where we have centers, Spain and France, represent 77.9% of our total number of suppliers. COMPANY PROFILE COMPANY 21 - Invoicing €28 million €10 million €12 million €50 million 54 25 11 18 No. of suppliers Type TOTAL Handling Packaging Technology All of our subcontracted suppliers are located in Europe. located suppliers are subcontracted All of our VOLUME OF SUBCONTRACTED ACTIVITY We ended 2018 with approximately 100 million units produced at subcontracted sup- at subcontracted 100 million units produced ended 2018 with approximately We and using a total of 54 suppliers. of invoicing of 50 million euros a total value for pliers, The suppliers and companies to whom we subcontract part im- subcontract we to whom are of our production The suppliers and companies and principles our extending to committed are We portant chain. actors value our in carry outwhich we they ensure to campaigns for to our suppliers, Code our Ethical to these. adhere star our suppliers, for mechanisms control and external internal established have We ting with the process of selecting a new supplier, which involves the latter passing an the latter which involves of selecting a new supplier, ting with the process our portfolio. into audit prior to their incorporation - THE AMERICAS 2.3% THE AMERICAS 4.0% ASIA 77.9% Spain + France EUROPE 93.7% LOCATION OF THE SUPPLIERS OF INVENTORY MATERIAL OF THE SUPPLIERS OF INVENTORY LOCATION At Puig, we subcontract a percentage of our productive activity to suppliers close to of our productive a percentage subcontract Puig,At we economic to the enabled us to contribute which has always centers, our production - pro and outsourced internal a balance between and also maintain activity of the area of activity. duction depending on peaks types: main three can be divided into The activity subcontract we there at specific times where and filling of products, of preparing process Packaging: sizes. batch is a lack of capacity or depending on the production Christ during packing decorative handling for operations labor-intensive Handling: - opera These mainly. Day Valentine’s and Day Mother’s Day, Father’s mas campaigns, supplier site, thus minimi- material at the packaging tions can be carried out entirely on costs. and saving movements zing goods or if it is incompatible lack the necessary technology, our factories where Technology: deodorants, as spray such products servicesuse these for We our own activity. with sampling formats. candles and different scented soap bars, make-up, The total number of suppliers of inventory material was 317 in 2018, distributed distributed 317 in 2018, was material of inventory number of suppliers The total area: by geographical as follows 20

COMPANY PROFILE ENVIRONMENTAL The company’s commitment to building a sustainable future by developing our products in a more efficient, safe and environmentally friendly way, is included in the ISSUES Sustainability Program to 2020, first drawn up in 2014 and redefined in 2017 due to the fact that a large number of the objectives were achieved ahead of schedule. Our Sustainability Program is aligned with those Sustainable Development Goals (SDGs) in which we can have the greatest impact given our activity and value for our stakeholders, taking into account the social, economic and cultural circumstances of the environments in which the company operates.

The plan is focused on Spain and France and is led by Puig senior management to ensure that it reaches all the people who collaborate with the company.

Our main commitment to the United Nations Sustainable Development Goals3 is re- flected in three lines of action:

We innovate and work continuously to improve sustainability throughout our activity, innovating in packaging, optimizing industrial processes, improving the efficiency of the facilities, implementing new energy systems and improving the training of our employees. 23

We are concerned about the emissions generated by our business activity and, consequently, our strategy focuses on reducing our corporate carbon footprint through minimization initiatives in the different pillars of the Sustainability Pro- ISSUES ENVIRONMENTAL gram that contribute the most to climate change (production, transport and distribution, and facilities and employees).

Our activities require a high consumption of resources and raw materials, from the ingredients of our fragrances and packaging materials to the consumption of water, gas and electricity in the facilities and therefore our commitment is to en- gage in responsible and sustainable production and consumption, paying special attention to aspects such as the use of chemical products, waste management and the consumption of fossil fuels.

The Program is deployed transversally throughout the company so that all employees and collaborators in all areas know, share and put into practice the principles, objectives and actions defined, with the aim of extending the concept of a sustainable future to the entire value chain of the business.

3 In 2015, the UN adopted the 2030 Agenda for Sustainable Development, an opportunity for countries and their societies to embark on a new path to improve the lives of everyone, without leaving anyone behind. The Agenda has 17 Sustainable Develo- pment Goals, which range from the elimination of poverty to the fight against climate change, education, women’s equality, the 04 protection of the environment and the design of our cities. ENVIRONMENTAL ISSUES ENVIRONMENTAL 25 8.47 21.27 713.11 2,583.39 27,758.33 33,475.32 Program. 4 · Business trips. · Business and distribution. Transport · generation. · Waste and services goods of · Purchase consumption). (water and services goods of · Purchase (paper consumption). 12 on responsible consumption and production and to and production consumption 12 on responsible 5 we have been able to reduce the amount of plastic used to reduce been able have we 6 TOTAL Scope 3: Scope other indirect emissions Abbreviation for Verified Carbon Standard. The VCS Program is the most widely used voluntary GHG program in the world. GHG program is the most widely used voluntary Program VCS The Standard. Carbon Verified for Abbreviation Itene is a technology, business, science and innovation center specializing in R&D&I in packaging, logistics, transport specializing in R&D&I in packaging, and mo- logistics, center science and innovation business, Itene is a technology, SDG stands for Sustainable Development Goal (United Nations). Sustainable Development SDG stands for We carry out controls and periodic monitoring of indicators at our emission sources. of indicators and periodic monitoring carry out controls We in the thermoformed trays of the boxes of certain fragrance lines by 13% thanks to an lines by 13% thanks of certain fragrance the boxes of trays in the thermoformed - Since its imple and aesthetic characteristics. the physical which maintains additive on 16.5 tons of plastic. in 2017 it has saved mentation 4 5 6 CARBON OFFSETTING impact of the company the environmental is to reduce of Puig The main objective since 2016 to the Mari- has contributed In addition, Puig initiatives. various through a part emissions gas Project offset to greenhouse the of in order Hydroelectric posas - of the cons Project consists The Mariposas Hydroelectric our activity. from resulting is one of the largest plant. Puig hydroelectric of a 6.3 MW truction and operation VCS certified to this project, by the contributors CIRCULAR ECONOMY to SDG to contribute In order bility. https://verra. org/project/vcs-program/ https://verra. the transition towards a more efficient production model with less environmental model with less environmental production efficient a more towards the transition economy. to the circular is committed impact, Puig the that put practice out carried into initiatives product of have design, we In the area and minimi- at source the use of materials aimed at reducing principles of ecodesign, cycle: of the product at all stages life of waste zing the generation written, which analyzes was Their Processes and • In 2017, a White Book of Materials pac- impact used in Puig and their processes of the main materials the environmental impact and metal – to understand their environmental plastic, glass, – paper, kaging the design stage. right from account into this variable take with Itene • In collaboration e) 2 0.00 565.16 206.44 1,619.15 2018 (t CO Source · Gas consumption. fleet. · Vehicle gases (air of refrigerant · Refilling and refrigeration conditioning equipment). · Purchase of electricity. · Purchase Scope energy Scope 1: Scope Scope 2: Scope direct emissions Sources of direct emissions that are owned or managed by Puig. Included by Puig. of direct owned or managed 1. Sources emissions that are Scope Sources of indirect emissions that derive from Puig activity but not- are Puig con from of indirect 3. Sources that emissions derive Scope indirect emissions due to POLLUTION in this scope are: the emissions generated by the fuel consumption of the company’s of the company’s by the fuel consumption the emissions generated are: in this scope refrigerant of the and the refilling (natural/propane) fleet, gas consumption vehicle systems. gases used in air conditioning of electricity. the purchase by 2. Indirect generated sources • Scope • by the generated includes: emissions This scope but party. by a third by Puig trolled the management travel, employee and paper), and services of goods (water purchase and the transport of products. and distribution generated of waste and treatment - referen from taken the emissions are used to calculate that are The emission factors these are Depending on the emission source, annually. updated and are ce standards - Guideli distribution and business trips (DEFRA used: transport, the main standards gases and of refrigerant Guide 2018); refilling 3.4 and OCC (Ecoinvent nes 18); waste 2018). version and services of goods (MAPAMA purchases - our ecologi reduce allow us to Program in the Sustainability defined The initiatives as a result of change, to climate impact is related The greatest Puig of cal footprint. In 2016, in its activity. generates that emissions the company gas (GHG) greenhouse its carbon foot- calculate automatically a tool to and implemented developed Puig print. - with the pro been done in accordance has footprint carbon of Puig The calculation the following 3), considering chain (Scope and its value visions of ISO 14064-1:2012 scopes: • 24

