PUMA Annual Report 2019 | Quarterlytics

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Annual Report 2019

PREPARE
PREPARE
PREPARE
PREPARE
PREPARE
PREPARE
TO PERFORM

TABLE OF CONTENTS

ABOUT
PERFORMANCE

BRAND
PERFORMANCE

ONE TEAM
PERFORMANCE

ONE PLANET
PERFORMANCE

T O OUR SHAREHOLDERS

OUR BRAND AND PRODUCTS

OUR PEOPLE

S USTAINABILITY

CEO Letter

08 Report by the Supervisory Board

“We don’t make our brand –
our consumers do.”
– Interview Adam Petrick

Teamsport

18 Running and Training

Prepare for Growth

Culture

Personal Journey

21 Basketball

24 Golf

26 Motorsport

Sportstyle

Accessories

OUR STORES

Introduction

“We want to embed sustainability into all
of our products.”
– Foreword Anne-Laure Descours, CSO
PUMA Sustainability Strategy 10FOR20

Social Aspects

Environment

Health and Safety

Governance

Summary and new Targets for 2025

GRI Index

107 Deloitte Assurance Statement

Annual Report 2019 ↗ TABLE OF CONTENTS

277

The PUMA Share

280

PUMA Year-on-Year Comparison

282

PUMA Group Development

284

Imprint

TABLE OF CONTENTS

PURE
PERFORMANCE

109

COMBINED MANAGEMENT REPORT
FOR THE FINANCIAL YEAR 2019

181

CONSOLIDATED FINANCIAL STATEMENTS

110

Overview 2019

182

Consolidated Statement of Financial Position

113

PUMA Group Essential Information

184

Consolidated Income Statement

113

Commercial Activities and Organizational Structure

185

Consolidated Statement of Comprehensive Income

114

Targets and Strategy

186

Consolidated Statement of Cash Flows

116

Product Development and Design

188

Statement of Changes in Equity

190

Notes to the Consolidated Financial Statements

268

Declaration by the Legal Representatives

269

Independent Auditor’s Report

276

ADDITIONAL INFORMATION

277

The PUMA Share

280

PUMA Year-on-Year Comparison

282

PUMA Group Development

284

Imprint

118

Sourcing

120

Employees

123 Management System

125

Information regarding the Non-financial Report

126

Economic Report

126

General Economic Conditions

127

Sales

130

Regional Development

132

Results of Operations

137

Dividends

138 Net Assets and Financial Position

142

Cash Flow

146

Statement regarding the Business Development and the

Overall Situation of the Group

147

Comments on the German GAAP Financial Statements of PUMA SE

151

Further Information

151

Information concerning Takeovers

154

Compensation Report

163

Corporate Governance Report including the Statement on

Corporate Governance in accordance with § 289f and § 315d HGB

172

Risk and Opportunity Report

179

Outlook

ABOUT
PERFORMANCE

To our Shareholders

Bjørn Gulden, Chief Executive Officer (CEO)

Annual Report 2019 ↗ TO OUR SHAREHOLDERSCEO-LETTER

B J Ø R N G U L D E N
C H I E F E X E C U T I V E O F F I C E R P U M A

DEAR SHAREHOLDERS,

This letter would have been much easier to write three months ago. We had just
finished the best year in PUMA’s company history, with €5,502 million in reve-
nues and €440 million in EBIT - the highest that PUMA has ever achieved. We
had double-digit growth in all regions and in all divisions. All business units re-
ported growth and we felt the PUMA brand had become stronger in all markets
around the world. Our order book for 2020 was very positive, with strong and ba-
lanced growth in all regions, so we were really looking forward to this year. Janu-
ary started well with strong wholesale numbers, a strong eCommerce perfor-

mance and record sales in our owned and operated stores. Then, in the last week
of January, in the middle of the Chinese New Year celebration, COVID-19 hit the
city of Wuhan in China. The Chinese market, both for retail and production, basi-
cally shut down. Over the next six weeks, the whole business in China, except for
eCommerce, basically disappeared. Other Asian markets, especially those which
normally have a lot of Chinese tourists, were also heavily impacted. Our focus
was to ensure that our staff in China was safe, to solve the supply chain issues by
ensuring deliveries from other sourcing countries, and to limit the financial da-
mage of the retail shut down in the domestic Chinese market. Our sales in the
rest of the world were very strong and none of us expected COVID-19 to develop
into a global pandemic.

We were wrong. As China started to recover in mid-March, the virus had started
to spread globally and by the end of the month basically 80% of our retail doors,
both owned and operated as well as partner stores, were closed. Most retail
partners had also closed their warehouses and did not accept shipments anymo-
re. The only channel that continued to work was eCommerce. Direct to Consumer
(DTC) eCommerce, although it is growing at almost 50%, is nowhere close to be
able to compensate for the lost business within offline channels, as it is less than
10% of our business in normal times. The COVID-19 pandemic had hit a quarter
that would have otherwise been great.

This development has basically continued in April. While the Chinese market is
recovering and some other Asian markets, like South Korea and Japan, are slow-
ly improving, the rest of the world has still basically shut down for the sales of
sport and sport lifestyle products.

There have been some store openings in the Netherlands, Austria and Germany,
while in Sweden, stores have been open the whole time. But it is still far too early
to talk about any recovery. The industry is in a crisis where basically 70-80% of
the retail space is closed, where almost all organized sports activities have stop-
ped and where global consumers are very worried about their health.

➔Annual Report 2019 ↗ TO OUR SHAREHOLDERSOur PUMA mantra to manage this difficult situation has been from the beginning
“To manage the crisis in the short term without hindering the mid-term
momentum”.

This means to first survive this phase of little revenue, then recover and stabilize
the business in the markets and channels that are opening up again, and then
finally utilize PUMA’s momentum to achieve growth again for 2021.

In order to get through this crisis, we are working closely with all our partners
such as retailers, suppliers, landlords, banks and authorities. We are reducing
costs and cash outflows wherever possible as well as securing additional finan-
cing to ensure that we, together with our partners, can sustain the value chain in
this period. Suspending dividend payments and suspending the Management
Board’s salary by 100% for now as well as reducing salaries of our senior ma-
nagement between 25% -35% are essential measures to achieve additional fi-
nancing given the circumstances.

I am very impressed by how all of our employees and most of our partners have
cooperated in these difficult weeks. Our goal is to survive this crisis together.

We are currently creating and distributing a lot of digital content to stay connec-
ted with our customers. This also increases the traffic to our PUMA eCommerce
platforms. We are also in the process of finalizing the Spring/ Summer 2021 pro-
duct range, where we will ensure that we can sell in the collections digitally to all
our retail partners. We have not reduced investment in product development, and
we will present full new ranges in all categories and all divisions both for Spring/
Summer 2021 and Autumn/ Winter 2021.

I am convinced that our industry will be very strong after the crisis. People will
probably do even more sports than before. Health and a healthy lifestyle will be
more important and the impact of global sports brands on global fashion will, in
my opinion, be even greater than before. The crisis will change the landscape,
but those brands that survive will be in a relatively stronger position than before.

And PUMA will be strong. The fact that 2019 was the best year in PUMA‘s history
has put us in a better position to manage this crisis. All regions and all product
divisions contributed with a double-digit sales growth, which underlines the on-
going successful execution of our FOREVER FASTER strategy and demonstrates

PUMA’s enormous potential. On our way towards becoming the Fastest Sports
Brand in the world, we have further refined our strategic priorities. In addition to
brand heat and desirability, a competitive product range, a leading offer for wo-
men, improved quality of distribution, organizational speed and building our
sports performance credibility in the US through our re-entry into Basketball, we
have now added communicating sustainability and a focus on local relevance as
two further strategic objectives.

Sustainability has been deeply embedded in our processes and is a big part of
how we work every day. We have been acting in a sustainable way, but have not
been vocal enough about it. For consumers worldwide, sustainability has become
more important, so we will also make our actions more visible. In 2019, we alrea-
dy reached nine out of our 10FOR20 sustainability targets and developed our next
set of targets for 2025, which we are announcing in this report.

In February, we launched a sportswear collection made from recycled plastic in
collaboration with recycling company First Mile. The shoes and apparel are made
from recycled yarn that is manufactured from collected plastic bottles.

Local relevance is key in our industry and is gaining importance every day. Diffe-
rent countries have different sports that people follow and participate in. For us,
it is key to be a part of that everywhere. One of the best examples of local rele-
vance is our partnership with Virat Kohli, the captain of the Indian cricket team.
Cricket is by far the most relevant sport in India and by partnering with Virat, we
gain credibility as a sports brand in the Indian market. Netball and Australian
Rules Football are relevant sports in Australia and New Zealand. Rugby plays a
major role in South Africa, whereas Handball is followed in vast parts of Europe.

In PUMA’s first full NBA Basketball season after our comeback in 2018, Toronto
Raptors shooting guard Danny Green was the first PUMA athlete to win the NBA
Finals since Isiah Thomas in 1990. With the support of JAY-Z, our Creative Direc-
tor for basketball, we continued to launch additional performance basketball
shoes and signed new highly talented NBA players such as RJ Barrett (New York
Knicks), Kyle Kuzma (Los Angeles Lakers) and Marcus Smart (Boston Celtics).

In 2019, PUMA further improved its brand heat and desirability among consu-
mers and accounts. We continued to work with relevant influencers on a global
as well as local basis and further expanded our sports endorsements, such as

Annual Report 2019 ↗ TO OUR SHAREHOLDERSentering into partnerships with the football clubs Manchester City, and Valencia
CF.

network with further refurbishments and in August, we opened our New York
flagship store on Fifth Avenue.

In track and field, the World Athletics Championships in Doha were an important
event for our 115 athletes and 12 national federations with Norwegian hurdler
Karsten Warholm successfully defending his title over 400 metres hurdles. In
Motorsport, we signed a long-term agreement with Porsche as well as a separa-
te collaboration with Porsche Design to create premium lifestyle products.

We added another bestseller to our Footwear offer, the RALPH SAMPSON, a
classic basketball silhouette. This underpins that we are generating credibility in
basketball, which we have leveraged into other categories. The RS-X-franchise
continued to resonate well with our customers, as did the CALI franchise, pre-
sented by PUMA’s ambassador Selena Gomez. Other key styles included the
PUMA FUTURE football boot and running & training shoes based on our LQD
CELL and HYBRID technology platforms. In the fourth quarter, we launched the
RS-X3, CALI SPORT and the RIDER, which is inspired by one of the jogging shoes
launched in the 1980s Creating a leading product offer for women remains a
priority for PUMA and we have capitalized on this growing segment in the global
sportswear market. We continue to see more and more women taking up sports
worldwide. Athletic wear has long made its way into everyday outfits. “Where the
gym meets the runway” continues to be the theme for our initiatives in the wo-
men´s segment.

We continued to invest in our distribution and logistics network. Our new highly
automated multichannel distribution center in Geiselwind, Germany is expected
to be operational in early 2021 as planned. A new, also highly automated distribu-
tion hub just outside of Indianapolis will enter operations later this year.

There is no question that the issues and uncertainties associated with the COVID-
19 pandemic present major challenges for PUMA and will have an impact on our
short-term performance. However, there will be a time after COVID-19 and we
believe strongly that the future of the sporting goods industry and for PUMA, in
particular, is bright. Positive underlying trends such as increasing sports partici-
pation and more casual wardrobe remain steady or will even accelerate as a re-
sult of the crisis. I am extremely proud of our employees and for their spirit with
which they are working through this crisis. I also recognize that for you as share-
holders this is a tough time. Therefore, I want to thank you, our shareholders, for
your continuing support, your confidence and above all for your trust.

PUMA improved the quality of its distribution and expanded its presence in key
sports performance and Sportstyle accounts around the world, in part by streng-
thening our relationships with key retailers by being a flexible and service-orien-
ted business partner. We also upgraded our owned-and-operated retail store

Bjørn Gulden
Chief Executive Officer PUMA

Annual Report 2019 ↗ TO OUR SHAREHOLDERS
REPORT BY THE SUPERVISORY BOARD

In this regard, the Supervisory Board has in its four regular meetings discussed
and resolved on the Company’s business policies; all relevant aspects of corpo-
rate development and corporation planning; the Company’s economic situation,
including its net assets, financial position and results of operations; and all key
decisions for the Group. The Management Board has informed the Supervisory
Board regularly, comprehensively, and in a timely manner in written and verbal
form about the implementation of all decisions and about all major business
transactions. Furthermore, in 2019 two extraordinary and a constitutive meeting
of the Supervisory Board took place. Urgent matters were decided using electro-
nic means of communication. All members participated in drawing up the reso-
lutions. Where necessary, representatives of the shareholders and employees
held separate preliminary discussions prior to the meetings.

J E A N -
F R A N Ç O I S
PA L U S
C H A I R M A N O F
T H E
S U P E R V I S O R Y
B O A R D

DEAR SHAREHOLDERS,

PUMA closes the year 2019 with record net sales and is growing faster in many
areas, beating both the markets and its competitors. The positive development of
all key performance indicators is a remarkable success – even without conside-
ring the background of increasing global uncertainties. The 2019 financial year
has begun with a change in the Management Board. Anne-Laure Descours was
appointed Chief Sourcing Officer. Especially in times when production sites are at
the centre of trade wars, it is of great advantage for PUMA to have in Anne-Laure
Descours an experienced expert who is located in Hong Kong and who makes the
necessary decisions, if needed in coordination with our production partners. One
focus of the Supervisory Board's work was the discussion and decision on the
share split, which intended to make PUMA shares more attractive for all
investors.

In the financial year 2019, the Supervisory Board has exercised all its duties un-
der the law, statutes and company rules. The Supervisory Board has dealt exten-
sively with the status and the development of PUMA and has regularly advised
and supervised the Management Board in its management of the Company.

Plenary Supervisory
Board

Jean-François Palus

Thore Ohlsson

Héloïse Temple-Boyer (since
18.4.2019)

Fiona May (since 18.4.2019)

Jean-Marc Duplaix (until
18.4.2019)

7/7

4/4

3/3

Béatrice Lazat (until 18.4.2019)

3/3

Martin Köppel

Bernd Illig

7/7

Attendance at meetings
(referring to regular and extraordinary
meetings)

Attendance
in %

100

The Supervisory Board discussed in detail all of the Company’s key business
transactions, based on the reports by the Management Board and the commit-
tees, and presented its own ideas. The Management Board has provided the Su-

➔Annual Report 2019 ↗ TO OUR SHAREHOLDERSCONFLICTS OF INTEREST

The members of the Supervisory Board are required to disclose any conflicts of
interest immediately. In the past year, no such disclosures were made.

COMMITTEES

The Supervisory Board has established three committees to perform its duties:
The Personnel Committee, the Audit Committee and the Nominating Committee.
The Personnel Committee and the Nominating Committee each comprise two
shareholder representatives and one employee representative. The Nominating
Committee is composed only of shareholder representatives. The composition of
the committees can be found in the notes to the consolidated financial state-
ments. The Supervisory Board receives regular reports on their work.

PERSONNEL COMMITTEE

The Personnel Committee has the task of preparing the conclusion and amend-
ment of employment contracts with the members of the Management Board and
establishing policies for Human Resources and personnel development. It met
three times in 2019. The discussions focused on proposals for determining the
bonus payments for the members of the Management Board. In addition, the
Personnel Committee dealt with the definition of the targets for 2019 and discus-
sed the personnel composition of the Management Board. The Supervisory
Board was given corresponding recommendations for resolution.

pervisory Board with detailed information on any deviations of the business per-
formance from the expected figures, both in writing and orally. The Supervisory
Board verified all of these explanations using the supporting documents, which
were always submitted in good time before the meetings. The Supervisory Board
was involved in all key decisions at an early stage. In addition, the Chairman of
the Supervisory Board maintained, and continues to maintain, regular verbal or
written contact with the CEO and keeps himself informed of all major develop-
ments. Overall, these discussions did not give rise to any doubts that the Ma-
nagement Board were managing the Group in anything other than a lawful and
proper manner.

MAIN ADVISORY FOCUS

In the financial year 2019, the focus was primarily on the following topics: change
in the Management Board with the resignation of Lars Radoor Sørensen as Chief
Operating Officer and appointment of Anne-Laure Descours as Chief Sourcing
Officer; audit and approval of the 2018 financial statements; setting the agenda
for the Annual General Meeting of April 18, 2019; ongoing business and sales de-
velopment; the Group’s financial position; business and budget planning for 2019
and medium-term planning, including investments; further improvements of the
compliance management and the internal control systems as well as material
litigation in the Group; and a proposal to the Annual General Meeting on the elec-
tion of Héloïse Temple-Boyer and Fiona May to the Company's Supervisory
Board.
As every year, the Personnel Committee and the Supervisory Board set the target
achievements for the variable remuneration of the members of the Management
Board regarding 2018, and decided on the bonus for the members of the Ma-
nagement Board and the targets for the remuneration of the members of the
Management Board in 2019.
The share split was a central topic of discussion for the Supervisory Board in the
first quarter of 2019, as the price of PUMA shares had risen considerably in re-
cent years and PUMA shares were no longer affordable for the PUMA consumer.
The share split was intended to bring the shares closer to other stocks in the
MDAX and make the shares more attractive to a broader investing public.

Annual Report 2019 ↗ TO OUR SHAREHOLDERSAUDIT COMMITTEE

ANNUAL FINANCIAL STATEMENTS ADOPTED

The Audit Committee held four regular meetings in financial year 2019. In parti-
cular, the Audit Committee is responsible for the annual and consolidated finan-
cial statements, the quarterly reports and the half-yearly financial report, ac-
counting issues and monitoring the accounting process, the effectiveness of the
internal control system, risk management and the risk management system, in-
ternal audits, and compliance management; and the statutory audit of the finan-
cial statements, with particular regard to the required independence of the statu-
tory auditors, issuing the audit mandate to the statutory auditors, defining the
audit areas of focus, any additional services to be performed by the auditors, and
the fee agreement. In addition, heads of Group functions were available for re-
ports and questions on individual agenda items at committee meetings.

NOMINATING COMMITTEE

The Nominating Committee has the task of proposing suitable candidates to the
Supervisory Board for its election proposals to the Annual General Meeting. It
held one meeting in the past fiscal year. The Nominating Committee recommen-
ded that the Supervisory Board propose to the Annual General Meeting on April
18, 2019 that Ms. Héloïse Temple-Boyer (Group Managing Director of Artemis
S.A.S., Paris/France) and Ms. Fiona May (Independent Management Consultant,
Calenzano/Italy) be proposed for election to the Supervisory Board.

CORPORATE GOVERNANCE

As in previous years, the Supervisory Board addressed current developments in
the German Corporate Governance Code (GCGC) in the financial year 2019. The
GCGC contains essential statutory regulations and recommendations for the ma-
nagement and supervision of listed companies and standards for responsible
corporate governance. The corporate governance standards have long been a
part of the corporate routine.

The annual financial statements for PUMA SE prepared by the Management
Board in accordance with German Commercial Code (Handelsgesetzbuch/HGB),
the consolidated financial statements and the combined management report for
PUMA SE and the PUMA Group, each for the financial year 2019, prepared in ac-
cordance with Section 315a HGB on the basis of the International Financial Re-
porting Standards (IFRS) have been audited by the statutory auditors, Deloitte
GmbH Wirtschaftsprüfungsgesellschaft, Munich, who were appointed at the An-
nual General Meeting on April 18, 2019 and commissioned by the Supervisory
Board to audit the annual financial statements and the consolidated financial
statements and have been given an unqualified auditor’s opinion.

In their report, the statutory auditors conclude that PUMA’s institutionalized risk
management system, in accordance with Section 91(2) of the German Stock Cor-
poration Act (Aktiengesetz/AktG), is capable of detecting at an early stage and
countering any developments that might jeopardize the continuity of the Compa-
ny as a going concern. The Supervisory Board has been updated by the Manage-
ment Board regularly on all relevant risks in this regard, in particular their as-
sessments of market and procurement risks, financial risks (including currency
risks) and organizational risks.

The accounting records, the audit reports from the statutory auditors and the
Management Board’s and Supervisory Board’s recommendation on the appro-
priation of net profit were made available to all members of the Supervisory
Board in a timely manner. At the meeting of the Audit Committee on February 18,
2020 and at the subsequent Supervisory Board meeting held on the same day,
the statutory auditors reported on the key results of their audit and discussed
them in detail with the Management Board and the members of the Supervisory
Board. No discrepancies were detected.

Pursuant to Paragraph 3.10 of the GCGC, the Supervisory Board reports on cor-
porate governance in the Corporate Governance Report. With very few excepti-
ons, the Company satisfies the requirements of the GCGC and explains these
system-related exceptions in the Statement of Compliance. The Statement of
Compliance of November 9, 2019 is available to our shareholders at any time on
the Company’s website under http://about.puma.com/de/investor-relations/cor-
porate-governance/declaration-of-compliance/.

The Supervisory Board reviewed in detail the annual financial statements, the
combined management report for PUMA SE and the PUMA Group, the Manage-
ment Board’s and the Supervisory Board’s recommendation on the appropriation
of net profit and the consolidated financial statements and raised no objections.
In accordance with the recommendation of the Audit Committee, the Supervisory
Board agreed with the results of the audit of both statements and approved the
annual financial statements of PUMA SE and the consolidated financial state-

Annual Report 2019 ↗ TO OUR SHAREHOLDERSments for the 2019 financial year. The 2019 annual financial statements have
thus been adopted.

The Management Board and the Supervisory Board resolved to propose to the
Annual General Meeting a distribution of a dividend of € 0.50 per dividend entit-
led share for the financial year 2019. In this context, the liquidity situation of the
Company, the financing and the effects on the capital market were discussed. A
total amount of around € 74.8 million will be paid out in dividends from PUMA
SE’s retained earnings. The remaining retained earnings of around € 85.9 million
will be carried forward.

Finally, in its meeting on February 18, 2020, the Supervisory Board was presen-
ted the first draft of the non-financial report in accordance with §§ 315c in con-
junction with §§ 289c to 289e of the German Commercial Code (HGB) and the
state of data collection was discussed. As soon as the non-financial report is fi-
nalised, it will be submitted to the Supervisory Board for approval and will be pu-
blished on the website of the Company by April 30, 2020.

PERSONNEL CHANGES IN THE SUPERVISORY BOARD

Mr. Jean-Marc Duplaix (Chief Financial Officer (CFO) of Kering S.A., Paris/France)
and Ms. Béatrice Lazat (Human Resources Director, Kering S.A., Paris, France)
each resigned from their positions as members of the Supervisory Board of
PUMA SE effective April 18, 2019. On April 18, 2019, the Annual General Meeting
elected Ms. Héloïse Temple-Boyer (Group Managing Director of Artemis S.A.S.,
Paris, France) and Ms. Fiona May (Independent Management Consultant, Calenz-
ano/Italy) as members of the Supervisory Board of PUMA SE. Their term of office
ends – as do those of the other members of the Supervisory Board – at the end
of the Annual General Meeting which decides on the discharge for the fiscal year
2022.

PERSONNEL CHANGES IN THE MANAGEMENT BOARD

Mr. Lars Radoor Sørensen resigned from his office as member of the Manage-
ment Board of PUMA SE with effect from January 31, 2019. Mr. Radoor Søren-
sen's successor for IT and Logistics was Mr. Michael Lämmermann, CFO of
PUMA SE, with effect from February 1, 2019. Ms. Anne-Laure Descours was ap-
pointed as Mr. Radoor Sørensen's successor for the Sourcing division with effect
from February 1, 2019.