ENVIRONMENTAL ISSUES ENVIRONMENTAL ISSUES ENVIRONMENTAL 27 7 8 433.31 3,481.58 KWh/FTE KWh/FTE liters/FTE 19,624,301 Headquarters Production centers 380 liters/1,000 units produced 569.4 KWh/hour of operation 569.4 KWh/hour 350.6 KWh/hour of operation 350.6 KWh/hour Indicators Gas consumption Water consumption Water Electricity consumption Barcelona and Paris headquarters for the fragrance business. the fragrance headquarters for and Paris Barcelona Employee. Time Full FTE, CLIMATE CHANGE CLIMATE in which it has in the environments impact the greatest mentioned, Puig have As we is to reduce main commitment The company’s change. to climate is related operates in the Sustai- presented mostwhich is why of the initiatives footprint, its ecological this goal. aimed at achieving to 2020 are nability Program 7 8 been adapted according to demand and a study carried out and a study to demand to at factory the Alcalá according been adapted water. irrigation reduce other so that it for can be used has been carried out wastewater, on reusing Work - pro to ensure been improved have systems monitoring and consumption purposes, per management. in all the plants , the facilities energy consumption to reduce In terms of initiatives efficient with more being replaced are systems lighting current being improved: are and monitoring consumption. insulation improving ones, so to be carbon neutral, our production 2020 is for established for The main objective energy sources. in renewable invested have we and factories in our four sources 100% renewable from Since 2015, electricity comes and Barcelona. headquarters in Paris in finding alternatives made progress we in 2018 In line with our sustainability goals, for in the results evident will become of all these initiatives The results fuels. to fossil 2019. based on our Ethical Code, a series of Code, based on our Ethical

both in production plants and in offices is key for Puig. for is key and in offices plants production both in SUSTAINABLE USE OF RESOURCES SUSTAINABLE is the sustainable supply of in- strategy of Puig One of the main pillars and priorities suppliers to our values and our commitments conveying materials, and raw gredients them to adopt sustainable policies and practices. more and encouraging (SSP) the Sustainable Supply Policy Through Waste management Waste at source waste of generation the reduce to promoted been have initiatives Various one of the goals In addition, in all our facilities. of waste the separation and improve 2015 in reached thata milestone was to landfill”, waste “Zero achieve to was 2020 for the headquarters. Currently, and Paris and in 2017 atour Barcelona in our factories waste the to increase and continuing this achievement maintaining lies in challenge rate. recovery by plants of our production rate recovery the waste to increase managed In 2018, we by 15%. offices 3% and the central is an there where offices, in our Barcelona waste food to combat One of the initiatives food. left-over away” to “take workers is to encourage canteen, employee requirements and good practices in environmental, business and social integrity mat- integrity business and social in environmental, practices and good requirements sustaina- to commitcorporate suppliers to encourage to been established have ters bility plan. materials or cardboard-based that the paper-based all is to ensure Another objective with work Puig, we At forests. managed sustainably from come used by the company best who apply environmental paper suppliers, and printing creative the best graphic, certified. FSC/PEFC are and whose products practices - to the respon only use local suppliers committed that we can guarantee In 2018, we from comes that 91% of our cardboard ensured having sible management of forests, sustainable sources. that is 100% of in our fragrances to using alcohol committed also expressly are We sustainable sources. plant origin and from - effi a more to ensure initiatives implementing been have now we years Puig, At for - con carried out Among the projects water to reduce and energy. cient use of water has production water where plant, Vacarisses of the the optimization sumption are 26

ENVIRONMENTAL ISSUES 05 SOCIAL AND PERSONNEL AND PERSONNEL SOCIAL ISSUES - • Purchasing of electricity from renewable sources, thus reducing GHG reducing thus sources, renewable of electricity from • Purchasing electricity to zero. emissions from electricity gas). and (water, consumption of resource • Minimization sustai- a in achieved been which has to landfill”, waste of “Zero • Goal - and impro generation in waste The reduction ned manner since 2015. unit GHG emissions per - reduced pro in its management have vements duced by 31% with respect to 2017. - redu and other materials, materials local suppliers of raw • Selection of more in procurement. cing emissions the from emissions derived to reduce with logistics operators • Collaboration - fo We sold. are they which in countries all the to products Puig of distribution gas, fuels such as natural the use of alternative that promote cus on initiatives technology. hybrid or fuel with additives manufacturing from emissions derived GHG • Actions to reduce implemented carried out several have we in 2020, to be carbon neutral In order processes. management, energy waste and water, improve to years recent in initiatives including: - of the faci performance the environmental improve to • Actions implemented of waste the generation to reduce initiatives various through lities and offices electricity and gas. of water, consumption its management, and improve - of Barce the offices in sources 100% renewable The supply of electricity from • electricity consumption from GHG emissions derived reducing lona and Paris, to zero. ment. PROTECTION OF BIODIVERSITY of directexception a the causes with impactcenters our of None areas, protected on watercourse close to a protected its location plant. above, As explained Vacarisses the and treat discharge in terms of wastewater special measures us to take has spurred In 2018, we reduced the corporate carbon footprint KPI by 1.5% (GHG emissions in emissions in (GHG KPI by 1.5% footprint carbon the corporate reduced we In 2018, account into take we 5% if becomes This figure €). in millions of income tCO2eq./net in the Mariposas Project. involvement our from the offsetting include: our carbon footprint to reduce implemented The initiatives 28

ENVIRONMENTAL ISSUES GENERAL EMPLOYMENT DATA AVERAGE REMUNERATION BY PROFESSIONAL CATEGORY (€)10 At year end, Puig had 4,313 employees,9 distributed as follows: Top Executives 224,412

Sales and Marketing 58,762 DISTRIBUTION BY GENDER Beauty Advisors 14,917 Women Men TOTAL Technical Employees 47,174 3,175 1,138 Administrative 42,033 74% 26% 4,313 Production 31,039

DISTRIBUTION BY AGE GROUP DISTRIBUTION BY COUNTRY <30 years of age 30-50 years of age >50 years of age Argentina 164 Netherlands 10 837 2,706 770 Australia 6 Panama 37 SOCIAL AND PERSONNEL ISSUES 19% 63% 18% Austria 8 Peru 189

Belgium 20 Portugal 22 DISTRIBUTION BY CATEGORIES Brazil 258 Russia 64 Top Executives 206 30 Canada 6 Saudi Arabia 101 31 Sales and Marketing 1,228 Chile 363 Singapore 44 Beauty Advisors 1,228 Colombia 5 Spain 1,719 Technical employees 996 France 670 Switzerland 77

Administrative 71 SOCIAL AND PERSONNEL ISSUES Germany 47 UAE 26 Production 584 Hong Kong 16 United Kingdom 222

Italy 42 United States 144 DISTRIBUTION BY TYPE OF CONTRACT Mexico 53 Permanent contract 4,001

Temporary contract 312 Until July 2018 there was no detailed follow-up on the causes of employees leaving the organization. As of July 1, data is available in SAP which allows us to analyze whe- Women Men ther departures are voluntary or due to dismissal. As a result, the data for the second half of the year is as follows: Permanent contract Temporary contract Total Permanent contract Temporary contract Total DISMISSAL (GENDER) <30 years of age 471 162 633 156 48 190

30-50 years of age 1,882 81 1,963 730 13 743 Women Men TOTAL

>50 years of age 572 7 579 190 1 191 102 51

Total 2,925 250 3,175 1,076 62 1,138 67% 33% 153

9 Number of employees excluding Dries Van Noten, L’Artisan Parfumeur and Penhaligon’s. 10 Includes annual base salary and annual bonus. DISMISSALS (AGE RANGE) Puig subcontracts part of its activity to special employment centers, thus contribu- ting to the occupational development of people with disabilities and complying with <30 years of age 30-50 years of age >50 years of age regulations. 30 92 31 Of the total subcontracted production, the part corresponding to special employ- 19.6% 60.1% 20.3% ment centers is nearly €2 million at the close of 2018 (4% of the total invoicing of subcontractor suppliers). The salary gap, calculated for comparable jobs,11 with a defined HAY grade12 and taking the annual base salary is 0.3%. Supplier Invoicing 2018 Location

TPC €679,804 France HAY grades Gap Fundación Arco Iris €595,403 Madrid Top Managers From 17 to 25 5.5% Fundación Privada DAU €591,262 Barcelona Other Employees From 5 to 16 0.0% Trefemo, S.L. €84,401 Madrid

The average remuneration of board members and top executives in 2018 was Ilunion Servicios Industriales €7,136 Barcelona SOCIAL AND PERSONNEL ISSUES €271,590, including the annual base salary, the annual bonus, the variable salary TOTAL €1,958,007 linked to each strategic plan and the pension plan.

There is no digital disconnection policy at the moment. ORGANIZATION OF WORK

PROCESS TO DETERMINE EMPLOYEE REMUNERATION The organization of working hours is determined by applying what is established 32 in the collective agreements applicable to labor relations and, additionally, what is 33 A salary review process is carried out annually which involves employees in charge agreed individually with the employees. of a team, Senior Management, the Appointments and Remuneration Committee – delegate committee of the Board of Directors – as well as the Board of Directors itself ABSENTEEISM and which leads to the determination of the remuneration of each individual. We can only accurately quantify the hours of absenteeism in Puig industrial centers. SOCIAL AND PERSONNEL ISSUES For this purpose, the following factors, among others, are considered: (i) the annual increase established by the collective agreement, where applicable, (ii) the evolution Centers Number of hours % of the company and (iii) the merits and skills of the employees. Alcalá de Henares 2,871 8.35% In order to guarantee objectivity, external consultants specializing in retribution are Barcelona 4,111 7.18% included in the process. Vacarisses 2,101 8.25% EMPLOYEES WITH DISABILITIES13 Chartres 1,509 8.14%

At the end of 2018, Antonio Puig, S.A. had 21 employees with a degree of disability greater than 33%. Given the different nature of the roles performed in the company and the geographical dispersion of our offices, there was no common criterion in 2018 for monitoring In addition, we adopt alternative measures, as established in the General Disability absenteeism in our non-industrial centers. In most of our offices there is no attendan- Law applicable to Spanish public and private companies. ce control.