We would like to express our sincere thanks to all departing members of the Su-
pervisory Board and Management Board for their work.

THANKS

We would like to express our gratitude and recognition to the Management
Board, the management teams at the Group companies, the Works Council and
all our employees for their hard work and their outstanding cooperation in 2019.

Herzogenaurach, February 18, 2020

On behalf of the Supervisory Board

Jean-François Palus
Chairman

Annual Report 2019 ↗ TO OUR SHAREHOLDERSBRAND
PERFORMANCE

Our Brand and Products

“We don’t make our brand –
our consumers do.”
– Interview Adam Petrick

Teamsport

18 Running and Training

21 Basketball

24 Golf

26 Motorsport

Sportstyle

Accessories

Adam Petrick, Global Director Brand Marketing

Annual Report 2019 ↗ OUR BRAND AND PRODUCTS

“WE DON’T MAKE OUR BRAND –
OUR CONSUMERS DO.”

In 2019, Adam Petrick, PUMA’s Global Director Brand Marketing, talked about
PUMA’s brand strategy in The CMO Podcast by Jim Stangle.

Stangle led transformations on brands like Hershey, Lexus, Nestle, SC Johnson
and Shire. He began to see a common thread that truly significant transforma-
tion is born from authentically activating a brand’s higher purpose. In The CMO
Podcast, he takes a unique look at the thought process and motivation of Mar-
keting leaders.

This is a condensed excerpt of the entire podcast, which you can find here.

JIM: Adam, you have done what few have done. You have kept a 71-year-old
brand relevant. You´ve made it a real Sportstyle brand, attracted amazing tal-
ent like Jay-Z, Rihanna and Cara Delevingne, while competing with Adidas and
Nike. What can we learn from what you´ve done to give this brand the energy,
relevance, magnetism and growth?

ADAM: Right now is an interesting moment. In 2013, we were in really bad shape
and we had to reinvent this brand. We knew that we had a great logo, a great
history and great people. We developed a brand concept that reflected all of
that and put it into perspective for where we wanted to go next. That was a great
opportunity to take what I had learned from the previous 14 years about fash-
ion, style, culture and the connection with the consumers and blend that with
the longer-term mark of the PUMA brand, which is going back 71 years. PUMA
has always competed in providing athletes with the gear that they need to per-
form at their very best - from Maradona and Pelé up to Usain Bolt.

In this latest 15-year cycle, we went from being a sports brand to a culture
fashion brand - and then we tried to marry those two. We had the opportunity to
bring something together that was a performance brand, based on innovation
and servicing athletes. This is the heart and soul of what we do, but we do it in
a way that’s different from our competition. We said let’s start from sports, let’s
go through creativity, fashion and culture and let’s talk about activism.

JIM: When did you know you were starting to turn the corner after 2013?

Adam Petrick, Global Director Brand Marketing

ADAM: We had some luck and some influential people. Nobody hates PUMA, and
the brand awareness is high. We have the best logo, everybody knows and rec-
ognizes it. When you have that heritage, people will take a risk. Rihanna was the
first to take a risk on us. Having the conversation of whether somebody like her
would work with PUMA was the turning point.

JIM: For your size, you’re punching above your weight in the sort of people you’re
attracting. Do you think it’s that spirit of collaboration, openness and listening?

ADAM: Our philosophy is: We don’t make our brand, our consumers make our
brand and by extension our ambassadors. We choose ambassadors based on
who they are and on their values. If we just sign someone based on their Social
Media KPIs such as the number of followers, that´s probably not going to work.
I think it matters that we truly care, truly listen and truly go out of our way to do
whatever they find interesting in our brand.

JIM: You are ceding control to people who also care?

ADAM: We were doing research, trying to figure out who these people are and if
they are aligned from a value standpoint. If we think we can do the right thing
together, then why not give them the keys? That’s important to us. The same

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSJIM: How do you stay in touch with sports, culture, business? What are your
habits?

ADAM: Staying in touch is about listening to our ambassadors, we want them to
inform us. There are hundreds of athletes. Listen to people who aren’t in the
offices and seeing what they think is important. Taking clues from that is valu-
able. That’s a competitive advantage. My advice: Who do you have outside of
your organization that’s telling you the truth?

thing applies for our consumers. If they want to shoot a campaign for PUMA,
we’ll give them a camera and they can send us the pictures and we’ll post them.
This allows our audience to say: “I’m a part of the creation of this brand, I’m
invested in it.”

JIM: We talked about brand purpose. What does that mean at PUMA?

ADAM: Our purpose was to be in a place where everybody who wants to play can
play. This means we are open and allowing for everybody who wants to take
part to do so. It also extends to the areas of being supportive of universal equal-
ity and extending our values into places that other companies might not be
comfortable going, because you’ve got to pick a side. If I can feel good about
extending that purpose into a territory that might be risky, I don’t care. We go
back a long way as a brand in trying to do the right thing. Those are powerful
shoulders to stand on.

JIM: Tell me about your job! Your title is Global Director of Brand and Market-
ing? How do you spend your time?

ADAM: I spend almost all day talking to my colleagues. My job is to inspire, to
get people to be thinking the right way, to prevent mistakes. My day is getting up
and get on the phone: phone calls, meetings, video conferences with Germany,
text messaging simultaneously. It’s a lot of communication.

JIM: What have been your lessons in building this lifestyle brand?

ADAM: This idea that the brand itself is a long-term project, it’s never finished.
PUMA for me personally is like this giant enormous sculpture and every day I
come in with my little hammer and try to constantly refine and improve it. That’s
a long-term view. And it has to start with a really strong sense of values. You
have to know what you stand for and why you choose to operate in the way you
do.

JIM: Anything else that would help others to learn from?

ADAM: We did focus on product and product creation. At that point, we had to
invest more in technology and innovation. We were a style company, almost a
“casual company.” We had to go back and revisit what the design aesthetic was
and the ideas behind the product. A lot came from the idea that sports has to be
at the center of everything. If you ground the product in something that is true
to the brand, then you will yield something more consistent and meaningful
over time. Attention has to be paid on the why of the product, that’s my advice.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSTEAMSPORT

INCREASING PRESENCE ON INTERNATIONAL FOOTBALL PITCHES

2019 was the year in which PUMA signed the largest deal in football in its com-
pany history – both in terms of size and ambition: We partnered up with City
Football Group, the parent company of reigning English Premier League Cham-
pions Manchester City. PUMA also teamed up with Valencia CF, one of the best
clubs in the Spanish football league LaLiga.

These investments ensure that we have a title contending presence in all major
football leagues, increasing PUMA’s international exposure and sports perfor-
mance positioning.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSWe boosted our brand visibility in Spain even further by becoming the official
match ball partner of LaLiga Santander and LaLiga 1|2|3. This means that all
goals in one of the world’s strongest competitions are scored with PUMA’s
LaLiga 1 football.

We also expanded our portfolio of national football teams, adding Egypt and
Morocco to a total roster of twelve squads.

EXCELLENT BALL CONTROL IN ALL SITUATIONS

Our players performed well all year, showing off our key football boots, the
FUTURE and the PUMA ONE. While the FUTURE provides an optimal feel for the
boot through a unique lacing system that benefits an agile playing style, the
PUMA ONE has a soft k-leather upper for excellent ball control in all situations.
Romelu Lukaku continued as our main ambassador for the PUMA ONE, while
Antoine Griezmann and Luis Suárez endorse the PUMA FUTURE. Also sporting
the PUMA FUTURE is Jan Oblak, one of the world’s leading goalkeepers.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSHANDBALL, NETBALL, AND RUGBY

Teamsport takes all shapes and sizes and PUMA did also very well off the foot-
ball pitch. Denmark took the title at the Handball World Championships, New
Zealand won the Women’s Netball World Championships and in Australia, the
Richmond Tigers were victorious in the AFL Grand Final. PUMA players also
played an important part in South Africa’s victory of the Rugby World Cup, with
Duane Vermeulen being voted Player of the Match in the final.

PUMA’S COMMITMENT TO WOMEN’S FOOTBALL

One of the largest football moments of the year was the Women’s World Cup in
France, in which PUMA team Italy reached the quarter finals. We underscored
our commitment to Women’s Football by supporting a total of 78 players during
the tournament. To celebrate the sports, we launched the latest evolution of the
PUMA ONE as the “PUMA ONE Trailblazer,” an exclusive launch of the latest
version of the PUMA ONE in a Women’s World Cup colorway worn by our leading
female players.

Other important tournaments in 2019 included the Africa Cup of Nations in
Egypt, where PUMA team Senegal was the runner up, and the Copa América in
Brazil with Uruguay reaching the quarter-finals and with Sergio Agüero and
Luis Suárez finishing joint-second in the tournament top goal scorers.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSRUNNING & TRAINING

The highlight of the year in PUMA’s Running & Training category took place in
Doha in Qatar: The IAAF World Athletics Championships. The numerous med-
als that PUMA-sponsored athletes brought home gave PUMA an unprecedented
visibility: over 115 sponsored athletes contended, PUMA athletes won eleven
medals, twelve national federations wore PUMA gear, and more than 20 med-
als were awarded to athletes wearing PUMA apparel. These results proved
that our running technologies and innovations work.

WORLD-CHAMP SENSATIONS IN DOHA

A stunning sensation on the track in Qatar was Norwegian hurdler Karsten
Warholm, who we had signed in the summer of 2019. The 23-year-old took
home the gold medal in the 400m men’s hurdles by beating his opponent with an
impressive 0.24-second advantage. He remains the 400m hurdles World Cham-
pion. If this wasn’t enough, Karsten also won the Men’s European Athlete of the
Year award and was nominated for the World Athletics Awards 2019 as the Male
Athlete of the Year.

18-year old Ukrainian high-jumper Yaroslava Mahuchikh claimed the silver
medal as the youngest field event medalist in the history of the Championships.
To honor her incredible 2019 season, she won the World Athletics Rising Star
Award, after she had equaled the U20 World Indoor Record and broke the U20
World Outdoor Record in addition to her success at the World Championships.

More outstanding performances came from American triple-jumper Will Claye,
Canadian sprinter Andre de Grasse, Swedish-American pole-vaulter Mondo
Duplantis, Jamaican discus-thrower Fedrick Dacres, Cuban long-jumper
Juan-Miguel Echevarria, Jamaican 400m hurdler Rushell Clayton, and Jamai-
can sprinter Shericka Jackson.

Jamaica, PUMA’s long-term partner in Track & Field, was the third most suc-
cessful federation, winning a total of twelve medals.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSSTABLE AS HELL CELL

In 2019, we launched a new cushioning technology called LQD CELL (pronounced:
/ˈlikwid/ /sel/). It is a shock-absorbing compound that is coupled with PUMA’s
foam products in strategic locations on the foot to improve stability, softness,
and absorption—overall, offering stable cushioning.

The huge benefit of LQD CELL is that it is an extremely versatile technology.
Depending on the shoe’s needs, it can be mixed with our proprietary energy-re-
turning foams in different parts of the sole, allowing LQD CELL to work in differ-
ent ways, and offering various benefits to the athlete.

We integrated this cushioning system in the LQD CELL Shatter, PUMA’s women’s
training shoe. LQD CELL Shatter is a provocative silhouette, designed for the
bold female athlete. It has a unique midsole shape which offers immediate
cushioning and energy return, while the internal heel counter provides addi-
tional heel support for training movements.

Needless to say, we provide the same benefits for men. The LQD CELL Tension,
PUMA’s men’s training shoe, was engineered for dynamic training and comes in
a bold design with prominent colour pops. An EVA-foam (ethylene-vinyl acetate)
wrap-up provides lateral support and the TPU (thermoplastic polyurethane)
heel clip offers optimal heel stability. The rubber outsole provides maximum
traction and durability for the ultimate grip, ideal for high-intensity training.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSPUMA INSPIRES WITH SELENA GOMEZ COLLECTIONS

In 2019, PUMA made waves with two training and lifestyle collections in collab-
oration with singer, actress, and producer Selena Gomez. The Spring/Summer
19 collection was inspired by Selena’s rise from her hometown in rural Texas to
her fast-paced Los Angeles life today, while the Autumn/Winter 19 collection
featured rugby-inspired looks and classic silhouettes.

ADRIANA LIMA BRINGS BOXING PASSION TO PUMA COLLECTION

PUMA and international supermodel and businesswoman Adriana Lima debuted
a boxing-inspired collection in 2019, featuring classic performance pieces with
a streetwear influence. Boxing has been very dear to Adriana for more than 18
years and this passion made her create a collection that not only allows you to
perform to your fullest, but also makes you look great while doing so.

All of these 2019 Running and Training events are proof of the fact that PUMA
successfully accomplished its mission to create fast products for the fastest
athletes out there.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSBASKETBALL

2019 was the year in which PUMA’s business unit Basketball PUMA Hoops
became a household name in basketball again. Between major player signings,
new silhouette drops, an official partnership with the NBA and the brand’s
presence at the biggest cultural and sporting events, PUMA Hoops became the
biggest disrupter on and off the court last year.

AN ALL-STAR UPROAR

PUMA launched the brand’s second basketball silhouette Uproar to coincide
with NBA All-Star Weekend in Charlotte. PUMA Hoops and Uproar became the
buzz of Queen City that couldn’t be ignored. We brought the heat with an activa-
tion space that boasted a customization bar in collaboration with Chinatown
Market, on-site basketball challenges with our Hoops roster including Danny
Green, DeAndre Ayton, Marvin Bagley and Kevin Knox, and post-game perfor-
mances by PUMA talent including Rapsody, A-Boogie Wit Da Hoodie, YBN Cor-
dae and Yo Gotti. As an encore, ambassador J. Cole rocked his own PUMAs
courtside and during his halftime show.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSRETURN OF AN ICON

The spring of 2019 saw the return of one of basketball’s most legendary names
– Ralph Sampson. The 7’4” center terrorized the NBA in the 80s, all while wear-
ing his signature PUMAs. In honor of Ralph and the legacy he left, we brought
back the PUMA Ralph Sampson, complete with a sleek, ´80s inspired silhouette
and Ralph’s signature stamped on the side. A perfect pair of kicks to rock on the
streets, PUMA Ralph Sampson has already become an instant classic for the
brand.

ALL EYES ON PUMA AT COMPLEXCON

PUMA Hoops stole the show at the 2019 ComplexCon. Hosted in Chicago, this
was the first time that the preeminent festival for culture, music, art and style
took place outside of Long Beach, so PUMA Hoops had to go big or go home. We
dropped jaws with huge exhibitions that featured the Legacy, a true perfor-
mance staple inspired by the brand’s sports heritage and built for the next
generation of hoops players. We hosted NBA2K gaming stations, on-site cus-
tomization and even a dunk contest held on our custom PUMA Hoops court.
PUMA Hoops ambassadors like DeAndre Ayton, Marvin Bagley III, Walt “Clyde”
Frazier, Katie Lou Samuelson, Gunna and DaniLeigh were on hand to take our
experience above anything else at ComplexCon.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSTHE PUMA HOOPS FAM GROWS

2019 was a big year for the PUMA Hoops family. We made waves with the addi-
tion of six new ambassadors, including the #1 draft pick in the WNBA Jackie
Young, as well as RJ Barrett, Kyle Kuzma, Kevin Porter Jr., Katie Lou Samuel-
son, and Marcus Smart. We’re not known for doing things quietly, so we
announced these signings in the most PUMA ways possible, with events on LA’s
Fairfax Ave., pop-up food trucks outside of Madison Square Garden, humor-driv-
en videos on social and everything in between.

CLYDE HARDWOOD TAKES ITS FIRST STEPS

In season two of PUMA Hoops, we introduced the Clyde Hardwood, a shoe that
turns heads on and off the court. To officially unveil the newest addition to the
Clyde franchise, PUMA Hoops hosted a Fireside Chat in NYC that featured cur-
rent New York Knicks Stars RJ Barrett and Kevin Knox, and the legend himself,
Walt “Clyde” Frazier, to talk basketball history, PUMA Hoops, and of course the
Clyde Hardwood. On launch day, we organized a King of the Court basketball
tournament and dunk contest at the Brooklyn Bridge Park on a pop-up floating
basketball court overlooking the NYC skyline. All of our athletes debuted the
Hardwood on court for the start of the season, RJ Barrett rocked them in the
Jahnkoy Fashion Show during Fashion Week in NYC and J.Cole leaked the new
silhouette during several training runs with Chris Brickley.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSGOLF

TEN YEARS WITH RICKIE FOWLER

2019 marked the ten-year anniversary of PUMA’s partnership with star golfer
Rickie Fowler. At the time, the 20-year old was just starting out in the golf world,
but he had the confidence and swagger that made him stand out. Our partner-
ship with him soon turned into one of the most successful collaborations in the
business. As Rickie prepared to make his colorful debut on the professional
scene in 2009, he did so with PUMA by his side. Now, ten years later, this part-
nership has impacted on-course style more than any other. Rickie introduced
the golf world to flat brim hats and bright monotone outfits, he brought high-top
shoes normally found on a court to the tee box, he’s worn joggers when most
are in pleated pants, had the world talking about an untucked button-down shirt
when the norm is a tucked in polo – together Rickie and PUMA have been setting
trends and will continue to make an indelible mark on golf fashion.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSGOLF GEAR THAT TAKES YOU FROM THE OFFICE TO THE COURSE

INNOVATION IS KING

In 2019, COBRA and PUMA Golf continued to bring exceptional, industry-leading
equipment, apparel, footwear and accessories to golfers around the world,
pushing the boundaries of what is expected in the golf space.

PUMA Golf delivered lifestyle-inspired apparel and two footwear franchises -
the NXT and PWRADAPT - for golfers of all ages and skill levels that take you
seamlessly from the office to the course.

Throughout the year, we focused on important sports and golf moments to com-
municate exciting products and collaborations. We celebrated the FedExCup
Playoffs with stylish City Caps and introduced patriotic-themed gear around the
U.S. Open, made even better with a major win from PUMA ambassador Gary
Woodland. We kicked off the year in Hawaii with untucked apparel and contin-
ued to launch Limited Edition products around each golf major in 2019.

COBRA Golf, PUMA’s brand for innovative golf equipment, introduced the KING
F9 SPEEDBACK family, delivering more speed, precision, and performance. The
KING F9 driver features the breakthrough SPEEDBACK Technology, which, for
the first time in golf, successfully combined a highly aerodynamic clubhead
shape with low CG, a game-changing advancement in the way a driver is engi-
neered. The new driver brought success from the very start, with Bryson
DeChambeau winning the 2019 Shriners Hospitals for Children Open and the
2019 Omega Dubai Desert Classic immediately after putting the driver in play.
Lexi Thompson followed suit with a win at the Shoprite LPGA Classic, and Rick-
ie Fowler had a huge win at Waste Management Phoenix Open, where he relied
on the F9 Speedback driver as well as on a F9 Speedback 4-iron.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSMOTORSPORT

In 2019, PUMA Motorsport continued successfully on its path to bring the race
track to the street by introducing exclusive apparel and next-level perfor-
mance footwear for drivers and fans alike. We also set out on a mission to
widen our Motorsport audience and attract new consumer groups such as the
gaming scene.

SIMPLY DELIVERING GRIP AND PERFORMANCE

We launched an entirely new shoe innovation, the Hi OCTN, which features an
outsole and midsole inspired by rugged off-road tires to deliver grip and perfor-
mance. We used this style to venture off to attract new consumer groups – in
this case gamers. For the Hi OCTN x NFS, which came in an entirely new silhou-
ette, we collaborated with Need for Speed, one of the most credible partners
and iconic racing games on the planet. Gamers were able to customize their
character to wear the Hi OCTN x NFS in the game, offering a perfect interaction
between the product and the target group.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSATTRACTING THE YOUNG

Events, Social Media and exclusive product launches speed up the game to
attract younger audiences by offering them something exclusive. The launch
event of the Hi OCTN in Miami was the perfect platform to attract attention and
spread the word via media, social media and influencer channels. Big names on
stage like Hip Hop star French Montana rounded up an evening of success.

ONLY WORKING WITH THE BEST

We continued to cooperate with our partners from Mercedes-AMG Petronas
Motorsport, Scuderia Ferrari, Aston Martin Red Bull Racing and BMW M Motor-
sport, sponsoring the best drivers in the world. At the beginning of last year, we
were able to add Porsche to our portfolio of the best motorsport partners in the
world.

PUMA’s drivers delivered amazing results. Lewis Hamilton (Mercedes-AMG
Petronas Motorsport) continued his legacy by claiming his 6th F1 World Cham-
pion title. Together with Valtteri Bottas (2nd in F1 World Championships), Mer-
cedes gained their 6th consecutive World Constructor Championship title in
Formula 1 since 2014. The drivers completing the top 5 in the Formula 1 Cham-
pionship – Max Verstappen (Aston Martin Red Bull Racing), Charles Leclerc
(Scuderia Ferrari) and Sebastian Vettel (Scuderia Ferrari) – were also dressed
in PUMA.

BMW M Motorsport celebrated a successful DTM season with Marco Wittmann
racing in 3rd position overall in the World Championships. Team Penske secured
three drivers in the top ten of the NASCAR Cup Series and Porsche will be offer-
ing great opportunities for PUMA in their debut season in Formula E, which
started in December 2019.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSSPORTSTYLE

In 2019, PUMA’s Sportstyle category continued to disrupt the fashion and street
scene with the successful RS series, an exaggerated footwear silhouette that
was inspired by running shoes of the early 2000s.

The RS range perfectly underpinned PUMA’s mission in Sportstyle: to target
everyone who is looking for an authentic style rooted in sports to serve the
requirements of everyday modern life – be it for the street, the office or day-
to-day leisure.

Celebrating extreme reinventions, the RS showcased bulky designs, bold col-
orways and eye-catching material mixes combined with a revamped version of
the RS technology that offers high rebound and comfort through its high-qual-
ity cushioning.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSCOMMEMORATING THE PAST AND EMBRACING THE FUTURE:
WE CALL IT “FUTRO”

Towards the end of last year, PUMA’s legendary 80s running shoe, the FAST RID-
ER, made a vibrant, playful splash on the streets. We launched the FAST RIDER OG
to celebrate the iconic running shoe from the 1980s that kicked off a new era as
Germany’s first “jogging” shoe 40 years ago when the sport of running moved
from the track to the streets. While the PUMA FAST RIDER OG showcased the
original shock-absorbing “Federbein” outsole with the RIDERFOAM midsole for
high rebound in 80s inspired colors, we merged the best of the past and future in
the FUTURE RIDER and STYLE RIDER. These styles featured futro silhouettes,
newly developed RIDERFOAM for extra comfort, bold materials, playful color
blocking and a subtle corrugated outsole inspired by the original “Federbein.”

Another bestseller that derived directly from our 80s archive and was worn by
Selena Gomez was the PUMA Cali. This futro sneaker was inspired by the original
PUMA California, a style born out of the courts in 1983 from Argentinean grand
slam champ Guillermo Vilas. The PUMA Cali is a stylish ode to retro vibes. While
it kept its sport-inspired leather upper true to the original and the characteristic
rubber sole, the new version got a bold remake.