11 We consider comparable jobs to be those between HAY grades 5 and 25. 12 Fashion businesses are excluded because as of the end of 2018 they do not have a standardized HAY grade. 13 Data for the company Antonio Puig, S.A. WORK-LIFE BALANCE The Integrated Management System describes all the processes implemented for the management of workers’ health and safety: At Puig, as well as our commitment to respect the law and through the provisions of our Ethical Code, we are committed to promoting the values of equality and dignity. • Risk assessment and control • Emergency management Our employees are able to take maternity and paternity leave without restrictions • Health surveillance management and their return to the company is guaranteed. • Management and investigation of accidents • Jobs with special risks In 2018 in Spain, 53 children were born to employees. All the parents took their cor- • Coordination with external companies responding paternity and maternity leave, distributed as follows: • Identification and compliance with legal requirements, etc.

The IMS is certified by an external certification body, TUV Rheinland. The certification Number of employees is renewed every three years and we have passed each time. taking leave

Men 10 As of the end of 2018, the Champs-Élysées offices had not yet certified, but the implementation of all the processes began in 2017 so the certification may be processed Women 43 in the future. SOCIAL AND PERSONNEL ISSUES

In 2018 the following relevant actions were carried out in relation to occupational health and safety: Those employees wishing to do so were able to take up their job positions afterwards. • Due diligence of the Puig Joint Prevention Service in Spain (carried out every • 50 employees have rejoined their jobs with no change. 34 six years), having passed on each occasion. 35 • 1 employee has moved to Puig in France. • The OHSAS 18001 certification has been renewed (within the integrated IMS • 1 employee was on leave until February 2019. audit which also includes the recertification of the ISO 9001, ISO 14001 and ISO • 1 employee voluntarily left at the end of her maternity leave in October 2018. 22713 standards). • Progress has been made in the implementation of the OHSAS processes at the Fashion offices in Paris. • A joint project has been carried out with the Facilities department to identify SOCIAL AND PERSONNEL ISSUES HEALTH AND SAFETY the applicable legal requirements in matters of OHS14 and safety of the facilities at all Puig affiliates, and to know the status of compliance with these regula- At Puig we are committed to the health and safety of our workers, as well as to com- tions. plying with regulations in each of our centers around the world. This project has also taken into account legal environmental requirements. Once the results have been analyzed, an action plan will be defined in 2019 for Our commitment goes beyond just the legal obligations, and we have adopted dif- any necessary corrective measures that are detected. ferent international standards that guarantee the continuous updating of the In- tegrated Management System (IMS): ISO 9001:2015 Quality Management; ISO OHS15 data, at the close of 2018 monitored and controlled within the following peri- 14001:2015 Environmental Management; ISO 22716: 2008 Cosmetics - Good Manu- meter: facturing Practices and OSHAS 18001:2007 Occupational Health and Safety Manage- ment. • Spain: in its entirety, covered by the existing Joint Prevention Service • France: Puig France, S.A.S. and Chartres factory

14 OHS: Occupational Health & Safety. 15 Idem. INDICATORS Occupational illnesses

Work accident frequency rate (FR)16 Centers No. of OI overall No. of OI women No. of OI men FR = No. of work accidents resulting in medical leave x 1,000,000 / Total number of hours worked Alcalá de Henares 1 0 1

Barcelona 1 0 1 Centers FR overall average FR women FR men Vacarisses 2 2 0 Alcalá de Henares 5.22 4.90 5.59 Chartres 0 0 10 Barcelona 15.49 11.85 22.36 Barcelona – Puig Tower 0 0 10 Vacarisses 16.24 17.92 12.68 Madrid 0 0 0 Chartres 9.02 7.67 10.93 Sales force Spain 0 0 0 Barcelona – Puig Tower 0.00 0.00 0.00 OVERALL 4 2 20 Madrid 0.00 0.00 0.00

SOCIAL AND PERSONNEL ISSUES Sales force Spain 5.63 6.78 0.00

OVERALL 7.64 6.33 8.42 SOCIAL RELATIONS

Workers have legal representation at the following work centers:

36 Severity index (SI) • In Spain: the three production centers (Barcelona, Vacarisses and Alcalá de Henares). 37 SI = No. of days lost due to work accidents x 1,000 / Total number of hours worked • In France: the industrial center of Chartres and the offices of the fashion and fragrance businesses, all located in Paris.

Centers FR overall average FR women FR men In those centers where there is legal representation of workers, employee-company Alcalá de Henares 0.14 0.07 0.21 dialogue is channeled through the representative bodies in the terms provided by law. SOCIAL AND PERSONNEL ISSUES Barcelona 0.28 0.15 0.54

Vacarisses 0.83 1.04 0.38 Since 2017, Puig channels information to its employees through the corporate social network Workplace. In the process of adopting this channel, Puig launched the “Let’s Chartres 0.09 0.08 0.10 Switch” initiative to improve the digital equipment and resources of its employees. Barcelona – Puig Tower 0.00 0.00 0.00 In the two countries with the most employees, Spain and France, 100% of the workers Madrid 0.00 0.00 0.00 manage their labor relations through the applicable sectoral collective agreements in accordance with the activity carried out. Sales force Spain 0.10 0.12 0.00

OVERALL 0.19 0.15 0.21 Additionally, in Argentina, beauty advisors, who represent 54% of the total staff of the affiliate, are governed by the corresponding collective agreement.