BOXING GEAR MEETS PARISIAN CULTURE: PUMA X BALMAIN

For the first time ever, PUMA and French luxury fashion house BALMAIN creat-
ed – together with PUMA ambassador Cara Delevingne – a unique collection
that blends sport and luxury fashion. The line featured pieces inspired by tradi-
tional boxing gear mixed up with Parisian couture and elevated with a stark
color palette plus design elements straight out of BALMAIN’s atelier.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTS
PUMA SELECT

FOR OUR NEXT GENERATION: PUMA KIDS

Throughout 2019, PUMA SELECT continued to collaborate with renowned brands
and fresh and upcoming designers across the world, such as Karl Lagerfeld,
Helly Hansen, HAN KJØBENHAVN, Les Benjamins, Jahnkoy and others.

In 2019, PUMA introduced various collections for kids in partnership with popu-
lar brands like Sesame Street and Hello Kitty, featuring playful patterns, cute
prints with popular cartoon characters, and bright colors. Understanding the
kids’ need for freedom, PUMA elevates style with comfortable cuts and
high-quality material.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSACCESSORIES

Accessories have always played a crucial role in our business, as they comple-
ment our ranges with innovative and trendy products across Sportstyle,
Running, Training, Motorsport and, for the first time in 2019, Basketball.

The fastest growing segment in 2019 was, in fact, our Women’s Accessories
business. It was boosted by exciting campaigns such as the PUMA x Balmain
debut collection, created with Cara Delevingne, which included bags, beanies,
gloves, a headband and a choker. The Training capsule collection of Adriana
Lima also included a full range of accessories.

A key growth driver across all categories was our headwear segment - be it in
collaborations with up-and-coming fashion labels such as Rhude and Ader
Error, or in Motorsport, where Formula 1 drivers such as Max Verstappen,
Sebastian Vettel and Charles Leclerc wore their PUMA caps with pride all season.

Annual Report 2019 ↗ OUR BRAND AND PRODUCTSBRAND
PERFORMANCE

Our Stores

Annual Report 2019 ↗ OUR STORESNEW YORK, NEW YORK!

In August 2019, we opened our biggest PUMA Flagship Store globally at the most
prestigious shopping location in the world: Fifth Avenue in New York City. Just a
stone’s throw away from Rockefeller Center, the store offers an immersive
PUMA brand experience on 1,670 square meters. Spread over two floors, cus-
tomers can find the latest PUMA products, race down the streets of New York
City in our Formula 1 race simulators, test the latest PUMA football boots in a
virtual San Siro Stadium or personalize their shopping in our customization
studio. The changing rooms at the store are fitted with “magic mirrors,” which
allow customers to try on clothes virtually and take selfies when trying on new
PUMA gear.

Our brand ambassadors Walt “Clyde” Frazier, Boris Becker and Usain Bolt
joined PUMA Basketball’s creative director Jay-Z in a star-studded opening
event in August, making sure that every New Yorker was aware that PUMA is
back in town.

PUMA Flagship Store Facts

Address: Fifth Avenue, Corner 49th Street

Size: 1,670 square meters

Product Areas: Accessories, Basketball, Golf, Kids, Motorsport, NYC Zone,

Running/Training, Select, Sportstyle, Teamsport

IAPM MALL, SHANGHAI, CHINA

We were excited to open our store in Shanghai right before Christmas in the
IAPM Mall. With a sales area of 601 square meters, the store features the best
of PUMA products and a Select zone, which shoppers can access through a sep-
arate entrance. This new landmark boosts PUMA’s DNA and shows off our
Motorsport credentials in a one-of-a-kind F1 simulator with a personalized
Shanghai track.

The location at the IAPM mall, known around the world, positions PUMA as one
of the big sports and fashion brands on the Asian market.

Annual Report 2019 ↗ OUR STORESCHONGQING, CHINA

With a total sales area of 492 square meters, PUMA opened a full-price store in
Chongqing in China in December. Located in one of the busiest streets of this
populous city, the store is easily recognized by its impactful façade, which ele-
gantly displays the extended catalog of product the brand can offer to consumers.

SCALO MILANO, ITALY

In June 2019, PUMA opened a 472-square-meter store in a premium outlet vil-
lage located only a short drive away from the city center of Milan, Italy. As spon-
sor of AC Milan, the brand has dedicated a permanent area to Teamsport, offer-
ing a wide range of customization services to the customers.

Annual Report 2019 ↗ OUR STORESONE TEAM
PERFORMANCE

Our People

Prepare for Growth

Culture

Personal Journey

Dietmar Knoess, Global Director People & Organization

Annual Report 2019 ↗ OUR EMPLOYEESPREPARE FOR GROWTH

PEOPLE & ORGANIZATION

We focus on our employees in everything we do. In order to send this strong
message of people centricity both internally and externally we have renamed the
Human Resources department “People & Organization” in 2019. It is our em-
ployees who allow us to push sports and culture forward and as an organization,
we have to adapt quickly to new market situations and adjust to the fundamental
changes of a modern working world. As we prepare our infrastructure for further
growth, we put a special focus on digitalization, and we provide a work environ-
ment that fosters agile thinking, creativity and interaction. We ensure that our
employees are familiar with agile working methods and encourage them to be
versatile and adaptable while we support their wellbeing by creating the conditi-
ons for a good work-life balance and encourage their personal development.

WORKDAY – CENTRAL SYSTEMS

To support PUMA’s growth, we continue to work on shaping our People & Orga-
nization infrastructure through digitalization. Simplifying and aligning our pro-
cesses worldwide enables us to quickly respond to changing needs.

In 2019, we reached the next level of digitalization. Our leading human capital
management system “Workday,” which we introduced globally in 2017, is an im-
portant part of our digital strategy. It includes the modules ”recruiting,” ”talent
and performance,” ”time recording and absence management” and ”learning.”
This means that only one software solution is used for major parts of important
personnel processes. In 2019, we continued to link Workday with other systems
and have steadily increased the number of employees and applicants who regu-
larly and actively use the system. Our employees benefit from a single and easy-
to-use system that is fully responsive. Furthermore, the system provides global

data in real time, which enables us to conduct large scale analyses and visualize
this data on dashboards. The insight we gain offers a solid basis for continuous
process improvement and decisions.

NEW OFFICES

We are committed to provide modern places of work for our employees all over
the world. Preparing for further growth, we have rolled out an innovative global
office concept for our new offices and have refurbished already existing ones.
These offices offer dynamic environments to promote creativity, focus, and colla-
boration. Our employees can choose between the different areas and a variety of
office features, depending on the type of work they are doing.

At our headquarters in Herzogenaurach, we reopened the renovated and refur-
bished canteen. To foster communication, the new design concept offers various
areas for our employees to not only have lunch or coffee but also have meetings
and conversations. Besides a new coffee bar, we set up different food stations,
which provide a variety of healthy international food.

Annual Report 2019 ↗ OUR EMPLOYEESpromoting health and fitness, fighting discrimination or supporting education for
children in need. Often these projects were done in cooperation with local non-
profit organizations. Considering that the number of FTEs in 2019 was 13,348
(968 for PUMA SE), we far exceeded our target.

➔

G.01 COMMUNITY ENGAGEMENT 2019

COMMUNITY ENGAGEMENT

2019 was a very successful year for community engagement at PUMA. With the
support of our employees, we continued to engage with local communities
through a variety of different projects all around the world. One example was the
project “Mission to Seafarers,” where PUMA employees in the United Arab Emi-
rates packed and distributed essential hygiene products for struggling fisher-
men. The PUMA team in Vietnam built book shelves for kids who attend primary
school in a province without a library. In Russia, a team of pupils from orphana-
ges was provided with football equipment and PUMA employees hosted a football
tournament for them.

Our goal was to reach a total number of hours spent on community engagement
equal to our average FTE (Full Time Equivalent) per year. We encouraged all of
our employees around the world to participate, and recorded projects and em-
ployee engagement on an online platform. In total, initiatives led by our subsidia-
ries on 5 continents contributed a total of 21,433 hours (1,783 for PUMA SE) of
community engagement. Projects ranged from protecting the environment to

Annual Report 2019 ↗ OUR EMPLOYEESCHARITY CAT

Charity Cat was founded in 2004 by a team of about 20 PUMA employees. Since
then, this non-profit organization has grown to include many other PUMA em-
ployees and even some external members.

All members are volunteers who spend their free time for different charitable
projects, both local and international, supporting long-term collaborations as
well as short-term work for good causes.

Annual Report 2019 ↗ OUR EMPLOYEESCULTURE

DIVERSITY & EQUALITY

Diversity & Equality are the most important ingredients for PUMA’s growth. Di-
verse teams with different skill sets and backgrounds are the most successful
resource when it comes to creative thinking, decision making and driving innova-
tion forward. They ensure that we design and develop products that meet the re-
quirements of our consumers around the world. The people working together at
our global headquarters in Herzogenaurach come from 70 different nations.
PUMA’s unique company culture reflects, embraces and respects the individuali-
ty of every single employee by giving the opportunity to everybody to achieve their
full potential.

To ensure a fair work environment and equal opportunities for all PUMA em-
ployees, regardless of their gender, nationality, ethnicity, religion, disability, age
or sexual orientation, we committed ourselves to the PUMA Code of Ethics (2005)
and to our Diversity Charter (2010).

A well-balanced gender distribution across all locations is one of our strengths.
The male to female ratio is 51 percent to 49 percent. This ratio has been stable
over the past years, proving that we provide an equally attractive work environ-
ment for all genders.

At PUMA, our goal is to achieve gender balance at all management levels. We
continue our efforts to raise the proportion of women in leadership positions. In
order to empower women, we offer specific training and access to inspirational
networks. The interaction with experienced female executives should encourage
our female employees to aim for leadership positions in our organization. In
2019, 41% of management positions across the group were held by women.

Annual Report 2019 ↗ OUR EMPLOYEES➔

T.01 PERCENTAGE OF WOMEN IN MANAGING POSITIONS

(in %)

Region

2015

2016

2017

2018

2019

EUROPE

EEMEA

North America

LATAM

APAC

Total

We have already reached our target to have at least 30% of women on the Super-
visory Board and 20% on the Management Board. We are on track to reach our
ambitious targets to have 30% of women at the first management level below the
Management Board and 40% of women at the second management levels below
the Management Board, both until October 2021.

For 2020, PUMA’s ambitions regarding diversity and equality were recognized by
the Financial Times with the “Leader in Diversity” award for Europe.

WELLBEING

We invest in a range of services and benefits to improve the health and wellbeing
of our employees. We believe that employees are more motivated and perform
better if they feel well and keep a healthy work-life balance. Our Wellbeing con-
cept was started at our headquarters in Herzogenaurach and was adapted to lo-
cal needs and regulations elsewhere. Today, it plays an important part at all our
PUMA subsidiaries globally.

Our wellbeing program includes four components: flex, athlete, finance and
social.

As a sports company, we of course offer a wide range of sports and workout op-
portunities, such as regular internal sports classes, sports events, free gym ac-
cess and our different outdoor courts for football, volleyball and basketball. Our
courses range from meditation and yoga, to TRX and HIIT. For employees at our
headquarters, we offered 34 events and 23 weekly sports courses in 2019, with a
total of 1,478 registrations. Through regular “Be Well Weeks,” we promote a
healthy lifestyle, covering a variety of topics such as nutrition, health checks and
information about the latest trends in exercise and sport.

Annual Report 2019 ↗ OUR EMPLOYEESFLEXIBLE WORKING CONDITIONS

Being committed to our people’s wellbeing, we offer great working conditions
which are rooted in our unique culture. To enable our employees to balance their
professional and private lives, we have different models such as flexible working
hours, mobile office, part time work and sabbaticals. Our employees can choose
from these models at different stages in their careers. Offering a parent-child-
office, day care spots and summer camps for children during school breaks, our
headquarters in Herzogenaurach was awarded the German “Audit Beruf & Fami-
lie” (audit job and family) certificate. Special treats for our PUMA kids included
the “BVB Kids Football Camp 2019” which was conducted by professional coa-
ches of German football club Borussia Dortmund as well as a “digital day” held

during the summer camp. The latter was supported by German organization
Haba “Digitalwerkstatt,” which teaches digital skills to kids.

Our goal is to minimize the number of employee-initiated exits and to keep the
percentage of employees in permanent employment above 80%. In 2019, 87% of
our employees worldwide had a permanent contract and the employment of over
34% of our employees was covered by a collective bargaining agreement. The
turnover rate is strongly dependent on the share of the retail business in the re-
spective markets and the region. In total, the turnover rate was 25% (9% for non-
retail employees and 42% for retail employees). The percentage of employees
working part-time was 22% at the end of 2019.

➔

T.02 EMPLOYMENT CONTRACTS (PERMANENT / TEMPORARY)

Total

Female

Male

Diverse

Total

Female

Male

Diverse

Permanent

Temporary

EUROPE

LATAM

North America

EEMEA

Asia/Pacific
APAC

Total

3,130

1,699

2,445

3,408

3,606

14,288

1,571

590

1,313

1,311

2,128

6,913

1,559

1,109

1,131

2,097

1,478

7,374

535

162

688

217

524

291

353

120

323

2,126

1,159

244

335

201

967

Annual Report 2019 ↗ OUR EMPLOYEES➔
➔

T.03 EMPLOYMENT CONTRACTS (FULL-TIME / PART-TIME) (in %)
T.03 EMPLOYMENT CONTRACTS (FULL-TIME / PART-TIME) (in %)
Diverse
Diverse

Employment contracts
Employment contracts

Female
Female

Male
Male

Full-time
Full-time
Part-time
Part-time

46
59

54
41

0
0

➔
➔

Total
Total

100

100
100

100

OCCUPATIONAL HEALTH AND SAFETY
OCCUPATIONAL HEALTH AND SAFETY
We strive to keep our people healthy and safe by providing a work environment in
We strive to keep our people healthy and safe by providing a work environment in
which health and safety issues are taken seriously. Our goal is to constantly re-
which health and safety issues are taken seriously. Our goal is to constantly re-
duce the average injury rate. In 2019, we aimed to stay below an injury rate of 1.0
duce the average injury rate. In 2019, we aimed to stay below an injury rate of 1.0
(OSHA). We conduct safety-related training courses all over the world, including
(OSHA). We conduct safety-related training courses all over the world, including
online training programs, to prepare employees for potential emergency situati-
online training programs, to prepare employees for potential emergency situati-
ons and reduce the number of accidents.
ons and reduce the number of accidents.
We provided a total of 15,665 hours of safety training in 2019. In the past year,
We provided a total of 15,665 hours of safety training in 2019. In the past year,
6,454 employees were trained in fire evacuation and 2,402 in first aid. The overall
6,454 employees were trained in fire evacuation and 2,402 in first aid. The overall
number of safety training hours increased 30% compared to the previous year,
number of safety training hours increased 30% compared to the previous year,
demonstrating PUMA’s continued focus on this issue.
demonstrating PUMA’s continued focus on this issue.
Worldwide, only 57 occupational accidents which required work to be stopped
Worldwide, only 57 occupational accidents which required work to be stopped
were recorded in 2019. This is a decline of 43.7% compared to the previous year
were recorded in 2019. This is a decline of 43.7% compared to the previous year
and continues the positive trend seen in recent years. According to the Occupa-
and continues the positive trend seen in recent years. According to the Occupa-
tional Safety and Health Administration (OSHA), this corresponds to an injury rate
tional Safety and Health Administration (OSHA), this corresponds to an injury rate
of 0.37 compared to 0.81 in 2018, meaning we did not only meet the target we set
of 0.37 compared to 0.81 in 2018, meaning we did not only meet the target we set
ourselves in 2019, but also sharply improved our performance. The (OSHA) injury
ourselves in 2019, but also sharply improved our performance. The (OSHA) injury
rate for PUMA SE stood at 0.22 and was at 0.90 in the previous year.
rate for PUMA SE stood at 0.22 and was at 0.90 in the previous year.
A further indicator of employee engagement and the health of our workforce is
A further indicator of employee engagement and the health of our workforce is
the rate of absence due to sickness, which was 1.55 % in 2019. The rate of oc-
the rate of absence due to sickness, which was 1.55 % in 2019. The rate of oc-
cupational diseases is 0.
cupational diseases is 0.

zero.

G.02 INJURY RATE ACCORDING TO OCCUPATIONAL SAFETY AND HEALTH
G.02 INJURY RATE ACCORDING TO OCCUPATIONAL SAFETY AND HEALTH
ADMINISTRATION
ADMINISTRATION

(OSHA-Rate)
(OSHA-Rate)

1.07
1.07

0.84
0.84

0.81
0.81

0.72
0.72

0.37
0.37

2015
2015

2016
2016

2017
2017

2018
2018

2019
2019

Injury rate (OSHA)

FEEDBACK TO PERFORM
FEEDBACK TO PERFORM
Feedback from inside and outside PUMA is very important to us. It shows if we
Feedback from inside and outside PUMA is very important to us. It shows if we
are moving in the right direction and it helps us to constantly improve. This way,
are moving in the right direction and it helps us to constantly improve. This way,
we are able to regularly compare ourselves with other companies and receive va-
we are able to regularly compare ourselves with other companies and receive va-
luable insight from our employees.
luable insight from our employees.

Annual Report 2019 ↗ OUR EMPLOYEESaward, participating the first time. With its certification, the Top Employer institu-

te recognized PUMA’s efforts to provide an outstanding culture and work

environment.

During 2019, PUMA also received several other awards for its outstanding work

culture and for embracing diversity.

EMPLOYEE OPINION SURVEY

In the past year, we conducted a global employee survey with the assistance of

the external provider Willis Towers Watson, to get feedback from our employees

and involve them in shaping their work environment. More than 9,750 employees

participated and used the opportunity to share their opinion on their workplace

and work life. We are proud of the result of 91% employee engagement and app-

reciate the high level of commitment of our employees and their loyalty to the

brand. Coming from 67% in our last survey this is a great improvement. The re-

sults were communicated on a global, local and departmental level, and ne-

cessary improvement measures were defined.

We encourage our employees to give constant feedback and one way is through

the external rating platform Glassdoor.

award, participating the first time. With its certification, the Top Employer institu-
te recognized PUMA’s efforts to provide an outstanding culture and work
environment.
AWARDS

We are especially proud that our offices in Europe, including UK, Spain, Italy,
During 2019, PUMA also received several other awards for its outstanding work
France and Germany, were audited and received the European Top Employer
culture and for embracing diversity.
award, participating the first time. With its certification, the Top Employer institu-
te recognized PUMA’s efforts to provide an outstanding culture and work
environment.

During 2019, PUMA also received several other awards for its outstanding work
culture and for embracing diversity.

EMPLOYEE OPINION SURVEY

In the past year, we conducted a global employee survey with the assistance of
the external provider Willis Towers Watson, to get feedback from our employees
and involve them in shaping their work environment. More than 9,750 employees
participated and used the opportunity to share their opinion on their workplace
and work life. We are proud of the result of 91% employee engagement and app-
EMPLOYEE OPINION SURVEY
reciate the high level of commitment of our employees and their loyalty to the
In the past year, we conducted a global employee survey with the assistance of
brand. Coming from 67% in our last survey this is a great improvement. The re-
the external provider Willis Towers Watson, to get feedback from our employees
sults were communicated on a global, local and departmental level, and ne-
and involve them in shaping their work environment. More than 9,750 employees
cessary improvement measures were defined.
participated and used the opportunity to share their opinion on their workplace
and work life. We are proud of the result of 91% employee engagement and app-
We encourage our employees to give constant feedback and one way is through
reciate the high level of commitment of our employees and their loyalty to the
the external rating platform Glassdoor.
brand. Coming from 67% in our last survey this is a great improvement. The re-
sults were communicated on a global, local and departmental level, and ne-
cessary improvement measures were defined.

We encourage our employees to give constant feedback and one way is through
the external rating platform Glassdoor.

AWARDS

We are especially proud that our offices in Europe, including UK, Spain, Italy,
France and Germany, were audited and received the European Top Employer

AWARDS

We are especially proud that our offices in Europe, including UK, Spain, Italy,
France and Germany, were audited and received the European Top Employer

Annual Report 2019 ↗ OUR EMPLOYEESPERSONAL
JOURNEY

PEOPLE CONNECTION & ATTRACTION

To support our company strategy and to ensure the success of our business, we
focus on connecting with potential candidates, attracting the right people and de-
veloping our talents. With an integrated talent management approach, we foster
a performance-learning and performance-driven culture at PUMA. We systema-
tically evaluate all employees, develop them based on their needs, identify ta-
lents and prepare them for driving the future success of PUMA.

We conduct talent conferences globally every year to assess the entire PUMA
workforce, including all levels of management. Employees are evaluated on cri-
teria such as individual performance and competencies, potential, ambition, ca-
reer progression and mobility. The targeted analysis of our employees’ profiles
allows us to not only prepare individual development plans, but also to match in-
ternal talent with vacancies. This helps us to find potential successors within the
company and to foresee and to address the future competency needs of our
organization.

We can only drive our mission to become the fastest sports brand in the world
and ensure PUMA’s long-term success with the right people. This becomes parti-
cularly important in a constantly changing and increasingly complex environ-
ment. Therefore, it is crucial that we are perceived as a top employer and attract
external candidates who want to join the unique PUMA working culture. In order
to connect with these potential candidates, we use digital platforms and social
media for our target group-specific, individual recruiting measures, as well as
our career website. Extensive networks of qualified applicants and up-to-date
candidate pools help us to quickly fill vacancies.

Annual Report 2019 ↗ OUR EMPLOYEESDEVELOPMENT

We believe in nurturing talent within and therefore we are committed to promote
the professional and personal development of all our employees. By doing so, we
also ensure that our people have the necessary expertise to guarantee conti-
nuous growth and market competence. Life-long learning is a necessity, particu-
larly in times of a rapidly changing world. Considering the 70-20-10-rule,
learning is optimized when it is done 70% on the job, 20% learning from others
and 10% training and self-study. We offer a large number of online and offline
training courses and workshops that are standardized or tailored to individual
needs. Fostering self-directed learning, we provide a state-of-the-art learning
infrastructure integrated in the Human Capital Management System Workday for
internal and external training courses. Furthermore, our employees have the
possibility to create their own content and share it with other PUMA employees.
Ensuring that everyone has access everywhere and at all times, Workday
Learning is available on all mobile devices. In 2019, 15,827 employees worldwide
participated in training courses and workshops with a total of 199,496 hours.

To prepare and motivate our staff for digital change, we have started to train em-
ployees to become ”agile coaches.” These coaches apply agile working methods,
pass on their knowledge to other colleagues on site, have the right mindset, and
are also available as experts on the subject. In addition to the management con-
tent already available in the ILP (International Leadership Program), we send our
staff on external and internal training courses to learn agile methods such as
Scrum, Design Thinking and KanBan. The high level of interest and steadily in-
creasing numbers of staff attending these courses show that we are moving in
the right direction.

LEADERSHIP TRAINING ILP/ ILP²

Our PUMA leaders play an important role in fulfilling our mission to become fo-
rever faster. We are only able to reach our goals through their commitment and
passion. They are responsible for driving and shaping our PUMA working culture
and our success depends on their skills and leadership expertise. That is why we
defined a set of leadership competencies, which is necessary to successfully lead
a team in an increasingly complex and volatile work environment. To equip our
staff with such competencies and ensure a common understanding of leadership
throughout the organization, we designed the International Leadership Program
(ILP & ILP2). PUMA leaders receive intensive training and coaching, including in-
teractive learning, roleplay simulations and best practice learning, as well as
joint projects. Areas of focus are in particular mindful leadership and agile
working methods. The program consists of different modules, providing leaders
with the opportunity to apply the newly acquired knowledge in between seminars.

Annual Report 2019 ↗ OUR EMPLOYEESSPEED UP/SPEED UP²

Accelerating the progress of our employees is essential for organizational suc-
cess. Driving that ambition, two selective development programs, Speed Up and
Speed Up , are designed to unlock the potential of our talents. To prepare them
for the next steps in their career, we provide an intense curriculum, including
cross-functional projects and tasks, coaching, mentoring, and job swaps as well
as targeted training courses. Participants also benefit from exposure to top ma-
nagement and establish strong networks globally.

In 2019, 10 dual-program students and trainees joined the PUMA Headquarters
In 2019, ten dual-program students and trainees joined the PUMA Headquarters
in Herzogenaurach. In total, PUMA had 42 apprentices and dual-program stu-
dents by the end of 2019, majoring in a range of subjects, from International
Business to IT. Another way of getting to know PUMA is an internship for stu-
dents, in which they are given the opportunity to gain 6 months of work
experience.

FUTURE CHAMPIONS

We are constantly looking for future talent we can develop successfully and pass
on the relevant skills to take over challenging roles within the PUMA Group. A va-
ried range of initiatives at universities, both locally and internationally, gives us
the opportunity to approach potential employees and identify suitable candidates.
Within a global work environment, we provide various options for graduates ta-
king their first career step.

Annual Report 2019 ↗ OUR EMPLOYEESONE PLANET
PERFORMANCE

Sustainability

Introduction

“We want to embed sustainability into all of

our products.”

– Foreword Anne-Laure Descours, CSO

PUMA Sustainability Strategy 10FOR20

Social Aspects

Environment

Health and Safety

Governance

Summary and new Targets for 2025

GRI Index

107 Deloitte Assurance Statement

Anne-Laure Descours, Chief Sourcing Officer (CSO)

Annual Report 2019 ↗ SUSTAINABILITY
INTRODUCTION

In 2019, we completed our 10FOR20 sustainability strategy and reached our tar-
gets one year ahead of schedule. At the same time, we finalized the new 10-
FOR25 sustainability targets in collaboration with our major stakeholders.

Throughout the sustainability section of this Annual Report, we will list our most
material sustainability topics and the approach we took to manage these. We will
also discuss the key performance indicators we set, and the results achieved for
each individual target area.

Overall, we made good progress and achieved the majority of key performance
indicators (KPIs) we had set in nine out of ten target areas. The performance in
one target area (Water & Air) remained below expectations. Since we still firmly
believe that we need close control over the emissions to air and water of our
suppliers, we will carry the targets for this area forward into our new targets for
2025.

The concept of sustainability in itself is a long-term journey and much remains to
be done, both within our industry and our company, to achieve a truly sustainable
business model and conduct. In our support of the United Nations Sustainable
Development Goals and tackling the Climate Crisis, we are happy to report that
we have hit all four of our bonus-relevant sustainability targets related to Clima-
te Action, Human Rights, and Health & Safety as well as Anti-Corruption.

Special highlights of the year 2019 were

the agreement and publication of a Science Based Carbon Emission Tar-
get paired with

a significant reduction of greenhouse gas emissions by purchasing re-
newable energy and renewable energy attribute certificates;

the re-accreditation of our social compliance program by the Fair Labor
Association;

achieving zero fatal accidents at PUMA and its finished goods suppliers
for the second year in a row;

surveying more than 20,000 workers at suppliers for working conditions
via a mobile app;

an increase in the pass rate of our material tests for chemicals to 98.9%
and wastewater tests at suppliers with wet-processing for chemical pa-
rameters to 94% and above;

an increase in community hours donated by PUMA staff globally;

the elimination of recruitment fees for migrant workers within our Tier
1 supplier base;

the launch of our Forever Better product sustainability platform;

increasing the usage of more sustainable cotton from Better Cotton In-
itiative (BCI) to over 80%; and

increasing the usage of certified polyester (bluesign & OEKO-TEX) to
over 90%.

Annual Report 2019 ↗ SUSTAINABILITY “WE WANT TO EMBED SUSTAINABILITY INTO ALL OF OUR PRODUCTS.”
“WE WANT TO EMBED SUSTAINABILITY INTO ALL OF OUR
– FOREWORD ANNE-LAURE DESCOURS, CSO
PRODUCTS.”
- FOREWORD ANNE-LAURE DESCOURS, CSO

One of the lasting memories of 2019 will be the image of young people taking
over the streets to protest the inaction of governments and the industry in the
face of climate change. As a company which counts many of these young people
among its customers, PUMA cannot idly sit by and do nothing. While we recogni-
ze that many problems our industry faces require industrywide solutions, PUMA
has made good progress on its sustainability commitments in 2019. Of the ten
target areas we set ourselves in 2015 as 10FOR20 Targets we achieved good pro-
gress in nine areas, and we will increase our level of ambition in the next cycle
until 2025, for example by adding targets on more sustainable products, biodiver-
sity and fair wages as well as protecting the ocean from plastic pollution.

A N N E - L A U R E D E S C O U R S
C H I E F S O U R C I N G
O F F I C E R ( C S O )

climate change

This includes setting a science-based target for our CO emissions for the first
time. In short, PUMA will reduce its carbon emissions by the amount that scien-
tists say is necessary to keep Climate Change within the boundaries set out by
the Paris Agreement. We believe that one-off sustainable collections are good for
reporting purposes but do little to improve the environmental footprint of the
company as a whole. That is why we sharply ramped up the use of more
sustainable materials, such as Better Cotton and bluesign -certified polyester in
all of our products. As the materials used for our products define more than half
of the environmental footprint, this is how we can make an impact at scale, and
our customers can rest assured that we are working on improving our sustaina-
bility performance throughout our product range.

➔Annual Report 2019 ↗ SUSTAINABILITYThrough such initiatives we can shape a more sustainable future and make sure
that our products can also be enjoyed by the next generations of athletes.

Beyond the environmental aspects of our sustainability strategy, we have also
made progress in improving the working conditions at our suppliers, for example
by phasing out recruitment fees for migrant workers at our finished goods manu-
facturers. In this context, we are encouraged that our social compliance program
for PUMA’s vendors and suppliers was once again approved by the Fair Labor As-
sociation, of which we have been a member since 2004.

It is not enough to ask our suppliers to treat their workers well, we also have to
set the right economic conditions. In 2019, we implemented new standards on
how we as a company should treat our manufacturing partners so they can make
the improvements of working conditions happen.

To share product-centric and consumer-facing information in a more accessible
way, we have partnered with sustainability communication experts Futerra and
launched Forever Better, a consumer-oriented website which highlights our
sustainability efforts (https://about.puma.com/en/forever-better).

climate action

There is still work to be done on our way towards becoming a more sustainable
company, be it on Climate Action, a more circular business model or full supply
chain transparency. For the challenges we cannot tackle on our own, we continue
to work with our industry peers and suppliers. The latest example of such an in-
dustry-wide approach is the “Fashion Pact” initiated by the French government,
of which PUMA is a part.

Through such initiatives we can shape a more sustainable future and make sure
that our products can also be enjoyed by the next generations of athletes.

sociation, of which we have been a member since 2004.

the improvements of working conditions happen.

sustainability efforts (https://about.puma.com/en/forever-better).

There is still work to be done on our way towards becoming a more sustainable

company, be it on Climate Action, a more circular business model or full supply

chain transparency. For the challenges we cannot tackle on our own, we continue

to work with our industry peers and suppliers. The latest example of such an in-

dustry-wide approach is the “Fashion Pact” initiated by the French government,

of which PUMA is a part.

Annual Report 2019 ↗ SUSTAINABILITYPUMA SUSTAINABILITY STRATEGY 10FOR20

Our 10FOR20 sustainability strategy aims to create maximum positive impact.
This holds true for our products, as well as for working conditions at PUMA and
its supply chain, and the communities around us. We don’t want to grab quick
headlines with niche sustainability collections, although such collections can
help to create consumer awareness. Rather, we want to deeply integrate
sustainability into all core business functions and all PUMA products. This way
our sustainability strategy is integrated with our overall company strategy and
our sustainability efforts are much more authentic.

Thematic and regional coverage of partnership initiatives

Percentage of suppliers reached via round table meetings

Publicly report on PUMA’s sustainability performance

Inform consumers on PUMA’s sustainability initiatives

STAKEHOLDER DIALOGUE (10FOR20 TARGET AREA 1)

Continue and expand PUMAs Stakeholder Dialogue and Public Non-Financial Re-
porting in accordance with global standards; increase sustainability communica-
tion towards consumers.

Relates to United Nations Sustainable Development Goal 17.

Ever since our first global Stakeholder Meeting in 2003, we aim to align our
sustainability program and actions with the expectations of our most relevant
stakeholders. Therefore, we are constantly talking to our investors, suppliers,
customers, consumers, athletes, industry peers, NGOs, scientists and of course
our biggest asset, our employees.

For us, a stakeholder dialogue means not shying away from inconvenient topics
and admitting that we cannot solve everything on our own. It means working on
these topics in close collaboration with experts and our industry peers and, of
course, always in line with anti-trust regulations.

For the first time in 2019, we invited more than 50 relevant stakeholders to our
PUMA headquarters in Herzogenaurach. This way we shared the PUMA spirit
with our guests, while at the same time allowing our top management (including
our CEO and CSO) to participate on both days.

Conduct a global stakeholder meeting

Conduct regional stakeholder meetings in all key sourcing regions

Target Description:Example from the 10FOR20 Action Plan:KPIs:Annual Report 2019 ↗ SUSTAINABILITYWe also conducted supplier round tables in all major sourcing regions (China,
Vietnam & Cambodia, Bangladesh, Indonesia, India, Europe & Africa, and Latin
America), reaching almost 600 supplier participants. This way we can openly dis-
cuss our sustainability vision with our manufacturing partners and ensure their
buy-in for our individual sustainability programs.

We have been transparent about our sustainability efforts ever since we publis-
hed our first sustainability report in 2003. We continue to inform the public in our
annual report as well as on our corporate website (https://about.puma.com/en/s
ustainability).

Our new consumer-facing Forever Better website will be updated frequently with
product-related sustainability information. It will also highlight collections with a
special sustainability focus, such as the First Mile Collection, which uses recy-
cled polyester, and the Day Zero Collection, which uses water saving
technologies.

To improve the sustainability performance of the materials used in our products,
we are working together with a number of partners such as bluesign Technolo-
gies, the Leather Working Group, the Better Cotton Initiative, the Forest Ste-
wardship Council, and Sustainable Apparel Coalition as well as Textile Exchange.
Overall, our global sustainability initiatives are supported by regional part-
nerships with organizations such as the Bangladesh Accord on Fire and Building
Safety, the Indonesia Protocol on Freedom of Association, the Chinese National T
extile and Apparel Council and the German Partnership for Sustainable Textiles.
Another example of local action would be our work with UNICEF to support water
and hygiene standards in South Africa. Lastly, we are active members of the Worl
d Federation of the Sporting Goods Industry as well as the European Sporting Go
ods Industry Federation.

PA R T I C I PA N T S O F T H E S TA K E H O L D E R M E E T I N G 2 0 1 9

We focused our discussion on the hot topics of climate change, living wages,
plastics and oceans as well as circularity, and used the feedback provided during
the event to sharpen our 10FOR25 targets. As an immediate outcome of the mee-
ting, we agreed to align our Climate Action Target to a 1.5 Degree Scenario and
increased our recycled polyester target from a proposed 25% to 75% until 2025.
For a more detailed description of the results, please refer to section 8 (Summa-
ry and Outlook).

➔Annual Report 2019 ↗ SUSTAINABILITY➔

G.01 MATRIX OF KEY PARTNERSHIP INITIATIVES

Social
Compliance

Human
Rights

Chemicals

Materials

Climate
Change

Health
and Safety

Right to Play

ZDHC

Textile
Exchange

United
Nations
Climate
(UNFCCC)

Bangladesh
Accord

Water
and Air

ZDHC

Governance

UN Global
Compact
(Germany)

ILO Better Work
(Bangladesh,
Cambodia,
Vietnam)

FLA

Fair Wage
Network
(Bangladesh,
Cambodia)

SLCP

UN Global
Compact
(Germany)

Soccer Aid
(UK)

global

local

AFIRM

BCI

CDP

Cambodia Road
Safety Program

SAC

FESI

BLUESIGN
Technologies

Stiftung 2 Grad
(Germany)

Leather
Working
Group

IFC
(Bangladesch,
Vietnam)

Apparel Impact
Institute
(China & Taiwan)

IPE
(China)

UNICEF
(South Africa)

AFIRM: Apparel and Footwear International RSL Management, BCI: Better Cotton Initiative, CDP: Carbon Disclosure Project, FESI: Federation of the European Sporting Goods Industry, FLA: Fair Labor Association, IFC:
International Finance Corporation, ILO: International Labor Organization, IPE: Institute of Public and Environmental Affairs, SLCP: Social and Labor Convergence Program, ZDHC: Zero Discharge of Hazardous Chemicals

Annual Report 2019 ↗ SUSTAINABILITYMOST MATERIAL ASPECTS

The most material aspects and targets for the 10FOR20 target period remained
unchanged and are displayed in figures 1 and 2 below.

➔

G.02 MOST MATERIAL ASPECTS

Annual Report 2019 ↗ SUSTAINABILITY➔

G.03 10FOR20 TARGETS

* SDGs: Sustainable Development Goals from the United Nations.

Annual Report 2019 ↗ SUSTAINABILITY➔

T.01 PUMA 10FOR20 SUSTAINABILITY TARGETS PERFORMANCE SUMMARY

TargetBaseline 2015Performance 2019Planned Action 2020Target 2020Status01StakeholderEngagementTalks at Banz;Supplier Round TablesGlobal Stakeholder Meeting atHeadquarters;Regional Supplier RoundTables with 590 participants;Forever Better Websitelaunched.Stakeholder Dialogue Meetings,Supplier Round Tables and PublicReporting will be continued.Consumer outreach will beintensified.Stakeholder dialogue,public reporting,consumer informationAchieved02HumanRightsHuman Rights ScreeningHuman Rights Assessmentscarried out for PUMA andsupply chain;Recruitment Fees eliminatedfrom T1 suppliers;21,433 communityengagement hours;Continue implementation ofHuman Rights policies;focus on elimination ofrecruitment fees for T2 suppliers,carry out an analysis on conflictminerals.Embed Human Rights across our operations andsuppliers.Positively impact communities where PUMA ispresent.Achieved, target area will bemoved to 2025 targets03SocialComplianceAll Tier 1 suppliers frequently audited;Workers complaints received andprogressedAll Tier 1 suppliers and coreT2 suppliers frequentlyaudited;Amount of Zero ToleranceIssues prevailing at yearend: 0Joint industry assessmenttool (SLCP) rolled out in ChinaPercentage of shared audits:43%No Zero Tolerance Issuesprevailing at year endImplement joint industryassessment tool (SLCP)Increase percentage of sharedaudits to 50%Compliance with industry standards/ILO CoreConventions for all core suppliers, includingsuppliers of finished goods as well as componentand material suppliers.Achieved. Target will bemerged with Human Rightsgoing forwardBCI: Better Cotton Initiative, EP&L: Environmental Profit and Loss, FSC: Forest Stewardship Council, ILO: International Labor Organization, LWG: Leather Working Group, MRSL: Manufacturing RestrictedSubstance List, OHS: Occupational Health and Safety, PFCs: Polyfluorinated Chemicals, PU: Polyurethane, REC: Renewable Energy Attribute Certificates, RSL: Restricted Substance List, SBT: Science-BasedTarget, SLCP: Social and Labor Convergence Program, VOC: Volatile Organic Compound, ZDHC: Zero Discharge of Hazardous Chemicals.Annual Report 2019 ↗ SUSTAINABILITY57

TargetBaseline 2015Performance 2019Planned Action 2020Target 2020Status04ClimateChangeScience-Based Target (SBT)development announcedScience based target acceptedand published:Scope 1 and 2:-35%Scope 3:-60% relative to salesCoverage of 75% of allelectricity used by renewableenergy tariffs or certificates.PUMA(Scope 1&2)Scope 1: -8.6%Scope 2: -5.5%Scope 2 (RECs)- 47.9Combined:-38.5% (absolute)Suppliers (Scope 3): -4.9%increase relative to salesCoverage of 90% of all electricityused globally by renewable energytariffs or renewable energycertificates.Offset remaining Scope 1 and 2emissions.Focus on savings for Scope 3emissions (supply chain)Science based reduction target to be developed andimplementedAchieved for Scope 1&2.Scope 3 work in progress.Target will be moved to10FOR25 targets05ChemicalsCommitment to Zero Discharge ofHazardous ChemicalsRSL compliance rate of 98.9%Wastewater tests from coresuppliers show 94%compliance on individualchemical parametersPFCs eliminated from PUMAproductsVOC Index below 16g/pairKeep RSL compliance rate over98%Improve wastewater compliancerate on individual chemicalparameters above 95%Reduce VOC consumption per pairof shoes below 15g/pairZero discharge of hazardous chemicals from oursupply chain.Phase out of intentional useof hazardous chemicals(ZDHC MRSL and PFCs)achieved.Target will be moved to10FOR25 TargetsBCI: Better Cotton Initiative, EP&L: Environmental Profit and Loss, FSC: Forest Stewardship Council, ILO: International Labor Organization, LWG: Leather Working Group, MRSL: Manufacturing RestrictedSubstance List, OHS: Occupational Health and Safety, PFCs: Polyfluorinated Chemicals, PU: Polyurethane, REC: Renewable Energy Attribute Certificates, RSL: Restricted Substance List, SBT: Science-BasedTarget, SLCP: Social and Labor Convergence Program, VOC: Volatile Organic Compound, ZDHC: Zero Discharge of Hazardous Chemicals.Annual Report 2019 ↗ SUSTAINABILITYTargetBaseline 2015Performance 2019Planned Action 2020Target 2020Status04ClimateChangeScience-Based Target (SBT)development announcedScience based target acceptedand published:Scope 1 and 2:-35%Scope 3:-60% relative to salesCoverage of 75% of allelectricity used by renewableenergy tariffs or certificates.PUMA(Scope 1&2)Scope 1: -8.6%Scope 2: -5.5%Scope 2 (RECs)- 47.9Combined:-38.5% (absolute)Suppliers (Scope 3): -4.9%increase relative to salesCoverage of 90% of all electricityused globally by renewable energytariffs or renewable energycertificates.Offset remaining Scope 1 and 2emissions.Focus on savings for Scope 3emissions (supply chain)Science based reduction target to be developed andimplementedAchieved for Scope 1&2.Scope 3 work in progress.Target will be moved to10FOR25 targets05ChemicalsCommitment to Zero Discharge ofHazardous ChemicalsRSL compliance rate of 98.9%Wastewater tests from coresuppliers show 94%compliance on individualchemical parametersPFCs eliminated from PUMAproductsVOC Index below 16g/pairKeep RSL compliance rate over98%Improve wastewater compliancerate on individual chemicalparameters above 95%Reduce VOC consumption per pairof shoes below 15g/pairZero discharge of hazardous chemicals from oursupply chain.Phase out of intentional useof hazardous chemicals(ZDHC MRSL and PFCs)achieved.Target will be moved to10FOR25 TargetsBCI: Better Cotton Initiative, EP&L: Environmental Profit and Loss, FSC: Forest Stewardship Council, ILO: International Labor Organization, LWG: Leather Working Group, MRSL: Manufacturing RestrictedSubstance List, OHS: Occupational Health and Safety, PFCs: Polyfluorinated Chemicals, PU: Polyurethane, REC: Renewable Energy Attribute Certificates, RSL: Restricted Substance List, SBT: Science-BasedTarget, SLCP: Social and Labor Convergence Program, VOC: Volatile Organic Compound, ZDHC: Zero Discharge of Hazardous Chemicals.58

TargetBaseline 2015Performance 2019Planned Action 2020Target 2020Status06Water & AirStart of wastewater testing andpublicationBi-Annual Wastewater Testsestablished at all coresuppliers with Wet-processing.Compliance rate ofconventional parametersabove 90% for 16 out of 17parameters.First draft of ZDHC AirEmissions Guideline availableImprove compliance rate ofconventional wastewaterparameters to above 90% for allparametersPilot Draft ZDHC Air EmissionsGuidelineIndustry good practice on water treatment and airemissions are met by 90% of PUMA core suppliersTarget not yet achieved.Will be carried to the new10FOR25 Targets07Materialsbluesign (polyester), Leather WorkingGroup (leather), and FSC (paper &cardboard) certification used insignificant volumesApparel: CottonBCI 80%Polyester:bluesign & OEKO-TEX: 98%Responsible Down: 100%Footwear:Leather:LWG: 98% Cardboard & Paper:FSC/Recycled: 100%Accessories:Polyester:bluesign& OEKO-TEX >99%BCI >90%FSC/Recycled >90%LWG >90%bluesign&OEKO-TEX> 90%Responsible Down 100%More sustainable materials used for our keymaterials; FSC 90%LWG 90%bluesign 50%BCI 50%Original 2020 Targets alreadyachieved in 2018.2020 Target for cotton andpolyester upgraded to 90%Targets will be merged into amore sustainable productstarget08EP&LKering Group EP&L published(including PUMA figures)PUMA EP&L 2018 published;Reduction per unit of turnoverfrom 2013 to 2018 of 13.6%Keep publishing EP&L values,Keep reducing the value per unitof turnoverContinue to report yearly on our impact;PUMA EP&L value significantly reducedTarget achieved. EP&Limpact will be reported onPUMA websiteBCI: Better Cotton Initiative, EP&L: Environmental Profit and Loss, FSC: Forest Stewardship Council, ILO: International Labor Organization, LWG: Leather Working Group, MRSL: Manufacturing RestrictedSubstance List, OHS: Occupational Health and Safety, PFCs: Polyfluorinated Chemicals, PU: Polyurethane, REC: Renewable Energy Attribute Certificates, RSL: Restricted Substance List, SBT: Science-BasedTarget, SLCP: Social and Labor Convergence Program, VOC: Volatile Organic Compound, ZDHC: Zero Discharge of Hazardous Chemicals.Annual Report 2019 ↗ SUSTAINABILITY59

TargetBaseline 2015Performance 2019Planned Action 2020Target 2020Status09Health &SafetyOHS part of compliance auditsFatal AccidentsPUMA: 0Suppliers: 0Injury RatePUMA: 0.37Core Suppliers: 0.5Zero fatal accidents;Average injury rate of PUMAentities below 1Zero fatal accidents;injury rates below industry average;Significantly reduce injury rates;Target achieved.Will be continued as part of10FOR25 targets10GovernancePUMA Code of Ethics training with lowparticipation rate;Ethics training participation rate: 60%PUMA Code of Ethics trainingparticipation rate: 99% (staffwith email accounts)97.6% of suppliers (99% ofcore suppliers) trained in anti-corruptionAnti-corruption sectionincluded in supplier audit toolEnsure PUMA staff (with emailaccount) training rate remainsover 95%Keep supplier training rate over95%Maintain and run a state-of-the-art compliancesystemTarget achieved.Will be part of normalGovernance routine at PUMAgoing forward.BCI: Better Cotton Initiative, EP&L: Environmental Profit and Loss, FSC: Forest Stewardship Council, ILO: International Labor Organization, LWG: Leather Working Group, MRSL: Manufacturing RestrictedSubstance List, OHS: Occupational Health and Safety, PFCs: Polyfluorinated Chemicals, PU: Polyurethane, REC: Renewable Energy Attribute Certificates, RSL: Restricted Substance List, SBT: Science-BasedTarget, SLCP: Social and Labor Convergence Program, VOC: Volatile Organic Compound, ZDHC: Zero Discharge of Hazardous Chemicals.Annual Report 2019 ↗ SUSTAINABILITYThe 10FOR20 targets are also directly linked to the 4 significant sustainability re-
lated risks identified in our due diligence process:

A. Potential human rights violations or incidents in our supply chain (T1 and T2*)

B. Potential incidents of environmental pollution in our supply chain (T1 or T2)

C. Potential non-compliance to chemical regulations during production (T1 or T2)

D. Negative effects of Climate Change

Further details on PUMAs overall risk management can be found in the risk ma-
nagement section on of this Annual Report.