16 All incidents are recorded, but only those claims processed by the workplace accident insurance company are accounted for in the FR. SOCIAL AND PERSONNEL ISSUES PERSONNEL AND SOCIAL 39 These three pillars are the responsibility of the corporate department de- has which the corporate of the responsibility are pillars These three those in of helping intention with the programs different implemented signed and support members of their teams. the managementpositions to inspire, develop and aimed at the steering Program, Teams include the High-Performance These programs working are nine of our affiliates Currently, affiliates. of the company’s committees and those who than 100 managers participation with the of more with this program, report to them. directly knowledge aimed at behaviors, the individual are programs Individual development - position and pre job in the current optimal performance and expertise necessary for with the direct defined on an annual managers are They positions. future for paration of the local business units. the responsibility are These programs basis. of the at levels all implemented are programs leadership development Individual - by the performance manage based on the individual needs identified organization based on is a system The PDJ Journey. Development the Performance ment system: in quantitative by their manager each employee for the setting of annual objectives the use objectives qualitative The terms. “How”) (the “What”),(the qualitative and of reference. model as a frame competency company’s ways: supports in two growth the of employees The PDJ of the performance of each employee and the monitoring The setting of objectives • of other peo- ensuring that in charge each manager is mandatory, by their manager a partple devotes of their time to the management of their teams. plan once the performance of the The establishment of an individual development • been established, have of the year has been assessed and the objectives year previous en- This directtheir and manager. employee the between upon agreed and up drawn skills the knowledge, both for annual growth targets, have that all employees sures them to potentially and to prepare job, current to perform their required or behavior in the future. responsibilities on greater take 1,975 participated in the PDJ. of 4,313 employees, In 2018, out of a total workforce globally. workers office almost all of the company’s represents This figure - specific trai two are (which includes industrial activity) there area In the Operations ning initiatives: on performance ma- project focused • Project 4.0: this is a three-year Manufacturing - that all the skills conside nagement and training, of which is to ensure the objective firstthis In level. required the to developed activity production are necessary for red on it and later the will include technicians, is on training the focus of the project, year line operators. production HSC both in the Chartres production center and in the Champs-Élysées and in the Champs-Élysées ChartresHSC both in the center production Health and Safety Committees (HSC) for the production centers of Alcalá, centers the production (HSC) for Committees Health and Safety France: France: Spain: headquarters. The percentage of workers whose place of work is monitored by the is monitored whose place of work of workers The percentage headquarters. health and sa- employee-company by formal represented and who are organization is 100% in France. committees fety Barcelona and Vacarisses. The percentage of workers whose place of work is monito- of work whose place of workers The percentage Vacarisses. and Barcelona heal- employee-company by formal represented and who are by the organization red to 100% of the corresponding is 47% in Spain (percentage committees th and safety in this country). factories in the three workers • Puig is firmly committed to the development of its employees, with a dual purpose: with of its employees, development to the is firmly committed Puig necessary to skills and behaviors has the knowledge, that the organization 1. Ensure carry out the defined strategy. - high poten achieve can that so they growth Support2. employees of the professional tial during their time at the company. and both collective programs, development several implemented have we Puig At individual. pillars: three around structured are plans development The collective success- our strategy executing plan: skills for - Support the strategic • Strategy for the definition of The main action in 2018 was challenges. future facing fully and for of which aims to enhance the digital knowledge program, Academy Digital the Puig will be im- This program of the organization. at all levels 600 employees than more 2019. from plemented that managers behaviors and values: culture of Puig - Reinforcement • Leadership the employees’ and maximize objectives the company’s to achieve in order must have experience. of functional expertise skills: and skills that• Functional - Development certain areas plan. need to meet of the strategic the challenges of the organization TRAINING Both in Spain and in France there are formal committees to assess and decide upon and decide upon to assess committees formal are there Spain and in France Both in parti- and workers company which both the issues in health and safety occupational cipate: • 38

SOCIAL AND PERSONNEL ISSUES 06 RESPECT FOR RESPECT RIGHTS HUMAN - partas guaran developed policies the as framework, its of well as Code, Ethical Our men and women. between equality tee and promote in the communication open encourages Code own Ethical company’s the addition, In official an equality and it regulates contravene that may of possible behaviors face to the Chair channel to report in this matter and direct possible breaches complaints of Directors. Board under the delegated a committee of the Audit Committee, as legislation, with current has an Equality Plan in place in accordance In Spain, Puig of representatives and employees of composed Equality on Jointa as Committee well - is a Pre In addition, as part of the Equality Plan, there of the framework the company. possible to responding for the procedure that regulates and Action Protocol vention in the workplace. of harassment situations in case on prevention and the regulations is an Equality Plan in force there In France, regulations. internal included in the rules of the company’s are of harassment EQUALITY ACCESSIBILITY FOR PEOPLE WITH DISABILITIES ACCESSIBILITY FOR PEOPLE with the complies Puig facilities. its of accessibility the ensuring to committed is Puig carry In addition, we buildings and facilities. established in its new legal standards mobility reduced with people to access guarantee to renovations outrequired the necessary. where In 2018, 77 employees participated. 77 employees In 2018, - of packaging, proces in the areas this project• Multiskilling: is aimed at employees to these groups is for The objective centers. production in all Puig sing and storage, on take and potentially them to rotate to allow areas, other in skills from be trained participated. 2018, 442 employees In responsibility. positions of greater of which 65% was €3 million, in 2018 was to training The global budget dedicated out carried by the actions initiatives and 35% to development to individual allocated area. corporate 40

SOCIAL AND PERSONNEL ISSUES FIGHT AGAINST CORRUPTION AND BRIBERY

Puig commitment to the defense of human rights, with respect for individual and collective freedoms, rejecting any form of child labor and with respect for people is included in our Ethical Code.

Puig does not operate directly in environments where there is a risk of human rights violations or of forced or compulsory labor. Therefore, no complaints have been received in this matter. RESPECT FOR HUMAN RIGHTS

Puig guarantees all its workers the freedom of association and the right to collective bargaining, as stipulated in the agreements of the International Labor Organization.

Our Ethical Code also clearly defines our position in favor of diversity and non-discri- 42 mination based on sex, race, religion, age, marital status, disability, sexual orientation or nationality, nor do we accept any form of harassment, whether sexual, physical, mental or otherwise.

All Puig employees have received detailed training on the content of the Ethical Code and this is part of the onboarding process for new employees.

During 2018 the company started a campaign of adherence to the principles of its Ethical Code among its suppliers to ensure they follow the same standards.

We have a complaints channel that reports directly to the Chair of the Audit Commit- tee of the Board of Directors, which guarantees full confidentiality and resolution in the event of any breaches of the Ethical Code.

07 Our fight against corruption and bribery is set out in several fundamental documents:

• Ethical Code • Compliance Policy • Conflict of Interest Policy • Gift Policy SOCIETY We are working on an Anti-corruption Policy, which was being drafted at the end of 2018 by the Compliance department.

Likewise, we have different control measures in place to ensure that none of the desi- red standards are violated, including the “Separation of duties and establishment of limits on the amounts spent on contracting and approving services provided by third parties and the settlement of employee T&E costs”.

We are particularly wary of those countries in positions of risk according to the CPI FIGHT AGAINST CORRUPTION AND BRIBERY 2018.17

Likewise, as explained above, there is a complaint mechanism in the Ethical Code for notifying any breaches.

CONTRIBUTIONS TO FOUNDATIONS AND 44 NON-PROFIT ORGANIZATIONS

Puig has always been a company committed to giving back to society a part of what we receive from it.

This commitment is expressed through different collaborations in several of our affiliates and the Puig Foundation. During 2018, we contributed a total of €1,640,104 to foundations and non-profit organizations.

Our business units and factories collaborate in one way or another with local non-profit organizations, in order to maximize our impact on the communities that surround us.

In Spain, we are have partnered with a renowned third sector partner, Ashoka, which leads the Invisible Beauty project, sponsored entirely by the Puig Foundation.