* Manufacturers of PUMA products; T2 Manufacturers of Materials and Components

➔

G.04 PUMA SUSTAINABILITY COMMITTEE 2019

During 2019, the most material aspects for the new target period 2025 were fur-
ther refined in an intensive stakeholder consultation process and are discussed
in Chapter 8 (Summary and Outlook).
in the chapter Summary and new Targets for 2025.

This 2019 Sustainability Section will still follow the 10FOR20 Methodology (figure
3), while from 2020 onwards we will use the updated 10FOR25 materiality analy-
sis and targets.

Annual Report 2019 ↗ SUSTAINABILITYSCOPE OF DATA COLLECTION

In this report we cover the PUMA Group. Our materiality analysis and EP&L cle-
arly indicate that a major part of our impact originates in the manufacturing of
materials and components and not in the assembly of finished goods. We there-
fore added our core suppliers of components and materials to the scope of our
data collection.

DATA SOURCES

To ensure a high degree of transparency and to promote the sharing of environ-
mental and social data with our industry peers, we have chosen to work with ex-
ternal and often public databases:

The Fair Factories Clearinghouse to share compliance audit data with
other brands.

The wastewater platform of the Zero Discharge of Hazardous Chemicals
(ZDHC) for sharing supplier data on wastewater testing.

The Chinese NGO IPE for the publication of supplier environmental data.

IPE’s Green Supply Chain Map, which enables the public to see the envi-
ronmental performance of some of our core suppliers in China.

We also collect social and environmental performance data of our company’s
own sites and from our core suppliers manufacturing our products.

Annual Report 2019 ↗ SUSTAINABILITYSOCIAL ASPECTS

HUMAN RIGHTS (10FOR20 TARGET NO 2)

Embed Human Rights across our operations and suppliers. Positively impact the
communities where PUMA is present.

Relates to United Sustainable Development Goals 3,4,5,10

Identify Human Rights hotspots in the Supply Chain

Mitigate the Risk of Forced/Bonded Labor

Promote Community Engagement

Number of Zero Tolerance Issues prevailing at year end (shared KPI
with Social Compliance)

Number of employee hours spent on community engagement (shared
KPI with HR)

PUMA’s sustainability policies are aligned with the UN Declaration of Human
rights, the International Labor Organization’s Core Labor conventions and the ten
principles of the United Nations Global Compact.

The observance of human rights has been a part of our first Code of Conduct in
1993 and has guided our business ethics since then. In 2019 we established a Re-
sponsible Purchasing Policy and a respective training program to ensure our
sourcing practices are aligned with our Code of Conduct.

In previous years, we conducted human rights risk assessments at Corporate
and Supply Chain respectively and communicated the results in our 2016 and
2017 Annual Reports. The most critical risks to human rights are forced/bonded
labor in our supply chain and, at the farm level, also the risk of child labor.

To mitigate the risk of forced and bonded labor we have advised our suppliers to
eliminate any recruitment fees. Such fees were previously paid by migrant
workers to labor contractors for bringing them to apparel factories in Mauritius
and Malaysia. We also updated our Forever Better Handbook on Social Standards
accordingly and, together with other brands, succeeded in eliminating recruit-
ment fees from our suppliers in Mauritius. In Malaysia we had only one active
supplier, with whom we no longer work, so that there are no recruitment fees at
our Tier 1 suppliers. There are still some challenges in the second tier of our
supply chain (fabric manufacturing in Taiwan), which we are currently working
on. We hope to resolve this issue by the end of 2020.

To ensure human rights are observed in cotton farming, we have joined the Bet-
ter Cotton Initiative in 2015. We have since scaled up our use of BCI Cotton from
zero to 80% currently. At the end of 2020 we aim increase that figure to 90% and
at the latest by 2025, our target is to purchase 100% of our cotton from certified,
more sustainable sources (BCI and organic cotton, recycled cotton).

Additionally, we have identified community engagement as an important vehicle
to create a positive impact locally, including on Social and Human Rights causes.

Therefore, we have a community engagement program in place at PUMA. In
2019, our PUMA colleagues around the globe spent 21,433 hours in community

Target Description:Examples from the 10FOR20 Action Plan:KPIs:Annual Report 2019 ↗ SUSTAINABILITY

engagement work. For more details on our community engagement program and
HR programs please refer to the People@PUMA section of this report.

SOCIAL COMPLIANCE (10FOR20 TARGET NO 3)

Compliance with industry standards / ILO Core Conventions for all core supp-
liers, including suppliers of finished goods as well as component and material
suppliers.

Relates to United Nations Sustainable Development Goals 3,5,8,10

Align Compliance Assessments at the Industry Level

Measure and manage social KPIs (supply chain)

Disclose full core supplier list and audit tool

Number of Zero Tolerance Issues prevailing at year end

Percentage of worker complaints resolved

Our social compliance program dates back to 1999 and was accredited by the
Fair Labor Association in 2019 for the third time. In 2019, we continued our part-
nerships with the Fair Labor Association, the Better Work Program of the Inter-
national Labor Organization and International Finance Corporation and the Social
and Labor Convergence Program (SLCP), supporting the roll out of SLCP 2019
operations in China. A total of 43 PUMA China and Taiwan core T1 and T2 supp-
liers completed SLCP assessments.

Duplicate audits by numerous brands can create an administrative burden on a
single vendor and be an inefficient use of resources. That is why we heightened
our collaborative efforts in this area to increase the percentage of shared audits
with other companies from 39% to 43% of PUMA suppliers. This is how we aim to
reduce costs and resources and maximize the efficiency of how we monitor our
collective supply chain as an industry.

In total, we conducted 475 audits in 418 factories with 94% of our Tier 1 vendors
earning a passing grade. Six percent of T1 suppliers failed to meet our require-
ments. If this happened to an active PUMA supplier, we worked with these part-
ners to improve the situation. 62% of those receiving a second audit received
passing grades. Nine factories could not sufficiently improve their performance
and were consequently removed from our active supplier factory base. Those
that applied to be suppliers but failed their first audits were not admitted.

We employ a team of compliance experts spread across all major sourcing regi-
ons. They regularly visit and audit our core manufacturing partners. We also em-
ploy external compliance auditors and work with the Better Work Program of the
International Labor Organization. Each PUMA supplier factory has to undergo a
mandatory compliance audit on an annual basis and any issues identified need to
be remedied as part of a corrective action plan.

Target Description:Examples from the 10FOR20 Action Plan:KPIs:Annual Report 2019 ↗ SUSTAINABILITY

➔

T.02 AUDIT RESULTS 2017-2019

Beyond auditing, we track social key performance indicators such as average
payments vs. minimum wage payments, overtime hours or coverage by collective
bargaining agreements.

Table 3 confirms that a majority of our core suppliers pay basic wages clearly
above the minimum wage, on average 17.6%. Adding overtime and bonus pay-
ments, this figure increases to 73.1%, a slight reduction from previous years
which can be attributed to increases in minimum wage figures. Social insurance
coverage remains above 90% and the percentage of permanent workers is get-
ting close to 70%.

Factory audits201920182017T1T2WarehousesT1T2T1T2A (Pass)10710082158713B+ (Pass)1261711482912227B- (Pass)1211001284211834C (Fail)1921177183D (Fail)4005091Total3773923809335478418473432Pass/Fail %94/695/550/5094/691/992/895/5Annual Report 2019 ↗ SUSTAINABILITY➔

T.03 SOCIAL KPIS PUMA CORE SUPPLIERS 2017-2019

2019LATINAMERICASOUTH ASIAEAST AND SOUTH ASIAEMEA201920182017KPIMexicoBangladeshIndiaPakistanChinaCambodiaIndonesiaPhilippinesVietnamTurkeyAverageAverageAverageGross wage paid above minimumwage excluding overtime andbonuses (%)59.122.918.522.17.68.61.60.033.62.417.620.926.1Grodd wage paid above minimumwage including overtime andbonuses (%)158.370.528.731.0170.266.839.735.1108.122.473.183.786.7Workers covered by socialinsurance (%)86.0100.097.799.064.3100.0100.095.593.9100.093.695.395.7Overtime work (hours per week)2.510.20.00.218.97.87.010.38.75.27.16.16.8Workers covered by a collectivebargaining agreement (%)0.00.00.00.094.428.233.30.098.40.025.426.721.5Female workers (%)49.842.747.38.964.084.388.869.080.459.059.456.059.3Permanent workers (%)14.6100.0100.0100.025.530.997.968.553.3100.069.168.063.6Annual Turnover Rate (%)61.033.46.620.863.043.317.264.840.032.238.236.840.3Injury Rate(%)0.20.30.00.00.50.50.22.70.30.30.50.60.4No. Of suppliers595059 Data received from 59 PUMA core suppliers representing 82% of 2019 production volume; reporting period for data collection: November 2018 – October 2019*Annual Report 2019 ↗ SUSTAINABILITYWe operate a PUMA worker compliance hotline. Phone numbers and email ad-
dresses of this hotline are visible on our Code of Conduct posters, which are dis-
played at every PUMA supplier globally. We also use social media such as
WeChat to connect with workers and have established more formalized compli-
ance and HR apps at selected core suppliers.

goods. For an existing factory, zero tolerance issues must be remedied immedia-
tely. This includes a root-cause analysis and preventive action must be taken to
avoid the issue from reoccurring in the future. As a last resort, business relati-
onships will be terminated if the factory is not cooperating. Other issues are also
followed up by our compliance team.

In total, 61 complaint issues across 7 countries were raised to PUMA’s feedback
system, 39% more than in the previous year. 100% were resolved by our team. In
India we broke through the zero-complaints threshold, with one worker reaching
out to PUMA about a compensation issue.

We also received 11 third-party complaints from external organizations related to
PUMA manufacturing partners. The third-party complaints focused on freedom
of association, fair compensation and discrimination. All 11 third-party com-
plaints were resolved by year end.

➔

T.04 WORKER COMPLAINTS 2017 - 2019

Worker Complaints

2019

2018

2017

Total received

Total Confirmed

Resolved

Not Resolved

Resolution Rate (in %)

100

Any issues identified during our auditing and hotline activities are classified into
zero tolerance issues (such as child labor or forced labor) critical issues and
other issues.

As the name implies, zero tolerance issues lead to the immediate failure of an
audit. In case of a new factory, this factory will not be allowed to produce PUMA

During 2019 we identified 3 zero tolerance issues and were able to remedy all of
them.

➔

T.05 ZERO TOLERANCE ISSUES (ZTIS) FOR THE LAST 3 YEARS

Country

2019

2018

2017

Grand Total

Cambodia

China

Indonesia

Vietnam

Grand Total

Annual Report 2019 ↗ SUSTAINABILITYMoving from auditing to remediation and capacity building in our supply chain,
we have set up capability-building initiatives to make suppliers more resilient
and self-sufficient. To improve HR management skills and educate HR manage-
rial team members, human resource management workshops were launched at
10 PUMA footwear suppliers in China.

➔

CAPACITY BUILDING ON FAIR WAGES

In 2018 and 2019, PUMA moved to an operational phase on wage issues. With the support of the Fair Wage Network, it carried
out a series of fair wage assessments at its core suppliers in Bangladesh and Cambodia. Some of them were certified by the
Fair Wage scheme, based on their performance across 12 fair wage dimensions. A number of its other suppliers operating in
those two countries will implement a remediation phase to improve their pay practices.
PUMA’s aim for 2025 is to expand this assessment and remediation exercise to suppliers from other countries. This should
lead to fairer and also more efficient pay practices.

DANIEL VAUGHAN-WHITEHEAD
Fair Wage Network
Co-Founder and Chair

Annual Report 2019 ↗ SUSTAINABILITYENVIRONMENT

The basis of our environmental efforts is to ensure that PUMA and its suppliers are
in full environmental compliance and any impact on the environment is optimized.

Relative reduction of Scope 1,2 and 3 CO emissions by 3% per year

We conducted 19 energy efficiency audits last year at our own entities, following up
on a first audit cycle in 2015. These audits, which are compulsory in the European
Union, help us identify energy saving opportunities at our offices, stores and
warehouses, which we can then roll out on a global basis.

As far as our suppliers are concerned, our PUMA compliance audits (as described
in the Social Compliance Section of this report) contain a dedicated section on envi-
ronmental and chemical compliance. During each audit, we check, for example,
environmental permits, waste management and effluent treatment plants.

In addition, we continued to ask all of our Core Suppliers to complete the Environ-
mental Facilities Module of the Sustainable Apparel Coalition. 127 of those assess-
ments were externally verified in 2019, which equates to an onsite environmental
audit. This figure is complemented by audits which our suppliers undergo frequent-
ly to obtain environmental certifications such as from bluesign , OEKO-TEX, GOTS,
GRS or the Leather Working Group.

CLIMATE CHANGE (10FOR20 TARGET NO. 4)

Science based CO reduction target to be developed (2016) and implemented
(2020).

Relates to United Nations Sustainable Development Goal 13

Work with Industry Peers on Climate Action

Extend large scale climate change projects in supply chain

Direct CO emissions from own entities (Scope 1)

Indirect CO emissions from own entities (Scope 2)

Indirect CO emissions from manufacturing, business travel and transport
of goods (Scope 3)

During the UN Climate Conference in Paris 2015, PUMA agreed to set a science-
based CO emissions target. After two attempts in 2017 and 2018, and the formati-
on of the Fashion Industry Charter on Climate Action in 2018, we finally agreed our
Science Based CO Emissions Target with the Science Based Target Coalition in
2
2019 and published the target in June.

The year 2019 also saw the formation of 7 working groups as part of the Fashion
Charter on Climate Action. PUMA is active in 5 of those working group and chairs
the Steering Committee of the Charter. PUMA also co-chairs the Working Group on
Sector Decarbonization.

https://unfccc.int/climate-action/sectoral-engagement/global-climate-action-in-fa
shion/about-the-fashion-industry-charter-for-climate-action

Target Description:Interim Target:Examples for the 10FOR20 Action Plan:KPIs:Annual Report 2019 ↗ SUSTAINABILITY➔

ABOUT THE FASHION INDUSTRY CHARTER FOR CLIMATE ACTION

On a global stage, PUMA has played an instrumental role in creating the UN-convened Fashion Industry Charter for Climate Ac-
tion and in mobilizing its suppliers, peers and partners in the industry and beyond to join his industry-wide collaboration plat-
form on climate. As a founding signatory, PUMA continues to play a key role by chairing the Steering Committee of the Fashion
Charter and is actively engaged in supporting working groups focused on decarbonization, manufacturing/energy and financial
tools. We look forward to working with PUMA going forward as it aligns its climate targets with science (1.5 degree temperature
goal) and together with other signatories of the charter continue to push for more ambitious, rapid, robust and credible proces-
ses to get there.

LINDITA XHAVERI-SALIHU
Sectors Engagement Lead UN Climate Change, Global Climate Action

We combined our SBT agreement with an increased effort to support the use of re-
newable electricity by purchasing Renewable Energy Attribute Certificates (RECs)
for those countries where PUMA has a major presence and renewable electricity
cannot be purchased directly. We purchased RECs worth 50% of PUMA’s emissions
from electricity for 2018 retrospectively and increased that figure to 75% in 2019.

In this way, we managed to lower our combined Scope 1 and 2 Emissions by 38%
compared to 2018 and 63% compared to 2017. Taking these RECs into account, we
hit our Science Based Emissions Target of 35% reduction for Scope 1 and 2 Emissi-
ons in 2019, one year ahead of schedule.

Annual Report 2019 ↗ SUSTAINABILITY➔

G.05 AGREED EMISSION TARGETS (SCOPE 1&2)

(t CO e)

also committed to install 2 megawatt hours of solar panels to create electricity.

* Science based CO reduction target
** Renewable Energy Attribute Certificates

In an attempt to balance our increasing Scope 3 emissions, we expanded the reach
of our energy efficiency programs to China and Taiwan by joining the Clean by De-
sign Program of the Apparel Impact Institute (https://apparelimpact.org/).

As part of our commitment to aII, four of our fabric producers with wet-processing
units have been entered into the Clean by Design program in a first phase (two
more will be engaged in the first batch 2020), and we reserved the right to expand
coverage further, should the program prove successful.

Another effort to reduce our Tier 1 carbon footprint further was made by joining
WWF’s Low Carbon Manufacturing Program. We recruited our largest garment fac-
tory to participate in the starter phase, identifying energy saving opportunities and
providing online carbon accounting training.

Our program in Vietnam, which is run in partnership with IFC, has shown positive
results, with 5500 tons of CO saved from energy efficiency measures. Our vendors
also committed to install 2 megawatt hours of solar panels to create electricity.

S O L A R I N S TA L L AT I O N AT P U M A V E N D O R I N V I E T N A M

The reduction of our Scope 3 emissions at factory level is complemented by
purchasing more sustainable – and therefore also less carbon-intensive – raw ma-
terials. For example, after hitting our 50% bluesign certified polyester target in
2018 already, we set new, more ambitious targets. In 2019 we achieved use of over
90% bluesign or OEKO-TEX certified polyester and by 2025, we aim for 75% recy-
cled polyester usage.

➔

G.05 AGREED EMISSION TARGETS (SCOPE 1&2)

(t CO e)

* Science based CO reduction target

** Renewable Energy Attribute Certificates

In an attempt to balance our increasing Scope 3 emissions, we expanded the reach

of our energy efficiency programs to China and Taiwan by joining the Clean by De-

sign Program of the Apparel Impact Institute (https://apparelimpact.org/).

As part of our commitment to aII, four of our fabric producers with wet-processing

units have been entered into the Clean by Design program in a first phase (two

more will be engaged in the first batch 2020), and we reserved the right to expand

coverage further, should the program prove successful.

Another effort to reduce our Tier 1 carbon footprint further was made by joining

WWF’s Low Carbon Manufacturing Program. We recruited our largest garment fac-

tory to participate in the starter phase, identifying energy saving opportunities and

providing online carbon accounting training.

Our program in Vietnam, which is run in partnership with IFC, has shown positive

results, with 5500 tons of CO saved from energy efficiency measures. Our vendors

S O L A R I N S TA L L AT I O N AT P U M A V E N D O R I N V I E T N A M

The reduction of our Scope 3 emissions at factory level is complemented by

purchasing more sustainable – and therefore also less carbon-intensive – raw ma-

terials. For example, after hitting our 50% bluesign certified polyester target in

2018 already, we set new, more ambitious targets. In 2019 we achieved use of over

90% bluesign or OEKO-TEX certified polyester and by 2025, we aim for 75% recy-

cled polyester usage.

➔Annual Report 2019 ↗ SUSTAINABILITY➔➔

T.06 SCOPE 1 AND SCOPE 2 CO E EMISSIONS FROM PUMA

EMISSIONS RELATIVE TO SALES

COe-Emissions (absolute figues)20192018201720162015% Change2019/18% Change2019/2015Scope 1 – Direkte COe-Emissions Fossile Fuels (T)6,3266,9187,6786,8547,296-8.6-13.3Car Fleet3,6184,0734,1343,7464,087-11.2-11.5Heating2,7082,8453,5453,1073,209-4.8-15.6Scope 2 - Indirect COe Emissions Electricity & Steam [T]40,98643,36640,02937,30035,591-5.515.2Scope 2 - Indirect COe Emissions Electricity & Steam [T] incl. RECs11,53322,12840,02937,30035,591-47.9-67.6Electricity (excl. RECs)39,28242,14538,91436,04634,445-6.814.0Electricity (incl. RECs)9,82820,90738,91436,04634,445-53.0-71.5Steam1,7051,2211,1151,2541,14639.648.8Subtotal Scope 1-247,31250,28447,70744,15342,887-5.910.3Subtotal Scope 1-2 incl. RECs17,85829,04647,70744,15342,887-38.5-58.4SCOPE 1-2 COe EMISSIONS RELATIV TO SALES (in tons COe per € million sales per year)8.610.811.512.212.7-20.5-32.1SCOPE 1-2 COe EMISSIONS RELATIV TO SALES (in tons COe per € million sales per year) (incl. RECs)3.26.211.512.212.7-48.1-74.421 - 82222222Annual Report 2019 ↗ SUSTAINABILITY➔

T.07 PUMA’S SCOPE 3 CO E EMISSIONS FROM SELECTED SUPPLY CHAIN ACTIVITIES

EMISSIONS RELATIVE TO SALES

COe-Emissions (absolute figures)20192018201720162015% Change2019/18% Change2019/2015Scope 3 - Other indirect emissions [T]272,540222,315208,525196,896192,30522.641.7Scope 3 - Other indirect emissions [T] incl. RECs250,240222,315208,525196,896192,30512.630.1COe Emissions from Business Travel Transportation [T]18,72715,58214,39412,16710,19120.283.8COe Emissions from B2B transport of goods [T]98,38674,18264,07648,48457,08532.672.3COe Emissions from B2C transport of goods [T]9,3585,9616,99416,2236,32157.048.0COe Emissions from SuppliersCOe Emissions from production in Tier 1 supply chain [T]146,069126,590123,061120,023118,70815.423.0COe Emissions from production in Tier 1 supply chain [T] incl. RECs123,769126,590123,061120,023118,708-2.24.3SCOPE 3 COe EMISSIONS RELATIV TO SALES (in tons COe per € million sales per year)49.547.850.454.356.83.6-12.7SCOPE 3 COe EMISSIONS RELATIV TO SALES (in tons COe per € million sales per year) (incl. RECs)45.547.850.454.356.8-4.9-19.9Total Scope 1-3 [T]319,852272,599256,232241,049235,19217.336.0Total Scope 1-3 [T] incl. RECs268,098251,361256,232241,049235,1926.714.0Annual Sales PUMA (in € million)5,5024,6484,1363,6273,38718.462.4TOTAL COe EMISSIONS RELATIV TO SALES (in tons COe per € million sales per year)58.158.662.066.569.4-0.9-16.3TOTAL COe EMISSIONS RELATIV TO SALES (in tons COe per € million sales per year) (incl. RECs)48.754.162.066.569.4-9.9-29.81. PUMA uses its own methodology for CO accounting, with reference to the GHG protocol.2. The consolidation scope follows the operational control approach, including PUMA-owned or operated offices, warehouses, stores and own industrial sites (Argentina).3. Outsourced Tier 1 production is accounted in the scope 3 emissions, covering CO emissions from all three divisions (Accessories, Apparel, and Footwear).4. We apply the “min. 90% rule” for data collection from PUMA entities, covering at least 90% of PUMA’s FTE employees worldwide. The residual will be extrapolated.5. PUMA applies the location-based approach for scope 2, using emission factors by ADEME. In addition to the location-based approach, the market-based approach is used where renewable energy orenergy certificates are purchased. Scope 3 emissions factors are based on additional company and industry-specific emission factors.6. Data includes extrapolations or estimations where no real data can be provided.7. Methodological changes over the last three years influence results.8. Tier 1 supplier emissions focus on energy related emissions21 - 82222222222222222Annual Report 2019 ↗ SUSTAINABILITYCHEMICALS (10FOR20 TARGET NO. 5)

Zero Discharge of Hazardous Chemicals from our Supply Chain by 2020.

Relates to Sustainable United Nations Development Goals 3,6

For testing purposes, we rely on the Product RSL developed by the AFIRM Group as
well as the Manufacturing RSL developed by ZDHC rather than own PUMA testing
standards.

Since 2015, we have increased the amount of RSL tests by 183 to 6605 while the
failure rate decreased from 7.7% to 1.1%. When materials fail an RSL test, they
cannot be used for PUMA products until the failure is corrected and they success-
fully pass the test. In this way we mitigated the risk of product level RLS failures, of
which there were none in 2019.

➔

G.06 RSL FAILURE RATE 2019 BY DIVISION

(%)

Number and pass rate of RSL tests

Percentage of Products without PFC

VOC Index for Shoes

While the effects of potentially hazardous chemicals on human health have yet to
be completely assessed, PUMA takes precautionary measures to prevent potential
harm to human health and the environment from its products and operations.

All materials used in PUMA products are subject to our Restricted Substance List
(RSL) testing program to ensure compliance with global chemicals regulations.

Target Description and Examples of the 10FOR20 Action Plan:KPIs:Annual Report 2019 ↗ SUSTAINABILITY
➔

T.08 RSL TEST STATISTICS 2015-2019

At manufacturing level, we phased out the intentional use of 11 priority chemical
groups classified as particularly hazardous as part of our Greenpeace Detox com-
mitment. This phase-out was supported by the increasing use of bluesign and
OEKO-TEX certified materials as well as substituting PFC-based water-repellent
finishes. We also trained our supplier base, for example during supplier round ta-
ble meetings. While most of those chemical groups were never intentionally used
in the first place, poly-fluorinated chemicals (PFCs) were used until 2017 for water-
repellent finishes on apparel and footwear products.

The phase-out of these substances is illustrated by the results of wastewater tests
by our core wet-processing suppliers. These tests show compliance levels of over
94% for each of the Manufacturing Restricted Substance List (MRSL) parameters
listed in the ZDHC MRSL. Most parameters show compliance rates of 100% or clo-
se to 100%, with the exception of harmful AZO Dyes (94.2% compliance) and PFCs
(95% compliance). Those two parameters were already phased out by PUMA, but
due to shared production with other brands and retails at the same suppliers could
still be found in a small number of samples.

With the help of our footwear suppliers, we also managed to further reduce the
amount of solvents or volatile organic compounds (VOCs) per pair of shoes to 15.6

g/pair in line with our 2020 target projection. We achieved this reduction by fre-
quent VOC reduction meetings with our footwear suppliers and chemical compa-
nies. In those meetings we shared best practices from leading suppliers and new
technological developments.

➔

G.07 VOC INDEX DEVELOPMENT OVER TIME

* 2019 figure based on core suppliers, in alignment with general reporting scope.

ProductDivision20192018201720162015Variation2018/2019 (%)Variation2015/2019 (%)# ofTestReportsComplianceRate (%)# ofTestReportsComplianceRate (%)# ofTestReportsComplianceRate (%)# ofTestReportsComplianceRate (%)# ofTestReportsComplianceRate (%)# ofTestReportsComplianceRate# ofTestReportsComplianceRateFootwear466899.2351298.4270797.9178196115092.132.90.8305.97.1Apparel123999.19889892599.15009848093.125.41.1158.16.0Accessories63996.276497.1753966779462492.0-16.4-0.92.44.3Others59100.0541004495.578948293.99.30.0-28.06.1Total660598.9531898.1442997.8302896233692.324.20.8182.76.6Annual Report 2019 ↗ SUSTAINABILITYWATER&AIR (10FOR20 TARGET NO 6)

Industry good practice for effluent treatment is met by 90% of PUMA core suppliers
with wet processing facilities. Industry good practice for air emissions is met by
90% of PUMA core suppliers with significant air emissions.

Relates to United Nations Sustainable Development Goal 6

Ensure regular wastewater testing at relevant suppliers

Support the development and adoption of an
standard

industry wastewater

Support the development of an industry air quality standard

wastewater into natural water bodies, 16 out of 17 measured parameters show
equally high compliance levels of 90% or above.

One parameter, namely coliform bacteria* (70%) remained below our 90% compli-
ance threshold against the ZDHC wastewater quality guidelines. We will work with
the 30% non-compliant suppliers on the installation of disinfection units to hit the
coliform bacteria target as well.

To further improve the wastewater quality performance, we initiated wastewater
treatment training, starting in Greater China. While waiting for more training being
offered by the ZDHC, our plan is to provide training sessions in all of our major
sourcing regions.

Our air emissions target aims for an industry good practice standard for air emissi-
ons. This standard is under development by the ZDHC and PUMA actively supports
the standard development.

Therefore, we consider that we have not yet met both the water and air targets for
2020. We will move these targets forward to our next target period for 2025.

* Coliform bacteria are universally present in large numbers in the feces of warm-blooded animals (or hu-
mans). While coliforms themselves are not normally causes of serious illness, they are easy to culture, and
their presence is used to indicate that other pathogenic organisms of fecal origin may be present https://en-
.wikipedia.org/wiki/Coliform_bacteria

Percentage of Core Suppliers with wet processing covered

MATERIALS (10FOR20 TARGET NO 7)

Percentage of Core Suppliers meeting good practice standards for waste-
water quality (good practice for air still not defined yet)

Since 2015, we increased the amount of wastewater testing from 33 suppliers to 70
suppliers and 125 test reports, thereby covering 90% of all core suppliers with in-
dustrial wet-processing facilities.

The test results imply that the phase-out of priority hazardous chemicals has been
largely completed as planned. On the testing results of conventional wastewater
parameters, which are only applicable to suppliers which directly discharge their

Use sustainable material alternatives for PUMA’s key materials: cotton, polyester,
leather, polyurethane and cardboard.

Relates to United Nations Sustainable Development Goals 12,15

Target Description:Examples for the 10FOR20 Action Plan:KPIs:Target Description:Annual Report 2019 ↗ SUSTAINABILITYIncrease bluesign certified polyester usage to 50% by 2020 (updated tar-
get 90%)

Increase Better Cotton Initiative fiber volume to 50% by 2020 (updated tar-
get 90%)

Increase the usage of FSC certified and/or recycled paper and cardboard
to 90% by 2020

Keep the percentage of leather from LWG medal rated tanneries above
90%

Explore the use of water-based polyurethane

Percentage figures for each material

The PUMA Environmental Profit and Loss Account attributes more than 50% of
PUMA’s environmental impact to material and raw material production. Therefore
we have placed a high priority on the large-scale use of more sustainable raw ma-
terials. As part of our 10FOR20 strategy, we set targets for more sustainable raw
materials used in our apparel, such as cotton and polyester, but also for footwear
leather, polyurethane and cardboard.

With the exception of polyurethane (PU), we had already achieved our targets by the
end of 2018. We therefore increased our level of ambition for certified cotton and
polyester from 50% to 90%, and added OEKO-TEX to the list of applicable certifica-
tion standards for polyester. Our material sourcing teams instructed our material
vendors to purchase more sustainable cotton and certified polyester where feasi-
ble. This effort was supported by increased demand from our business units for

more sustainable materials at product level. The results are 82% cotton from the
Better Cotton Initiative and organic cotton, and 98% certified polyester in our appa-
rel ranges and exclusive use of certified polyester in our accessories division.

Regarding more sustainable PU, we piloted water-based PU in 2018 and so far have
sold approximately 300,000 pairs of sneakers using water-based PU. While we
found some technical limitations in the use of water-based PU, the significant price
increase compared to conventional PU has so far prevented us from further increa-
sing the use of this material. We hope that together with our industry peers we can
scale up the production volume of water-based PU and eliminate any technical is-
sues as well as bring the price down to a competitive level.

PUMA X FIRST MILE COLLECTION USES SUSTAINABLE
P U M A T I M E F O R C H A N G E K O L L E K T I O N M A D E O U T O F
YARN MADE FROM RECYCLED PL A STIC.
O R G A N I C C O T T O N

C O L L E C T I O N

Examples for the 10FOR20 Action Plan:KPIs:➔Annual Report 2019 ↗ SUSTAINABILITY
➔

➔
T.09 DEVELOPMENT OF MORE SUSTAINABLE MATERIAL USAGE SINCE 2015

T.09 DEVELOPMENT OF MORE SUSTAINABLE MATERIAL USAGE SINCE 2015

➔

Apart from our original targets on BCI Cotton and certified polyester, we also star-
ted using recycled polyester and organic cotton for some of our sustainability focu-
sed collections.

Oeko-Tex: 46%

Regularly publish updated PUMA EP&L data

EP&L IMPACT (10FOR20 TARGET NO 8)

EinführuIntroduce industry aligned product sustainability tools for design
and development

Continue to report on the EP&L every year under the lead of KERING.

BezieRelates to United Nations Sustainable Development Goals 7,12

Annual EP&L Values PUMA

Following PUMA‘s spin-off from Kering, we re-integrated the calculation of the
PUMA EP&L into our own sustainability efforts. The year 2019 was a transition year
to migrate the EP&L systems into our own IT landscape. At the end of the year, we
were able to calculate our 2018 EP&L results: (https://about.puma.com/en/sustain
ability/environment)

Target Description:Examples for the 10FOR20 Action Plan:KPI:DivisionMaterial Targets% of Total 2015% of Total 2016% of Total 2017% of Total 2018% of Total 2019Target 2020ApparelCotton from BCI3% (organic)19%40%50%BCI+Organic: 82%BCI cotton: 80%Organic cotton: 2%50% (90%)bluesign certified Polyester15%24%47%66%bluesign+Oeko-Tex+Recycled: 98%bluesign: 55%Oeko-Tex: 42%Recycled: 1%50% (90%)Accessoriesbluesign certified Polyester20%21%34%46%bluesign+Oeko-Tex: 100%bluesign: 54%Oeko-Tex 46%50% (90%)FootwearFSC certified and/or recycled Paper&Cardboard85%78%95%92%Product Packaging 100%90%FootwearLWG Medal Rated Leather99%94%99%99%98%90%®®®Annual Report 2019 ↗ SUSTAINABILITYTarget Description:Examples for the 10FOR20 Action Plan:KPI:DivisionMaterial Targets% of Total 2015% of Total 2016% of Total 2017% of Total 2018% of Total 2019Target 2020ApparelCotton from BCI3% (organic)19%40%50%BCI+Organic: 82%BCI cotton: 80%Organic cotton: 2%50% (90%)bluesign certified Polyester15%24%47%66%bluesign+Oeko-Tex+Recycled: 98%bluesign: 55%Oeko-Tex: 42%Recycled: 1%50% (90%)Accessoriesbluesign certified Polyester20%21%34%46%bluesign+Oeko-Tex: 100%bluesign: 54%Oeko-Tex 46%50% (90%)FootwearFSC certified and/or recycled Paper&Cardboard85%78%95%92%Product Packaging 100%90%FootwearLWG Medal Rated Leather99%94%99%99%98%90%®®®Target Description:Examples for the 10FOR20 Action Plan:KPI:DivisionMaterial Targets% of Total 2015% of Total 2016% of Total 2017% of Total 2018% of Total 2019Target 2020ApparelCotton from BCI3% (organic)19%40%50%BCI+Organic: 82%BCI cotton: 80%Organic cotton: 2%50% (90%)bluesign certified Polyester15%24%47%66%bluesign+Oeko-Tex+Recycled: 98%bluesign: 55%Oeko-Tex: 42%Recycled: 1%50% (90%)Accessoriesbluesign certified Polyester20%21%34%46%bluesign+Oeko-Tex: 100%bluesign: 54%Oeko-Tex 46%50% (90%)FootwearFSC certified and/or recycled Paper&Cardboard85%78%95%92%Product Packaging 100%90%FootwearLWG Medal Rated Leather99%94%99%99%98%90%®®®

➔

G.08 PUMA EP&L 2018

* without value-channel footwear

Annual Report 2019 ↗ SUSTAINABILITYBased on our 10FOR20 targets, we are reporting on PUMA’s progress towards gra-
dually lowering the EP&L value relative to our financial revenue. While there was
an increase in EP&L Value from 2017 to 2018, mainly caused by a more detailed
material analysis, the overall trend between 2013 and 2018 remains positive with a
decrease of EP&L value per revenue of 13.6%.

➔

G.09 PUMA EP&L TREND 2013 TO 2018

(in € million)

* without value-channel footwear

For an overview of the environmental KPIs of PUMA entities and its Core Tier 1
suppliers, please see table 10. Together with data on our material consumption and
manufacturing locations (tables 11 and 12 below), these figures form the basis of
the PUMA EP&L.

Annual Report 2019 ↗ SUSTAINABILITY➔

T.10 E-KPIS PUMA AND SUPPLY CHAIN

1-6

20192018201720162015% Change2019/18% Change2019/2015EnergyExcl. RECs:Electricity consumption (MWh)61,49966,51264,11963,33959,888-7.52.7Electricity consumption from renewable tariff (MWh)11,54711,69511,61112,04911,360-1.31.7Percentage renewable electricity consumption16%15%18%19%19%Incl. RECs:Electricity consumption (MWh)61,49966,51264,11963,33959,888-7.52.7Electricity consumption from renewable tariff (MWh)48,81636,74611,61112,04911,36032.8329.7Percentage renewable electricity consumption79%55%18%19%19%Energy from non-renewable fuels (oil, natural gas, etc.) (MWh)10,97511,72414,43012,59314,314-6.4-23.3Energy from steam (MWh)7,9155,7345,1555,7755,02938.057.4Total Energy Consumption80,38983,97083,70481,70779,231-4.31.5Energy consumption from PUMA production (MWh)*246,160195,866194,881180,041149,70925.764.4* Includes suppliers of tier 11. Figures include PUMA owned or operated offices.2. Includes paper consumption for offices usage in offices, warehouses and stores, card board and paper bags consumption.3. Data includes extrapolations or estimations where no real data could be provided.4. Excludes on-site generated and consumed energy as well as energy produced on site and sold to the grid.5. Includes own production sites in Argentina. All other production is outsourced to independent supplier factories, some warehouse operations are outsourced to independent logistic providers, franchised stores areexcluded.6. Store data is derived from exemplary stores in each country and extrapolated to cover all stores; methodological changes over the last 3 years do influence results.Annual Report 2019 ↗ SUSTAINABILITY3

We have worked with our core suppliers for almost 10 years on energy efficiency as
well as reducing water consumption and waste, for example as part of the Vietnam
Improvement Program (VIP) or the Partnership for Cleaner Textiles (PaCT) run by
the IFC.

tories had been setup but were not running as efficiently as existing production li-
nes, which caused this slight increase. Going forward, we will work with our supp-
liers on increasing the efficiency of the new production lines and set new targets to
reduce the amount of waste.

The results of these efforts are visible in a positive overall trend of energy and wa-
ter consumption per pair or piece of product since 2015, although we see a slight
increase in average footwear figures due to changes in our supplier base. New fac-

20192018201720162015% Change2019/18% Change2019/2015Waste, paper and waterWaste (tons)3,1544,8775,2935,3025,007-35.3-37.0Recycled waste (tons)1,1112,2823,4193,2752,949-51.3-62.3Percentage recycled waste35%47%65%62%59%Waste from PUMA produktion [T]*24,20516,68214,68612,25711,43345.1111.7Paper and cardboard consumption [T]**2,2812,2922,7563,3373,465-17.2-34.2Certified or recycled paper and cardboard consumption [T]1,8181,1202,0252,5122,49862.3-27.2Percentage certified or recycled paper consumption80%49%74%75%72%Paper and cardboard consumption from PUMA production [T]*14,86313,60714,12915,26913,3579.211.3Water (m)95,29189,676106,397107,025104,2216.3-8.6Water from PUMA production (thous. m)*2,5722,0302,1492,1451,77426.745.0* Includes suppliers of tier 1** Including paper bags, direct and indirect paper and cardboard consumption1. Figures include PUMA owned or operated offices2. Includes paper consumption for offices usage in offices, warehouses and stores, card board and paper bags consumption.3. Data includes extrapolations or estimations where no real data could be provided.4. Excludes on-site generated and consumed energy as well as energy produced on site and sold to the grid.5. Includes own production sites in Argentina. All other production is outsourced to independent supplier factories, some warehouse operations are outsourced to independent logistic providers, franchised stores areexcluded.6. Store data is derived from exemplary stores in each country and extrapolated to cover all stores; methodological changes over the last 3 years do influence results.33Annual Report 2019 ↗ SUSTAINABILITY➔

➔

T.11 2019 FOOTWEAR E-KPI RESULTS

Summary

T.12 2019 APPAREL E-KPI-ENABLON RESULTS

Summary

Since 2017, we also measure average environmental key performance indicators
(E-KPIs) from the manufacturing of fabric as well as artificial and genuine leather.
As we have included our main material suppliers into our energy and water effici-
ency programs and other brands have also expanded their resource efficiency pro-

grams at our shared material suppliers, we can see a positive performance trend.
The notable improvements in reducing CO emissions can partially be attributed to
2
changing boilers from coal or oil to less polluting fuel sources such as rice husk or
natural gas.

Summery of Supplier e-KPIsWeightedChangeRange 2019ValueValue 2015Value 2016Value 2017Value 2018Value 20192019-20182019-2015MinMaxNumber of SuppliersEnergy/pair (kWh)1.51.61.41.21.34%-15%0.402.0824CO/pair (Scope 1, 2 and 3) (kg)1.41.11.00.91.03%-29%0.251.6924Water/pair (l)18.318.414.514.515.25%-17%1.0361.5124Waste/pair (g)113.6105.2115.910912717%12%8.51230.89242Summery of Supplier e-KPIsWeightedChangeRange 2019ValueValue 2015Value 2016Value 2017Value 2018Value 20192019-20182019-2015MinMaxNumber of SuppliersEnergy/pair (kWh)1.50.60.70.60.60%-62%0.134.2423CO/pair (kg)1.40.40.30.30.2-6%-83%0.072.4023Water/pair (l)18.36.87.64.24.45%-76%0.85923Waste/pair (g)113.650.644.046.556.321%-50%2186232Annual Report 2019 ↗ SUSTAINABILITY➔

➔

T.13 2019 EKPIS LEATHER PRODUCTION

Summary

T.14 2019 EKPIS TEXTILES PRODUCTION

Summary

Summery of Supplier e-KPIsWeighted/mChangeRange 2019ValueValue 2017Value 2018Value 20192019-20182019-2017MinMaxNumber of SuppliersEnergy/m (kWh)9.18.78.2-5%-10%2.310.16CO/m (kg)3.43.23.22%-5%1.04.76Water/m (l)91.890.274.7-17%-19%51176Waste/m (kg)1.60.80.8-8%-50%0.026222222Summery of Supplier e-KPIsWeightedChangeRange 2019ValueValue 2017Value 2018Value 20192019-20182019-2017MaxMinNumber of SuppliersEnergy/t (kWh)13,679.1113,386.8012,636.3-6%-8%35,208.42,707.417CO/t (t)4.454.454.4-2%-2%14.61.217Water/t (m)119.30122.78105.5-14%-12%229.0–17Waste/t (kg)299.5970.6362.08-12%-79%532.4–1723Annual Report 2019 ↗ SUSTAINABILITYHEALTH AND SAFETY (10FOR20 TARGET NO 9)
HEALTH AND SAFETY (10FOR20 TARGET NO 9)

HEALTH AND SAFETY (10FOR20 TARGET NO 9)

Zero fatal accidents at PUMA and within suppliers; average injury rate for supp-
liers below 2 (interim target 2017) and PUMA below 1.5

Ensuring safe working conditions for our own employees and hundreds of
thousands of indirect employees at our manufacturing partners is an ethical im-
perative but it also makes good business sense. In 2015, we set a target of zero
fatal accidents and also aimed to reduce the number of work-related accidents.

Zero fatal accidents at PUMA and within suppliers; average injury rate for supp-
liers below 2 (interim target 2017) and PUMA below 1.5

Relates to the United Nations Sustainable Development Goal 3

Apart from our ongoing auditing program, which includes occupational health
and safety assessments, we implemented our Building Safety Program in coun-
tries where we identified a risk. We have also set up professional risk assess-
ments at all our major manufacturing partners.

From 2015 till the end of 2019 our building safety assessment program covered
the following countries:

Expand building safety projects to Indonesia

➔

T.15

Expand building safety projects to Indonesia

➔

T.15

Ensure professional risk assessments are conducted regularly

Number of Fatal Accidents at Tier 1 and Core Tier 2 Factories

Country

Ensure professional risk assessments are conducted regularly

No Factories

Comments

Country

No Factories

Comments

Part of our ongoing membership of the Bangladesh Accord

Bangladesh

Part of our ongoing membership of the Bangladesh Accord

Bangladesh

India

Indonesia

Number of Fatal Accidents at Tier 1 and Core Tier 2 Factories
In partnership with Elevate

Pakistan

In partnership with AsiaInspection

India

Indonesia

Pakistan

In partnership with AsiaInspection

In partnership with Elevate

Average Injury Rate at PUMA (reported in People at PUMA section)

Average Injury Rate of Core Tier 1 Suppliers

In that context we are happy to report that none of our suppliers have been invol-
ved in any structural building safety incident or factory fire since 2015.

We continue to check the availability of health and safety risk assessments and
function health and safety committees at our suppliers through our audit
program.

Target Description:Examples for the 10FOR20 Action Plan:KPIs:Annual Report 2019 ↗ SUSTAINABILITYTarget Description:Examples for the 10FOR20 Action Plan:KPIs:We are happy to report that our efforts have resulted in zero fatal accidents for
the years 2018 and 2019, as well as slightly reduced accident rates at our core
suppliers.

➔

T.16

Country

Injury Rate 2017

Injury Rate 2018

Injury Rate 2019

Bangladesh

Cambodia

China

Indonesia

Vietnam

Average

Fatal Accidents

0.7

1.2

0.5

0.4

0.6

0.3

3.2

0.5

0.3

0.6

0.3

0.5

0.2

0.3

0.5

As we believe that every accident is one too many, we aim to further reduce acci-
dent rates as part of our 2025 sustainability strategy and targets.

Annual Report 2019 ↗ SUSTAINABILITYGOVERNANCE (10FOR20 TARGET NO 10)
GOVERNANCE (10FOR20 TARGET NO 10)

Maintain and run a state-of-the-art Compliance Management System (including
Anti-Corruption measures).

Relates to United Nations Sustainable Development Goals 8,16

Increase participation rate in Code of Ethics training

Introduce a PUMA Anti-Corruption Policy

Percentage of PUMA employees trained on anti-corruption

Percentage of PUMA Core suppliers trained in anti-corruption

COMPLIANCE MANAGEMENT SYSTEM AT PUMA

PUMA is a global sports company, aiming for sustainable growth and innovation.
PUMA recognizes the legal and reputational risks inherent in running a global
business in a fast-paced environment where laws and customs differ from coun-
try to country. As outlined in the Corporate Governance Report, PUMA has set up
a Compliance Management System (CMS) to systematically prevent, detect and

sanction violations in the areas of corruption, money laundering, conflicts of inte-
rest, antitrust law, fraud and embezzlement.