Invisible Beauty is a project that supports entrepreneurial excellence in those who are carrying out innovative social initiatives with a high impact (Innovators program) and young people committed to their environment who want to use their talent, creativity and passion to carry out social initiatives (Makers program).

17 CPI: Corruption Perception Index. This index, which ranks 180 countries and territories by their perceived levels of public sector corruption, as determined by recognized experts and businessmen, uses a scale of 1 to 100, where 0 means “highly corrupt” and 100 “very clean”. 08 SOCIETY 47 - evaluation through Ecovadis. Using this evaluation, we we Using this evaluation, Ecovadis. through evaluation 18 Sustainable Supply Policy. plan corrective actions together with the suppliers that have obtained low scores to obtained low scores actions with the suppliers that together have plan corrective suppliers outcarried for campaigns inclusion have We performance.their improve with thatof ensuring aim comply the our suppliers with all lastthe during years two our SSP policy by 2020. SUBCONTRACTING AND SUPPLIERS Code Ethical our of commitments the extending in years recent in invested have We the alignment of carry out types of actions two to guarantee We to the supply chain. our suppliers with our standards. 1. Alignment with our SSP: 18 For temporary hires, we collaborate with the company Manpower, with the condition with the condition Manpower, company with the collaborate we hires, temporary For - com this with agreements signed have We areas. nearby from people hire thatthey in the handling personnel, especially of temporary the training to encourage pany thus developing practices, manufacturing in good and trucks forklift and driving of - Vacaris in worked who have of the people Many their employability. their skills and permanent similar industries at job positions in other the end of their found ses have with us. contract temporary REGION OF OUR PRODUCTION ACTIVITY IN THE IMPACT in the vicinity of its that enrich the social fabric initiatives in different is involved Puig facilities: - Industrial Es Torrella of the Can Committee part are we of the Executive Vacarisses: activity the to manage established Vacarisses, carries out which tate, its activity in of this the transfer until Plant of the industrial estate Treatment Wastewater of the is finalized. Council Town activity to the a Valley, since 2002, of the Cosmetic has been one of the promoters, Chartres: Puig to the per related companies than 550 more encompasses cluster which currently chain. Its value along the entire including companies sectors, fumery and cosmetics for initiatives, is to supportobjective different of the sector through the development competitiveness. or improving in business development example which aims to cluster strategy is part Government’s of the French Valley Cosmetic so and the leaders of each sector, smaller companies between interaction encourage can grow. ecosystem that the entire Puig is committed to the local areas in the countries in which it is present. On average, itwhich in average, present.On is countries the in areas local the to committed is Puig - the develop thus boosting locally, hired are in each country 96% of the workers over it in which ment of the communities is present. locally at each of its factories: to employing is especially committed Puig - 221 people with permanent con employ we center: production Alcalá de Henares at periods of higher production to cover hires of 26 temporary and an average tracts the from come the plant of our sales. 98% of these workers due to the seasonality towns in the vicinity of the center. - to pro which works Foundation, with the Integra collaborate we hires temporary For and people with disabili- of people atmote the employment risk of social exclusion this foundation. six people from employed ties. During 2018 we and 390 people with permanent contracts employ we center: production Barcelona at periods of higher production the plant to cover hires of 35 temporary an average due to the seasonality of our sales. priority (Badalona), to give in the area located ask Manpower, we hires temporary For within the vicinity of the plant.to finding personnel from - 148 people with permanent con employed in 2018 we center: production Vacarisses long-term leaves. two cover to hires temporary and two tracts 30.30 during 2018 was (temp agencies) contracts number of temporary The average at the periods of higher production the plant- due to signi to cover people per month, in the activityficant of our main client. increases all over from employees hire means that we of the factory location The geographical the factory, less than 15 km from live 73% of employees region. Occidental Vallès the and other towns. Vacarisses Viladecavalls, Terrassa, most of them in with a bus service our employees provide we to the factory, help them commute To main the two for of people (Terrassa) the town with the highestfrom concentration to the center. the largest number of transfers involve which shifts COMMITMENT TO LOCAL DEVELOPMENT COMMITMENT 46

SOCIETY SOCIETY 49 - and undertakes to contract to contract and undertakes and other national legisla- and other national 20 the need to approve a new supplier (to incorporate it into the current it current the into supplier (to incorporate a new to approve the need • Strategy: supplier (e.g.- an existing or a new activity a packa from of suppliers) network a full service). on to provide ging supplier going IFRA: International Fragrance Association. Fragrance IFRA: International tions and internal regulations, going beyond what is legally necessary in some as- beyond going regulations, tions and internal of our perfumery products. cycle and cosmetics pects of the life tant one being Regulation (EC) No 1223/2009 of the European Parliament and of the of and Parliament European the of 1223/2009 No (EC) tantone being Regulation the rules in which harmonizes products 30, 2009 on cosmetic of November Council while products cosmetic for market an internal to achieve in order the Community of human health. of protection ensuring a high level of IFRA with the recommendations also complies Puig Puig manufacturing and distribution of cosmetic products is subjectis products cosmetic of distribution and strictto manufacturing legisla- Puig and their labelling and packaging. tion, both in terms of their manufacture the most impor legislations, is subject single one of our products to several Every 20 CONSUMERS The audits are carried out by a team of accredited internal auditors. They use a form form use a They auditors. out carried internal The audits are by a team of accredited heads of the management systems. internal by the different that validated has been each audit and depending on After supplier. each type of adapted for is a form There De- by the Outsourcing an action is monitored plan is established which the result, The visits. of the follow-up partment.The result obtained determines the frequency Department. of the Outsourcing in the balanced scorecard recorded are results clause: that up includes the following is drawn suppliers a contract key For (in- that the Manufacturer Puig before and warrants represents “The Manufacturer agents) and/or affiliates, branches, representatives, employees, managers, its cluding with all the term of this Agreement during and will comply complies has complied, civil, criminal, financial, any with and, in particular, and regulations applicable laws data administrative, environmental, health and safety, commercial, fiscal, corporate, other requirement or any labor or social security regulations and privacy, protection during will also comply The Manufacturer authorities. government by the competent ataccessible and published Code Ethical Puig with the Agreement this of period the the link http://www.puig.com/es/about-us/ethical-code/ the fulfilment of its obli- licenses and permits necessary for policies, those insurance of any if it is aware will notify Puig The Manufacturer under this Agreement. gations to this clause.” related breach