PUMA’s Chief Compliance Officer is based at the headquarter in Herzogenaurach
and reports to the CEO of PUMA SE. A network of Local Compliance Officers in
operating subsidiaries across the world supports the Chief Compliance Officer.
They ensure that Compliance measures are rolled out globally and are in line
with local laws and customs. Local Compliance Officers also act as a first point of
contact for employees and help with the investigation of incidents. PUMA promo-
tes a “speak-up culture” where employees are encouraged to raise any compli-
ance issues with their manager, Local Compliance Officer or People & Organizat-
ion Partner. To give employees as many channels as possible to report incidents
there is also a web-based whistleblowing platform. The platform allows em-
ployees to report from anywhere, at any time, using their own language and an-
onymously, if they choose. All incidents are investigated immediately and tho-
roughly, and the required disciplinary steps or improvement measures are taken.
There is regular and ad-hoc incident reporting to the top management. In 2019,
the Compliance team received 33 reports about alleged violations. Three of these
concerned alleged bribery/kickbacks. One case was closed after the investigation
did not confirm the allegation. In the other two cases the investigation is still
ongoing.

Target Description:Examples for the 10FOR20 Action Plan:KPIs:Annual Report 2019 ↗ SUSTAINABILITYThe PUMA Code of Ethics sets out the principles governing our actions and va-
lues. It contains - among others - rules on the handling of conflicts of interest,
personal data, and insider information, and prohibits anti-competitive behavior
as well as corruption in any form. The Code of Ethics is an integral part of every
employment contract. In order to further reduce the risk of misconduct, the
PUMA Code of Ethics is complemented by comprehensive policies governing
selected risk areas such as anti-corruption, violation of competition law and anti-
money laundering in detail. The Code of Ethics as well as the PUMA compliance
policies apply to all subsidiaries.

ANTI-CORRUPTION MEASURES

Prevention of bribery is one of the key aspects of the Compliance Management
System. At PUMA, we have a zero-tolerance approach regarding bribery and cor-
ruption in any form, and this is clearly communicated by top level management.

Employees are first introduced to the rules of the Code of Ethics and the PUMA-
Group compliance policies when they start working for PUMA; reminders are
sent out to them on a regular basis. The Code of Ethics and the rest of the comp-
liance policies are available for everyone on the Compliance site on the Intranet.
Every year PUMA rolls out a group-wide mandatory e-learning on the PUMA
Code of Ethics. To make sure that employees are familiar with all topics descri-
bed in the Code of Ethics, the e-learning covers different topics every year. The

2019 e-learning course included the topics (i) prevention of bribery, (ii) inappro-
priate behavior in the workplace and (iii) safeguarding data. Sponsor of the cam-
paign was the Management Board of PUMA SE, above all the CEO Bjørn Gulden,
who promoted the e-learning course to all PUMA employees . 99% of the em-
ployees of the PUMA Group with a PUMA email account (PUMA SE appr. 97%)
have completed the e-learning course. In addition, groups of employees selec-
ted on the basis of risk exposure, are being provided with more in-depth know-
ledge in regular face-to-face trainings. Last year the focus areas of these trai-
nings were anti-corruption and competition law.

To implement our Anti-Corruption measures also at our PUMA suppliers, the
PUMA Vendor Code of Conduct contains a paragraph on Ethical Business Prac-
tices and the PUMA supplier compliance audit tool includes several questions on
Anti-Corruption. Each year, we train our suppliers on Anti-Corruption measures
during our Supplier Round Table Meetings. In the year 2019 we increased the
training coverage among our Core Suppliers from 93% (in 2018) to 99%.

Highlights: 99% of all PUMA staff globally with email account completed our
Code of Ethics Training and 99% of our Core Suppliers were trained in Anti-
Corruption.

1
Excluding employees on long-term leave, store staff, warehouse and factory employees.

Annual Report 2019 ↗ SUSTAINABILITYSUMMARY AND NEW TARGETS FOR 2025

TARGET SUMMARY 2020

At the beginning of the new decade in 2020 we can summarize our 10FOR20 Tar-
get achievement as follows:

Out of the 10 target areas set in 2015, we have achieved our desired progress in 9
areas.

Particularly in the area of more sustainable materials the progress has been fas-
ter than anticipated and we clearly exceeded the targets for the materials we use
the most - cotton and polyester - with 82% and 98% target sourcing respectively.

We also see good progress in the area of Social Compliance and Chemicals Ma-
nagement, where we constantly met our yearly targets during the target period
and achieved significant progress, for example with the elimination of recruit-
ment fees for migrant workers at our contract factories and the phase-out of
PFCs.

In the area of Health and Safety, we struggled to meet our Zero Fatal Accidents
target in the first few years but hit the target from 2018 onwards.

Our Climate Action program received a boost in 2018 with the creation of the Fa-
shion Charter on Climate Action Initiative under the umbrella of UN Climate. We
used the positive momentum to finalize and publish our science-based CO
2
emission reduction target in 2019 and at the same time invested at a large scale
into renewable energy – thus reducing our own emissions significantly.

The only target area where progress is falling significantly behind our expectati-
ons is the target area of Water & Air.

When we set our targets for Water & Air in 2015, we did not anticipate that it
would take our industry more than four years to develop a standard for air emis-

sions and we also were more optimistic about achieving the standards set in the
ZDHC Wastewater Quality Guideline.

Therefore, we have decided to move those targets to our new target period for
2025. However, we aim to complete these targets much earlier.

NEW TARGETS 2025

Following a formal materiality analysis process in 2018 and extensive internal
and external stakeholder dialogue in 2019, our Board of Management has signed
off on our new 2025 target areas.

We decided to replace the activities which contribute to performance improve-
ments more indirectly, such as Stakeholder Dialogue and the calculation of the
EP&L, with new target areas which make a direct impact, such as Plastics and
the Oceans and Biodiversity. Both topics are also part of the Fashion Pact initia-
ted by the French Government in 2019 and signed by PUMA.

In addition, we decided to merge the target areas for Social Compliance and Hu-
man Rights because of the wide overlap between them, while giving the topic of
Fair Income, which has been pointed out as very important by many stakehol-
ders, more prominence by creating a separate target area.

Finally, we upgraded our existing Materials target area into a Products target
area and added Circularity as a new target area, due to the growing interest and
importance of the topic.

Corporate Governance will no longer be reported under the umbrella of our
sustainability program but instead as a separate and very important objective wi-
thin the company.

Annual Report 2019 ↗ SUSTAINABILITY➔

G.10 PUMA SUSTAINABILITY TARGETS 2025

Human Rights
(SDG 3, 5, 8 and 10*)

Biodiversity
(SDG 1(cid:6) and 15*)

Fair Income
(SDG 1, 2 and 10*)

Products
(SDG 12*)

Health & Safety
(SDG 3*)

PUMA SUSTAINABILITY TARGETS

2025

Circularity
(SDG 9,12,1(cid:6) and 15*)

Chemicals
(SDG 3 and 6*)

Water & Air
(SDG 6, 1(cid:6) and 15*)

Climate
(SDG 7 and 13*)

Plastic & Oceans
(SDG 3, 1(cid:6) and 15*)

*SDG: United Nations Sustainable Development Goals

Annual Report 2019 ↗ SUSTAINABILITY➔

T.17

Human Rights (1)

Health & Safety
(2)

Train 100,000 direct and indirect staff on women
empowerment

Mapping of sub-contractors and T2 suppliers for human rights
risks

25,000 hours of community engagement globally per year

Zero Fatal Accidents (PUMA and Suppliers)

Reduce accident rate to 0.5 (PUMA and suppliers)

Building safety operational in all high-risk countries

Chemicals (3)

Ensure 100% of PUMA products are safe to use

Reduce Restricted Substances Failures to under 1%

Reduce organic solvent usage to under 10gr/pair

Water & Air (4)

90% compliance with Wastewater Quality Guideline of ZDHC

90% with Air Quality Guideline of ZDHC

15% of water reduction per pair or piece of product

Climate (5)

Plastic & Oceans
(6)

Align target with 1.5 degrees

100% Renewable Energy for PUMA entities

25% Renewable Energy for core suppliers

Eliminate Plastic Bags from PUMA stores globally

Support scientific research on microfibers

Research biodegradable plastic options for products

Circularity (7)

Take Back Scheme for all major markets

Reduce production waste to landfill by at least 50%

Develop recycled material options for cotton, leather and
rubber

Products (8)

100% of cotton, polyester, leather and down from certified
sources

Increase recycled polyester use to 75% (apparel)

90% of all footwear contains at least one recycled
component

Fair Income (9)

Fair Wage Assessments for top 5 sourcing countries

Biodiversity (10)

Support setting up an Science Based Target (SBT) on
Biodiversity

Effective and freely elected worker representatives at all core
suppliers

Ensure bank transfer payments to workers at all core
suppliers

100% of cotton, leather and viscose from certified sources

Zero use of exotic skins or hides

Over the next 5 years we will work hard to realize those new targets. Similar to the target period from 2015 to 2020 we will not shy away from increasing our level of am-
bition in case we hit individual targets earlier than expected.

With growing concerns about climate change, the loss of biodiversity and plastic pollution, our world is facing an environmental crisis. At PUMA we are ready to act and
contribute to solutions to solve this crisis!

Target AreaTarget 1Target 2Target 3Annual Report 2019 ↗ SUSTAINABILITYGRI-INDEX

Index to Separate Combined Non-Financial Report and GRI content

This report constitutes a separate combined non-financial report in accordance
with sections 289b to 289e and 315b, 315c in conjunction with 289c to 289e of the
German Commercial Code (HGB). This consolidated non-financial report consists
of the sections and disclosures referenced in the following overview in column
“CSR Directive Implementation Act: Index to Non-financial Statement” as well as
the chapter "Sustainability" and the section "Culture" in the chapter "Our
People".

The reporting period covered is January 1st, 2019 to December 31st, 2019. No re-
statements of information have been made in this report. We have provided sepa-
rate reports for PUMA SE and the PUMA Group within the “Governance and
People at PUMA” section only. Separate reporting of other sustainability data
would not add any meaningful new information or value and would require signi-
ficant additional resources, so we have omitted it here. Information about

PUMA’s business model is set out in the Financial section of this Annual Report
on page 113. This combined sustainability report has undergone a voluntary “li-
mited assurance” with focus on accordance with German CSR Implementation
Act (CSR-RUG) by Deloitte.

Since 2003 PUMA’s sustainability reports are based on the guidelines of the Glo-
bal Reporting Initiative (GRI), which developed detailed and widely recognized
standards on sustainability reporting. This report has been prepared in accor-
dance with the GRI Standards: Core option. This option enables us to report on
the impacts related to our economic, environmental, social, and governance per-
formance. It includes topics that are material to PUMA’s business and our key
stakeholders, and that constitute our sustainability targets. These targets have
been systematically developed in accordance with the feedback from PUMA’s
stakeholders.

Annual Report 2019 ↗ SUSTAINABILITYDescription

CSR Directive
Implementation*

Page

102-1

102-2

102-3

102-4

102-5

102-6

102-7

102-8

Name of the organization

Activities, brands, products, and
services

Location of headquarters

Location of operations

Ownership and legal form

a. A description of the organization’s activities.

b. Primary brands, products, and services, including an explanation of any products or services that are banned in
certain markets.

Markets served

a. Markets served, including:

i. geographic locations where products and services are offered;

ii. sectors served;

iii. types of customers and beneficiaries.

Scale of the organization

Information on employees and
other workers

The reporting organization shall report the following information:

a. Total number of employees by employment contract (permanent and temporary), by gender.

b. Total number of employees by employment contract (permanent and temporary), by region.

c. Total number of employees by employment type (full-time and part-time), by gender.

d. Whether a significant portion of the organization’s activities are performed by workers who are not employees. If
applicable, a description of the nature and scale of work performed by workers who are not employees.

e. Any significant variations in the numbers reported in Disclosures 102-8-a, 102-8-b, and 102-8-c (such as seasonal
variations in the tourism or agricultural industries).

f. An explanation of how the data have been compiled, including any assumptions made.

102-9

Supply chain

113

119

163,197

130-131

120-132

41-42, 120

118-119

*CSR Directive Implementation Act: Index to Non-financial Statement

GENERAL DISCLOSURESORGANIZATIONAL PROFILEAnnual Report 2019 ↗ SUSTAINABILITYa. Significant changes to the organization’s size, structure, ownership, or supply chain, including:

i. Changes in the location of, or changes in, operations, including facility openings, closings, and expansions;

ii. Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for
private sector organizations);

iii. Changes in the location of suppliers, the structure of the supply chain, or relationships with suppliers, including
selection and termination.

102-10

Significant changes to the
organization and its supply
chain

102-11

Precautionary principle or
approach

102-12

External initiatives

102-13

Membership of associations

127-131

52-53

Description

CSR Directive
Implementation*

Page

102-14

Statement from senior decision-maker

102-15

Key impacts, risks, and opportunities

102-16

Values, principles, standards, and norms of behavior

Description

CSR Directive
Implementation*

Page

5-7

60, 172-178

Description

CSR Directive
Implementation*

Page

62, 163-171

*CSR Directive Implementation Act: Index to Non-financial Statement

STRATEGYETHICS AND INTEGRITYAnnual Report 2019 ↗ SUSTAINABILITY102-18

Governance structure

The reporting organization shall report the following information:

a. Governance structure of the organization, including committees of the highest
governance body.

b. Committees responsible for decision-making on economic, environmental, and social
topics.

102-21

Consulting stakeholders on economic, environmental, and
social topics

163-171

51-53

Description

CSR Directive
Implementation*

Page

102-40

List of stakeholder groups

102-41

Collective bargaining agreements

102-42

Identifying and selecting stakeholders

102-43

Approach to stakeholder engagement

102-44

Wichtige Themen und hervorgebrachte
Anliegen

The reporting organization shall report the following information:

a. Key topics and concerns that have been raised through stakeholder engagement, including:

i. how the organization has responded to those key topics and concerns, including through its
reporting;

ii. the stakeholder groups that raised each of the key topics and concerns.

51-53

41, 65

51-53

Description

CSR Directive
Implementation*

Page

*CSR Directive Implementation Act: Index to Non-financial Statement

GOVERNANCESTAKEHOLDER ENGAGEMENTAnnual Report 2019 ↗ SUSTAINABILITYDescription

CSR Directive
Implementation*

Page

102-45

102-46

102-47

102-48

Entities included in
the consolidated
financial statements

Defining report
content and topic
Boundaries

List of material
topics

Restatements of
information

102-49

Changes in reporting

102-50

Reporting period

102-51

Date of most recent
report

102-52

Reporting cycle

102-53

102-54

Contact point for
questions regarding
the report

Claims of reporting
in accordance with
the GRI Standards

The reporting organization shall report the following information:

a. A list of all entities included in the organization’s consolidated financial statements or equivalent documents.

b. Whether any entity included in the organization’s consolidated financial statements or equivalent documents is not covered by
the report.

The reporting organization shall report the following information:

a. An explanation of the process for defining the report content and the topic Boundaries.

b. An explanation of how the organization has implemented the Reporting Principles for defining report content.

The reporting organization shall report the following information:

a. The claim made by the organization, if it has prepared a report in accordance with the GRI Standards, either:

i. ‘This report has been prepared in accordance with the GRI Standards: Core option’;

ii. ‘This report has been prepared in accordance with the GRI Standards: Comprehensive option’.

102-55

GRI content index

The reporting organization shall report the following information:

a. The GRI content index, which specifies each of the GRI Standards used and lists all disclosures included in the report.

b. For each disclosure, the content index shall include:

i. the number of the disclosure (for disclosures covered by the GRI Standards);

ii. the page number(s) or URL(s) where the information can be found, either within the report or in other published materials;

iii. if applicable, and where permitted, the reason(s) for omission when a required disclosure cannot be made.

198-202

54, 61, 63

284

91-106

*CSR Directive Implementation Act: Index to Non-financial Statement

REPORTING PRACTICEAnnual Report 2019 ↗ SUSTAINABILITY102-56

External assurance

The reporting organization shall report the following information:

107-108

Description

CSR Directive
Implementation*

Page

a. A description of the organization’s policy and current practice with regard to seeking external assurance for the report.

b. If the report has been externally assured:

i. A reference to the external assurance report, statements, or opinions. If not included in the assurance report accompanying the
sustainability report, a description of what has and what has not been assured and on what basis, including the assurance
standards used, the level of assurance obtained, and any limitations of the assurance process;

ii. The relationship between the organization and the assurance provider;

iii. Whether and how the highest governance body or senior executives are involved in seeking external assurance for the
organization’s sustainability report.

*CSR Directive Implementation Act: Index to Non-financial Statement

Annual Report 2019 ↗ SUSTAINABILITYMaterials

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

301-1

Materials used by weight or volumeMaterials
used by weight or volume

Part Omitted: Materials used by weight or volume

Reason: Confidentiality constraints

Description

CSR Directive
Implementation*

Page

75-76

Description

CSR Directive
Implementation*

Page

Explanation: The total materials` weights are obtained to calculate the target progress. For
confidentiality reasons only the percentages reached are disclosed.

*CSR Directive Implementation Act: Index to Non-financial Statement

SPECIFIC STANDARD DISCLOSURESENVIRONMENTAL TOPICSGRI 103: MANAGEMENT APPROACH 2016GRI 301: MATERIALS 2016Annual Report 2019 ↗ SUSTAINABILITYEnergy

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

Description

CSR Directive
Implementation*

Page

68-70

Description

CSR Directive
Implementation*

Page

302-3

Energy intensity

The reporting organization shall report the following information:

80, 82-83

a. Energy intensity ratio for the organization.

b. Organization-specific metric (the denominator) chosen to calculate the ratio.

c. Types of energy included in the intensity ratio; whether fuel, electricity, heating, cooling, steam, or all.

d. Whether the ratio uses energy consumption within the organization, outside of it, or both.

*CSR Directive Implementation Act: Index to Non-financial Statement

GRI 103: MANAGEMENT APPROACH 2016GRI 302: ENERGY 2016Annual Report 2019 ↗ SUSTAINABILITYEmissions

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

305-1

305-2

305-3

305-4

305-5

Direct (Scope 1) GHG emissions

Energy indirect (Scope 2) GHG emissions

Other indirect (Scope 3) GHG emissions

GHG emissions intensity

Reduction of GHG emissions

Description

CSR Directive
Implementation*

Page

68-70

Description

CSR Directive
Implementation*

Page

71-72

*CSR Directive Implementation Act: Index to Non-financial Statement

GRI 103: MANAGEMENT APPROACH 2016GRI 305: EMISSIONS 2016Annual Report 2019 ↗ SUSTAINABILITYSupplier Social Assessment

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

414-1

414-2

New suppliers that were screened
using social criteria

Negative social impacts in the supply
chain and actions taken

The reporting organization shall report the following information:

a. Percentage of new suppliers that were screened using social criteria.

The reporting organization shall report the following information:

a. Number of suppliers assessed for social impacts.

Description

CSR Directive
Implementation*

Page

Description

CSR Directive
Implementation*

Page

63-66

b. Number of suppliers identified as having significant actual and potential negative social impacts.

c. Significant actual and potential negative social impacts identified in the supply chain.

d. Percentage of suppliers identified as having significant actual and potential negative social impacts with
which improvements were agreed upon as a result of assessment.

e. Percentage of suppliers identified as having significant actual and potential negative social impacts with
which relationships were terminated as a result of assessment, and why.

*CSR Directive Implementation Act: Index to Non-financial Statement

100

SOCIAL TOPICSGRI 103: MANAGEMENT APPROACH 2016GRI 414: SUPPLIER SOCIAL ASSESSMENT 2016Annual Report 2019 ↗ SUSTAINABILITYFreedom of Association and Collective Bargaining

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

Description

CSR Directive
Implementation*

Page

63-64

Description

CSR Directive
Implementation*

Page

407-1

Operations and suppliers in
which the right to freedom of
association and collective
bargaining may be at risk

The reporting organization shall report the following information:

65-66

a. Operations and suppliers in which workers’ rights to exercise freedom of association or collective bargaining
may be violated or at significant risk either in terms of:

i. type of operation (such as manufacturing plant) and supplier;

ii. countries or geographic areas with operations and suppliers considered at risk.

b. Measures taken by the organization in the reporting period intended to support rights to exercise freedom of
association and collective bargaining.

Forced or Compulsory Labor

103-1

103-2

Explanation of the material topic and its Boundary

The management approach and its components

*CSR Directive Implementation Act: Index to Non-financial Statement

Description

CSR Directive
Implementation*

Page

101

GRI 103: MANAGEMENT APPROACH 2016GRI 407: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING 2016GRI 103: MANAGEMENT APPROACH 2016Annual Report 2019 ↗ SUSTAINABILITY103-3

Evaluation of the management approach

Description

CSR Directive
Implementation*

Page

Description

CSR Directive
Implementation*

Page

409-1

Operations and suppliers at significant risk for
incidents of forced or compulsory labor

The reporting organization shall report the following information:

a. Operations and suppliers considered to have significant risk for incidents of forced or
compulsory labor either in terms of:

i. type of operation (such as manufacturing plant) and supplier;

ii. countries or geographic areas with operations and suppliers considered at risk.

b. Measures taken by the organization in the reporting period intended to contribute to the
elimination of all forms of forced or compulsory labor.

Human Rights Assessment

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

Description

CSR Directive
Implementation*

Page

*CSR Directive Implementation Act: Index to Non-financial Statement

102

GRI 409: FORCED OR COMPULSORY LABOR 2016GRI 103: MANAGEMENT APPROACH 2016Annual Report 2019 ↗ SUSTAINABILITY412-1

Operations that have been subject to human rights
reviews or impact assessments

The reporting organization shall report the following information:

a. Total number and percentage of operations that have been subject to human rights reviews
or human rights impact assessments, by country.

Description

CSR Directive
Implementation*

Page

Occupational Health and Safety

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

Description

CSR Directive
Implementation*

Page

40, 42

Description

CSR Directive
Implementation*

Page

403-2

Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities

*CSR Directive Implementation Act: Index to Non-financial Statement

103

GRI 412: HUMAN RIGHTS ASSESSMENT 2016GRI 103: MANAGEMENT APPROACH 2016GRI 403: OCCUPATIONAL HEALTH AND SAFETY 2016Annual Report 2019 ↗ SUSTAINABILITYDiversity and Equal Opportunity

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

Description

CSR Directive
Implementation*

Page

39-40, 170-171

405-1

Diversity of governance bodies and
employees

The reporting organization shall report the following information:

a. Percentage of individuals within the organization’s governance bodies in each of the following diversity
categories:

Description

CSR Directive
Implementation*

Page

39-40, 170-171

i. Gender;

ii. Age group: under 30 years old, 30-50 years old, over 50 years old;

iii. Other indicators of diversity where relevant (such as minority or vulnerable groups).

b. Percentage of employees per employee category in each of the following diversity categories:

i. Gender;

ii. Age group: under 30 years old, 30-50 years old, over 50 years old;

iii. Other indicators of diversity where relevant (such as minority or vulnerable groups).