19 74% 72% % response 99 138 Suppliers their answers evaluated through through evaluated 192 133 included Total suppliers Total (127 re-evaluated + 65 new) (127 re-evaluated RESULTS sent to 88 suppliers that accounted for 80% of for sent to 88 suppliers that accounted material: Suppliers of inventory su- and Media sent to 35 Marketing material: Suppliers of non-inventory • +90% purchase volume • +90% purchase suppliers • Recurrent • Suppliers at risk • 98%. rate Response revenues. • 58%. rate ppliers. Response technology manufacturing or if a recent • Risk: determined by type of product, - has been detected non-compliance with the pro thatquality problem indicates cess. (based on Puig for invoicing the importance of the annual supplier’s • Invoicing: the ABC supplier analysis). 2018 Campaign 2017 Campaign Sustainable Supply Policy. 19 This campaign will be extended during 2019. This campaign will be extended performed audits are network, up the Puig suppliers that make outsourcing As for oc- (environment, managementthe with systems compliance ensure to periodically the UNE- Moreover, practices). manufacturing and good risk prevention cupational certified is and the UNE-EN22716:2008 EN ISO in) (which Puig standards 9001:2015 activities. and monitor outsourced us to evaluate require prioritization the and years, five and three between is audits these of frequency The establishing the annual audit based on: plan are criteria for 2. Actions to promote the adherence of our suppliers to the company’s Ethical Code. Code. Ethical of our suppliers to the company’s the adherence 2. Actions to promote criteria: a new campaign, with the following launched In 2018 we The results were as follows: were The results We use the following criteria to choose which suppliers will be evaluated: will be choose which suppliers criteria to following use the We SSP campaign of the evaluation during the second obtained In 2018, the results were positive. Suppliers improved their score by 3.4 points over the previous year year the previous over by 3.4 points their score Suppliers improved positive. were re-evaluated. in those that were rate higher response a achieved 51) and we (54.4 vs 48

SOCIETY We take great care during the process of creating our products to implement mea- • In the event that an ingredient is detected which is potentially harmful to the sures that guarantee the health and the safety of consumers. Monitoring is carried safety of our consumers, it would be automatically discarded for any new pro- out throughout the product development workflow, and can be summarized in three duct and we would plan for it to be removed from the formulation of any exis- main areas: ting products in the market.

1. Ingredients and packaging REGARDING THE FINAL PRODUCT 2. Development of new formulas • Specifications/Quality control. 3. Final product and labelling • GMPs Cosmetics (standard ISO 22716 Cosmetic products. Good manufacturing practices (GMP)/CR, chap. III, article 8). • Validation of pilot tests. REGARDING INGREDIENTS AND PACKAGING • Cosmetovigilance (CR, chap. VII, article 23). • Gathering/analysis of toxicological data for all ingredients (IFRA restrictions, • Non-conformities. opinions of the Scientific Committee on Consumer Safety, CR,21 among others).

• Validation/approval of new ingredients/materials (CR, chap. IV). FOR THE LABELLING • Packaging/product compatibility test (CR, annex 1, part A, paragraph 4). • Regulated by the Cosmetics Regulation. We have an internal regulatory affairs • In-vitro study of phototoxicity of the fragrance. team that ensures compliance. Likewise, we have an internal policy on this matter, based on the CR and also on other international legislation and sectoral re- SOCIETY commendations. 51 50 REGARDING THE DEVELOPMENT OF NEW FORMULAS

• Internal voluntary guide on labelling, which includes both the CR and other SOCIETY • Cosmetics Regulation EC 1223/2009 (CR). international legislation and sectoral recommendations in a single document. • Blacklist: voluntary internal regulation that expands the list of prohibited substances set by law. Puig constantly monitors the market and its trends and MECHANISMS FOR HANDLING CLAIMS immediately discards all those substances for which there are safety doubts, even if they haven’t yet been banned by legislation. We have a set of mechanisms in place so that our consumers can contact us to make • Microbiology: preservation system, microbiological risk, microbiological con- any claims. Claims can be very diverse, from reactions to our products by consumers trol, Challenge test or efficacy test of the preservation system (CR, annex 1, part to problems with orders from our direct customers. A, paragraph 3). • Stability studies (CR, chap. III, article 8 annex 1, part A, paragraph 2). We follow common standards based on EU regulations for all queries: • Toxicological tests carried out following GLPs (Good laboratory practices) (CR, article 3): eye irritation in-vitro, skin irritation in-vitro, HRIPT allergy test. • Compliance with legislation • Consumer/efficacy test (CR, chap. VI, article 20). • Veracity • Labelling (CR, chap. VI, article 19). • Data that supports the claim • MoS (Margin of Safety)/Impurities calculation. • Honesty • Safety Assessment Report (CR, chap. III, article 10 annex 1, part A). • Impartiality • Informed decision-making

21 RC stands for Regulation (EC) No. 1223/2009 of the European Parliament and the Council of November 30, 2009, known in the sector as the Cosmetics Regulation. SOCIETY 53 23 8,153 1,953 paid 47,754 17,048 Corporate tax Corporate 22 83,721 44,628 13,176 Profit 191,913 • Customer claims: 2.29 • Customer claims: claims: 6.59 • Consumer claims: 8.88 Total • No. of likely and very likely cosmetovigilance alerts in 2018 for every million million every alerts for in 2018 cosmetovigilance likely very and likely of No. tolerance). good units: 0.32 (very manufactured mi- every of finished product of functional in 2018 for and texts claims No. units: llion manufactured Spain of Europe Rest Americas of world Rest In thousand of euros. In thousand of euros. 22 23 TAX INFORMATION TAX - determining the com for as the body responsible of Puig, S.L., of Directors The Board applicable to all its subsidiaries Policy Tax the Corporate approved tax strategy, pany’s website. 22, 2018 and published iton March on the company’s it where ope- and regions locations to respect firmly undertakes different the Puig fulfilment of our tax obliga- a rigorous into translates which, in terms of taxes, rates present. are in which we in the countries tions directly values, principles, framework, at is aimed establishing the governance Policy Tax The to decision-making and thatbehavior tax our guide should standards and guidelines all this must And risks. be and mitigate with regulations compliance correct ensure tax of good application while ensuring the proper aligned with our business strategy the with and transparency of cooperation a relationship and maintaining practices public subsidies. does not receive Puig tax administrations. different - or vo of non-compliance with standards within the category None of these cases fall codes. luntary 1. An alert is detected and registered in the Puig database. 1. An alertPuig in the detected is and registered company. an external from a questionnaire answers The consumer 2. about including an case is collected, the The maximum amount of information 3. of the product.analysis internally. dossier is prepared 4. A complete - com the external with of the claim is determined in conjunction The validity 5. / Questionable / Unlikely. likely Very / / Likely Possible pany: agreed previously to the consumer, sends a letter of reply company The external 6. with Puig. AssessmentThe alert Report. in the Product Safety 7. is closed and registered about the case, and if possible of The maximum amount of initial information 1. is collected. the product, of a possible defect in the product is carried out and if said defect Verification 2. as compensation. a new product is sent to the consumer and a gift is found, the The product the root to identify cause of the defect and to take is analyzed 3. necessary actions. brands and Prestige of the Premium on the websites form • Contact website e-mail on the Puig • Contact telephone numbers • Contact There are two types of claim: types of two are There care health consumers, from includes all communications This • Cosmetovigilance. reaction undesired any concerning authorities national or competent professionals cosmetic a use of foreseeable or reasonably normal the or after during place taking below: the procedure These follow product. other claim: • Any by an external is managed this process fragrances, and Prestige In the case of Premium it by Puig. is handled directly all other products, For company. their claims: to make to consumers channels available different makes Puig - and statis controls its internal reportedfor and incidents defects all the analyzes Puig measures. the appropriate to take in order tics, 52

SOCIETY Content Contents od Law 11/2018 Materiality Location in this report Reporting framework24 verification

GRI GENERAL INFORMATION

Brief description of the business GRI 102-1 model (business environment and Company profile GRI 102-2 TABLE OF CONTENTS organization) GRI 102-5

Company profile > Values GRI 102-16 Diligence procedures > Ethical Code > Fight against corruption and GRI 102-17 bribery

GRI 102-3 Company profile Geographical presence > Presence in the world GRI 102-4 GRI 102-6

Company profile Objectives and strategies of the > Message from the Chairman GRI 102-14 organization and CEO GRI 103 > Strategy and objectives

GRI 102-18 Company profile Organization and structure > Governance and organization GRI 102-22 GRI 102-23

Company profile 55 Main factors and trends that GRI 102-11 > Factors and trends that could affect could affect the company’s future the company’s future progress GRI102-15 progress > Risks and opportunities GRI 103

Supply chain and subcontracting Company profile OF CONTENTS GRI TABLE > Supply chain GRI 102-9

ENVIRONMENTAL ISSUES

Management approach Environmental issues GRI 103

General Information Environmental issues GRI 103

Environmental issues GRI 201-2 Pollution > Pollution > Carbon offsetting GRI 305-5

Circular economy and waste pre- Environmental issues vention and management > Circular economy GRI 306-2

24 In cases in which the GRI standard does not cover the requirement of Law 11/2018 in its entirety, we have followed the 09 reporting criterion chosen by the company to comply with the provisions of the aforementioned Law. GRI TABLE OF CONTENTS OF TABLE GRI 57 GRI 103 GRI 103 GRI 102-43 GRI 103 GRI 413-1 GRI 102-9 GRI 103 GRI 414-1 GRI 103 GRI 103 GRI 201-4 GRI 415-1 GRI 103 GRI 416-1 GRI 416-2 GRI 417-1 GRI 102-16 GRI 102-17 GRI 103 GRI 102-17 GRI 103 GRI 205-1 GRI 201-1 GRI 413-1 - - Respect for human rights human Respect for Fight against and Fight corruption bribery against and Fight corruption bribery Respect for human rights human Respect for Tax information Tax Information about the company Information - to local develop > Commitment ment Information about the company Information Information about the company Information > Consumers handling claims > Mechanisms for Information about the company Information and suppliers > Subcontracting Fight against and Fight corruption bribery to foundations > Contributions and non-profit organizations N/A N/A Human rights Corruption and bribery Corruption Subcontracting and suppliers Subcontracting Management approach Management approach Contributions to foundations Contributions and non-profit organizations Consumers Commitment of the company to of the company Commitment sustainable development Management approach Tax information Tax RESPECT FOR HUMAN RIGHTS FOR HUMAN RESPECT FIGHT AGAINST CORRUPTION AND BRIBERY CORRUPTION AND FIGHT AGAINST INFORMATION ABOUT THE COMPANY ABOUT INFORMATION GRI 103 GRI 103 GRI 405-1 GRI 406-1 GRI 103 GRI 403-2 (2016) GRI 403-3 (2016) GRI 103 GRI 404-2 GRI 404-3 GRI 103 GRI 403-2 (2016) GRI 401-2 GRI 401-3 GRI 102-8 GRI 103 GRI 405-1 GRI 304 GRI 302-1 GRI 302-4 GRI 303-1 GRI 306-1 GRI 306-5 GRI 201-2 GRI 305-1 GRI 305-2 GRI 305-3 GRI 305-5 GRI 103 GRI 102-41 Social and personnel issues > Equality policies Social and personnel issues people accessibility for > Universal with disabilities Social and personnel issues > Training Social and personnel issues > Health and safety Social and personnel issues data employment > General with disabilities > Employees Social and personnel issues of work > Organization > Absenteeism to help the work-life > Measures balance Social and personnel issues > Social relations Environmental issues Environmental > Sustainable use of resources issues Environmental change > Climate issues Environmental of biodiversity > Protection N/A Equality Universal accessibility for Universal people with disabilities Organization of work Organization Training Employment Sustainable use of resources Sustainable Social relations Health and safety Protection of biodiversity Protection Climate change Climate SOCIAL AND PERSONNEL ISSUES SOCIAL AND PERSONNEL 56

GRI TABLE OF CONTENTS Mr. Marc Puig NOVAQUERN, S.L. EXEA EMPRESARIAL, S.L. Guasch Represented by Represented by Mr. Manuel Puig Rocha Mr. Josep Oliu Chairman Vice Chairman Board member

Mr. José María Castellano EXEA INTERNATIONAL, BV Mr. Yiannis Petrides Ríos Represented by (Identified in his passport as Ms. Giovanna Kampouri Monnas Board member Ioannis Petrides) (Identified in her passport as Ioanna Kampouri) Board member Board member

Mr. Rafael Cerezo Laporta Mr. Jordi Constans Fernández Mr. Manel Adell Domingo

Board member (Identified in his passport as Jorge Board member Valentín Constans Fernández) Board member

Mr. Daniel Lalonde

Board member