*CSR Directive Implementation Act: Index to Non-financial Statement

104

GRI 103: MANAGEMENT APPROACH 2016GRI 405: DIVERSITY AND EQUAL OPPORTUNITY 2016Annual Report 2019 ↗ SUSTAINABILITYAnti-corruption

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

Description

CSR Directive
Implementation*

Page

86-87

Description

CSR Directive
Implementation*

Page

205-2

Communication and training about anti-corruption policies and procedures

86-87

Economic Performance

103-1

103-2

103-3

Explanation of the material topic and its Boundary

The management approach and its components

Evaluation of the management approach

*CSR Directive Implementation Act: Index to Non-financial Statement

Description

CSR Directive
Implementation*

Page

172

105

ECONOMIC TOPICSGRI 103: MANAGEMENT APPROACH ANTI-CORRUPTION 2016GRI 205: ANTI-CORRUPTION 2016GRI 103: MANAGEMENT APPROACH 2016Annual Report 2019 ↗ SUSTAINABILITY201-2

Financial implications and other risks and opportunities due to climate change

174

Description

CSR Directive
Implementation*

Page

*
CSR Directive Implementation Act: Index to Non-financial Statement

*CSR Directive Implementation Act: Index to Non-financial Statement

106

GRI 201: ECONOMIC PERFORMANCE 2016Annual Report 2019 ↗ SUSTAINABILITYDELOITTE ASSURANCE STATEMENT

INDEPENDENT AUDITOR’S REPORT ON A LIMITED ASSURANCE

on, the legal representatives are responsible for such internal control they have

ENGAGEMENT

To PUMA SE, Herzogenaurach

OUR ENGAGEMENT

We have performed a limited assurance engagement on the Separate Non-Fi-

nancial Group Report of PUMA SE (hereinafter: “the Company”) in accordance

with Section 315b German Commercial Code (HGB), which was combined with

determined necessary to enable the preparation of the Combined Non-Financial

Report that is free from material misstatements, whether intentional or

unintentional.

The accuracy and completeness of the environmental data in the Combined Non-

Financial Report are inherently subject to limits that result from the manner in

which data is collected and calculated and assumptions made.

the Non-Financial Report of the parent company, PUMA SE, Herzogenaurach, in

PRACTITIONER´S RESPONSIBILITY

accordance with Section 289b German Commercial Code (HGB) for the period

from January 1 to December 31, 2019 (hereinafter: “Combined Non-Financial Re-

port”). This Combined Non-Financial Report consists of the chapter “Sustainabi-

Our responsibility is to express a limited assurance conclusion on the Combined

Non-Financial Report, based on the assurance engagement we have performed.

lity” and the section "Culture" in the chapter "Our People" of the Annual Report

We are independent of the Company in accordance with the provisions under

of PUMA SE. The section “EP&L Impact” in the chapter “Sustainability” as well

German commercial law and professional requirements, and we have fulfilled

as references to the Annual Report, the Company's website and external web-

our other ethical responsibilities in accordance with these requirements.

sites were not part of our engagement.

RESPONSIBILITY OF THE LEGAL REPRESENTATIVES

Our audit company applies the German national legal requirements and the Ger-

man profession’s pronouncements for quality control, in particular the by-laws

The legal representatives of PUMA SE are responsible for the preparation of the

governing the rights and duties of public auditors and chartered accountants

Combined Non-Financial Report in accordance with Sections 315b, 315c German

(Berufssatzung für Wirtschaftsprüfer und vereidigte Buchprüfer) as well as the

Commercial Code (HGB) in connection with Sections 289c to 289e German Com-

IDW Standard on Quality Control 1: Requirements for Quality Control in Audit

Firms [IDW Qualitätssicherungsstandard 1: Anforderungen an die Qualitätssiche-

rung in der Wirtschaftsprüferpraxis (IDW QS 1)], which comply with the Interna-
tional Standard on Quality Control 1 (ISQC 1) issued by the International Auditing
and Assurance Standards Board (IAASB).

We conducted our assurance engagement in compliance with the International
Standard on Assurance Engagements (ISAE) 3000 (Revised): “Assurance Engage-
ments other than Audits or Reviews of Historical Financial Information” issued by
the IAASB. This standard requires that we plan and perform the assurance enga-
gement in a form that enables us to conclude with limited assurance that nothing
has come to our attention that causes us to believe that the information disclo-

DELOITTE ASSURANCE STATEMENT
DELOITTE ASSURANCE STATEMENT

INDEPENDENT AUDITOR’S REPORT ON A LIMITED ASSURANCE
INDEPENDENT AUDITOR’S REPORT ON A LIMITED ASSURANCE
1
1
ENGAGEMENT
ENGAGEMENT

To PUMA SE, Herzogenaurach
To PUMA SE, Herzogenaurach

OUR ENGAGEMENT
OUR ENGAGEMENT

We have performed a limited assurance engagement on the Separate Non-Fi-
We have performed a limited assurance engagement on the Separate Non-Fi-
nancial Group Report of PUMA SE (hereinafter: “the Company”) in accordance
nancial Group Report of PUMA SE (hereinafter: “the Company”) in accordance
with Section 315b German Commercial Code (HGB), which was combined with
with Section 315b German Commercial Code (HGB), which was combined with
the Non-Financial Report of the parent company, PUMA SE, Herzogenaurach, in
the Non-Financial Report of the parent company, PUMA SE, Herzogenaurach, in
accordance with Section 289b German Commercial Code (HGB) for the period
accordance with Section 289b German Commercial Code (HGB) for the period
from January 1 to December 31, 2019 (hereinafter: “Combined Non-Financial Re-
from January 1 to December 31, 2019 (hereinafter: “Combined Non-Financial Re-
port”). This Combined Non-Financial Report consists of the chapter “Sustainabi-
port”). This Combined Non-Financial Report consists of the chapter “Sustainabi-
lity” and the section "Culture" in the chapter "Our People" of the Annual Report
lity” and the section "Culture" in the chapter "Our People" of the Annual Report
of PUMA SE. The section “EP&L Impact” in the chapter “Sustainability” as well
of PUMA SE. The section “EP&L Impact” in the chapter “Sustainability” as well
as references to the Annual Report, the Company's website and external web-
as references to the Annual Report, the Company's website and external web-
sites were not part of our engagement.
sites were not part of our engagement.

RESPONSIBILITY OF THE LEGAL REPRESENTATIVES
RESPONSIBILITY OF THE LEGAL REPRESENTATIVES

The legal representatives of PUMA SE are responsible for the preparation of the
The legal representatives of PUMA SE are responsible for the preparation of the
Combined Non-Financial Report in accordance with Sections 315b, 315c German
Combined Non-Financial Report in accordance with Sections 315b, 315c German
Commercial Code (HGB) in connection with Sections 289c to 289e German Com-
Commercial Code (HGB) in connection with Sections 289c to 289e German Com-
mercial Code (HGB).
mercial Code (HGB).

In preparing the Combined Non-Financial Report, the legal representatives used
In preparing the Combined Non-Financial Report, the legal representatives used
the Sustainability Reporting Standards of the Global Reporting Initiative (GRI)
the Sustainability Reporting Standards of the Global Reporting Initiative (GRI)
with the option “Core” and have indicated these within the Combined Non-Finan-
with the option “Core” and have indicated these within the Combined Non-Finan-
cial Report.
cial Report.

This responsibility of the Company’s legal representatives includes the selection
This responsibility of the Company’s legal representatives includes the selection
and application of appropriate methods for preparing the Combined Non-Finan-
and application of appropriate methods for preparing the Combined Non-Finan-
cial Report as well as making assumptions and estimates related to individual
cial Report as well as making assumptions and estimates related to individual
1 We have performed a limited assurance engagement on the German version of the Combined Non-Financial
non-financial disclosures, which are reasonable in the circumstances. In additi-
non-financial disclosures, which are reasonable in the circumstances. In additi-
Report and issued an independent audit report in German language, which is authoritative. The following text

is a convenience translation of the independent auditor’s report.

mercial Code (HGB).

In preparing the Combined Non-Financial Report, the legal representatives used
the Sustainability Reporting Standards of the Global Reporting Initiative (GRI)
with the option “Core” and have indicated these within the Combined Non-Finan-
cial Report.

This responsibility of the Company’s legal representatives includes the selection
and application of appropriate methods for preparing the Combined Non-Finan-
cial Report as well as making assumptions and estimates related to individual
non-financial disclosures, which are reasonable in the circumstances. In additi-

on, the legal representatives are responsible for such internal control they have
on, the legal representatives are responsible for such internal control they have
determined necessary to enable the preparation of the Combined Non-Financial
determined necessary to enable the preparation of the Combined Non-Financial
Report that is free from material misstatements, whether intentional or
Report that is free from material misstatements, whether intentional or
unintentional.
unintentional.

The accuracy and completeness of the environmental data in the Combined Non-
The accuracy and completeness of the environmental data in the Combined Non-
Financial Report are inherently subject to limits that result from the manner in
Financial Report are inherently subject to limits that result from the manner in
which data is collected and calculated and assumptions made.
which data is collected and calculated and assumptions made.

PRACTITIONER´S RESPONSIBILITY
PRACTITIONER´S RESPONSIBILITY

Our responsibility is to express a limited assurance conclusion on the Combined
Our responsibility is to express a limited assurance conclusion on the Combined
Non-Financial Report, based on the assurance engagement we have performed.
Non-Financial Report, based on the assurance engagement we have performed.

We are independent of the Company in accordance with the provisions under
We are independent of the Company in accordance with the provisions under
German commercial law and professional requirements, and we have fulfilled
German commercial law and professional requirements, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
our other ethical responsibilities in accordance with these requirements.

Our audit company applies the German national legal requirements and the Ger-
Our audit company applies the German national legal requirements and the Ger-
man profession’s pronouncements for quality control, in particular the by-laws
man profession’s pronouncements for quality control, in particular the by-laws
governing the rights and duties of public auditors and chartered accountants
governing the rights and duties of public auditors and chartered accountants
(Berufssatzung für Wirtschaftsprüfer und vereidigte Buchprüfer) as well as the
(Berufssatzung für Wirtschaftsprüfer und vereidigte Buchprüfer) as well as the
IDW Standard on Quality Control 1: Requirements for Quality Control in Audit
IDW Standard on Quality Control 1: Requirements for Quality Control in Audit
Firms [IDW Qualitätssicherungsstandard 1: Anforderungen an die Qualitätssiche-
Firms [IDW Qualitätssicherungsstandard 1: Anforderungen an die Qualitätssiche-
rung in der Wirtschaftsprüferpraxis (IDW QS 1)], which comply with the Interna-
rung in der Wirtschaftsprüferpraxis (IDW QS 1)], which comply with the Interna-
tional Standard on Quality Control 1 (ISQC 1) issued by the International Auditing
tional Standard on Quality Control 1 (ISQC 1) issued by the International Auditing
and Assurance Standards Board (IAASB).
and Assurance Standards Board (IAASB).

We conducted our assurance engagement in compliance with the International
We conducted our assurance engagement in compliance with the International
Standard on Assurance Engagements (ISAE) 3000 (Revised): “Assurance Engage-
Standard on Assurance Engagements (ISAE) 3000 (Revised): “Assurance Engage-
ments other than Audits or Reviews of Historical Financial Information” issued by
ments other than Audits or Reviews of Historical Financial Information” issued by
the IAASB. This standard requires that we plan and perform the assurance enga-
the IAASB. This standard requires that we plan and perform the assurance enga-
gement in a form that enables us to conclude with limited assurance that nothing
gement in a form that enables us to conclude with limited assurance that nothing
has come to our attention that causes us to believe that the information disclo-
has come to our attention that causes us to believe that the information disclo-

107

Annual Report 2019 ↗ SUSTAINABILITYsed in the Combined Non-Financial Report has not complied, in all material re-

the Combined Non-Financial Report of the Company, for the period from January

spects, with Sections 315b, 315c in connection with Sections 289c to 289e Ger-

1 to December 31, 2019 has not complied, in all material aspects, with Sections

man Commercial Code (HGB). In a limited assurance engagement the assurance

315b, 315c German Commercial Code (HGB) in connection with Sections 289c to

procedures are less in extent than for a reasonable assurance engagement and,

289e German Commercial Code (HGB).

therefore, a substantially lower level of assurance is obtained. The assurance

The audit opinion only refers to the chapter “Sustainability” and the section "Cul-

procedures selected depend on the practitioner’s professional judgment.

ture" in the chapter "Our People" of the Annual Report of PUMA SE, Herzogenau-

Within the scope of our limited assurance engagement, which was performed

from November 2019 to April 2020, we conducted, amongst others, the following

site and external websites.

audit procedures and other activities:

rach. Our opinion does not refer to section “EP&L Impact” in the chapter

“Sustainability” as well as references to the Annual Report, the Company's web-

Obtaining an understanding of the structure of the sustainability orga-

nization and of the stakeholder engagement

Interview of the legal representatives and relevant employees that par-

ticipated in the preparation of the Combined Non-Financial Report

about the process of preparation, the measures on hand and precautio-

nary measures (system) for the preparation of the Combined Non-Fi-

LIABILITY

nancial Report as well as about the information within the Combined

Identification of the risks of material misstatement within the Combined

genaurach, on November 20, 2019 as well as in accordance with the “General en-

Analytical evaluation of selected disclosures within the Combined Non-

Reconciliation of the disclosures within the Combined Non-Financial

Report with the respective data within the consolidated financial state-

München/Germany, April 17, 2020

PURPOSE OF THE ASSURANCE STATEMENT

We issue this report on the basis of the engagement agreed with PUMA SE, Her-

zogenaurach. The limited assurance engagement has been performed for purpo-

ses of PUMA SE, Herzogenaurach, and the report is solely intended to inform

PUMA SE, Herzogenaurach, on the results of the assurance engagement.

The report is not intended to provide third parties with support in making (finan-

cial) decisions. Our responsibility exclusively refers to PUMA SE, Herzogenau-

rach, and is also restricted under the engagement agreed with PUMA SE, Herzo-

gagement terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften

(German public auditors and German public audit firms)” from January 1, 2017 of

the Institut der Wirtschaftsprüfer in Deutschland e.V. We do not assume any res-

ponsibility to third parties.

Wirtschaftsprüfungsgesellschaft

(Dr. Thomas Reitmayr)
Wirtschaftsprüfer

(ppa. Thomas Krick)

Director

1
We have performed a limited assurance engagement on the German version of the Combined Non-Fi-
nancial Report and issued an independent audit report in German language, which is authoritative. The
following text is a convenience translation of the independent auditor’s report.

Non-Financial Report

Financial Report

ments as well as the management report

Evaluation of the presentation of the disclosures

sed in the Combined Non-Financial Report has not complied, in all material re-
spects, with Sections 315b, 315c in connection with Sections 289c to 289e Ger-
man Commercial Code (HGB). In a limited assurance engagement the assurance
procedures are less in extent than for a reasonable assurance engagement and,
sed in the Combined Non-Financial Report has not complied, in all material re-
therefore, a substantially lower level of assurance is obtained. The assurance
spects, with Sections 315b, 315c in connection with Sections 289c to 289e Ger-
procedures selected depend on the practitioner’s professional judgment.
man Commercial Code (HGB). In a limited assurance engagement the assurance
procedures are less in extent than for a reasonable assurance engagement and,
Within the scope of our limited assurance engagement, which was performed
therefore, a substantially lower level of assurance is obtained. The assurance
from November 2019 to April 2020, we conducted, amongst others, the following
procedures selected depend on the practitioner’s professional judgment.
audit procedures and other activities:

Within the scope of our limited assurance engagement, which was performed
Obtaining an understanding of the structure of the sustainability orga-
from November 2019 to April 2020, we conducted, amongst others, the following
nization and of the stakeholder engagement
audit procedures and other activities:

Interview of the legal representatives and relevant employees that par-
Obtaining an understanding of the structure of the sustainability orga-
ticipated in the preparation of the Combined Non-Financial Report
nization and of the stakeholder engagement
about the process of preparation, the measures on hand and precautio-
nary measures (system) for the preparation of the Combined Non-Fi-
Interview of the legal representatives and relevant employees that par-
nancial Report as well as about the information within the Combined
ticipated in the preparation of the Combined Non-Financial Report
Non-Financial Report
about the process of preparation, the measures on hand and precautio-
nary measures (system) for the preparation of the Combined Non-Fi-
Identification of the risks of material misstatement within the Combined
nancial Report as well as about the information within the Combined
Non-Financial Report
Non-Financial Report
Analytical evaluation of selected disclosures within the Combined Non-
Identification of the risks of material misstatement within the Combined
Financial Report
Non-Financial Report
Reconciliation of the disclosures within the Combined Non-Financial
Analytical evaluation of selected disclosures within the Combined Non-
Report with the respective data within the consolidated financial state-
Financial Report
ments as well as the management report

Reconciliation of the disclosures within the Combined Non-Financial
Evaluation of the presentation of the disclosures
Report with the respective data within the consolidated financial state-
ments as well as the management report

Evaluation of the presentation of the disclosures

PRACTITIONER’S CONCLUSION

Based on the assurance work performed and evidence obtained, nothing has
come to our attention that causes us to believe that the information disclosed in

PRACTITIONER’S CONCLUSION

Based on the assurance work performed and evidence obtained, nothing has
come to our attention that causes us to believe that the information disclosed in

the Combined Non-Financial Report of the Company, for the period from January
PRACTITIONER’S CONCLUSION
1 to December 31, 2019 has not complied, in all material aspects, with Sections
Based on the assurance work performed and evidence obtained, nothing has
315b, 315c German Commercial Code (HGB) in connection with Sections 289c to
come to our attention that causes us to believe that the information disclosed in
289e German Commercial Code (HGB).
the Combined Non-Financial Report of the Company, for the period from January
The audit opinion only refers to the chapter “Sustainability” and the section "Cul-
1 to December 31, 2019 has not complied, in all material aspects, with Sections
ture" in the chapter "Our People" of the Annual Report of PUMA SE, Herzogenau-
315b, 315c German Commercial Code (HGB) in connection with Sections 289c to
rach. Our opinion does not refer to section “EP&L Impact” in the chapter
289e German Commercial Code (HGB).
“Sustainability” as well as references to the Annual Report, the Company's web-
The audit opinion only refers to the chapter “Sustainability” and the section "Cul-
site and external websites.
ture" in the chapter "Our People" of the Annual Report of PUMA SE, Herzogenau-
rach. Our opinion does not refer to section “EP&L Impact” in the chapter
PURPOSE OF THE ASSURANCE STATEMENT
“Sustainability” as well as references to the Annual Report, the Company's web-
We issue this report on the basis of the engagement agreed with PUMA SE, Her-
site and external websites.
zogenaurach. The limited assurance engagement has been performed for purpo-
ses of PUMA SE, Herzogenaurach, and the report is solely intended to inform
PURPOSE OF THE ASSURANCE STATEMENT
PUMA SE, Herzogenaurach, on the results of the assurance engagement.
We issue this report on the basis of the engagement agreed with PUMA SE, Her-
zogenaurach. The limited assurance engagement has been performed for purpo-
LIABILITY
ses of PUMA SE, Herzogenaurach, and the report is solely intended to inform
The report is not intended to provide third parties with support in making (finan-
PUMA SE, Herzogenaurach, on the results of the assurance engagement.
cial) decisions. Our responsibility exclusively refers to PUMA SE, Herzogenau-
rach, and is also restricted under the engagement agreed with PUMA SE, Herzo-
LIABILITY
genaurach, on November 20, 2019 as well as in accordance with the “General en-
The report is not intended to provide third parties with support in making (finan-
gagement terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften
cial) decisions. Our responsibility exclusively refers to PUMA SE, Herzogenau-
(German public auditors and German public audit firms)” from January 1, 2017 of
rach, and is also restricted under the engagement agreed with PUMA SE, Herzo-
the Institut der Wirtschaftsprüfer in Deutschland e.V. We do not assume any res-
genaurach, on November 20, 2019 as well as in accordance with the “General en-
ponsibility to third parties.
gagement terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften
(German public auditors and German public audit firms)” from January 1, 2017 of
München/Germany, April 17, 2020
the Institut der Wirtschaftsprüfer in Deutschland e.V. We do not assume any res-
ponsibility to third parties.

Wirtschaftsprüfungsgesellschaft
München/Germany, April 17, 2020

(Dr. Thomas Reitmayr)
Wirtschaftsprüfer
Wirtschaftsprüfungsgesellschaft
1
We have performed a limited assurance engagement on the German version of the Combined Non-Fi-
(Dr. Thomas Reitmayr)
(ppa. Thomas Krick)
nancial Report and issued an independent audit report in German language, which is authoritative. The
Wirtschaftsprüfer
Director
following text is a convenience translation of the independent auditor’s report.

(ppa. Thomas Krick)
Director

1
We have performed a limited assurance engagement on the German version of the Combined Non-Fi-
nancial Report and issued an independent audit report in German language, which is authoritative. The
108
following text is a convenience translation of the independent auditor’s report.

Deloitte GmbHAnnual Report 2019 ↗ SUSTAINABILITYDeloitte GmbHDeloitte GmbH

PURE
PERFORMANCE

Combined Management Report*

151

Further Information

151

Information concerning Takeovers

154

Compensation Report

163

Corporate Governance Report including the

Statement on

Corporate Governance in accordance with §

289f and § 315d HGB

172

Risk and Opportunity Report

179

Outlook

* Combined Management Report:

This report combines the Management Report of the
PUMA Group and the Management Report of PUMA SE.

110

Overview 2019

113

PUMA Group Essential Information

113

Commercial Activities and Organizational Structure

114

Targets and Strategy

116

Product Development and Design

118

Sourcing

120

Employees

123 Management System

125

Information regarding the Non-financial Report

126

Economic Report

126

General Economic Conditions

127

Sales

130

Regional Development

132

Results of Operations

137

Dividends

138 Net Assets and Financial Position

142

Cash Flow

146

Statement regarding the Business Development and the

Overall Situation of the Group

147

Comments on the German GAAP Financial Statements of

PUMA SE

Michael Lämmermann, Chief Financial Officer (CFO)

109

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT
OVERVIEW 2019

M I C H A E L L Ä M M E R M A N N

C H I E F F I N A N C I A L
O F F I C E R ( C F O )

In 2019, the PUMA Group (hereinafter PUMA) continued on its path to become the
fastest sports brand in the world, by further strengthening its sports perfor-
mance positioning. PUMA entered into many new partnerships with internatio-
nally renowned football clubs and the brand increased its visibility at key sports
events globally through the numerous victories of our sponsored athletes and
teams.

Our brand ambassadors Selena Gomez and Cara Delevingne created new Sport-
style collections that made waves on the catwalks and in the streets. We also

opened our flagship store in New York City and even entered the virtual world of
esports. All of this strengthened the PUMA brand and helped us live up to our vi-
sion of being “Forever Faster”.

In our sports performance business, the year started with a bang, as we announ-
ced our partnership with Manchester City in February. This deal is PUMA’s lar-
gest ever, both in terms of scope and ambition. We were also excited to welcome
Pep Guardiola, one of the most celebrated football managers in the world, as a
brand ambassador.

In Spain, we signed a contract with Valencia CF, one of the most respected clubs
in Spanish football. We also became the official match ball partner of Spanish
football league LaLiga Santander and LaLiga 1|2|3. This means that all goals in
one of Europe’s strongest professional football leagues are now scored with the
PUMA LaLiga 1 football.

The Women’s World Cup in France was one of the highlights of the football year
and firmly put women’s football in the spotlight. During this tournament, PUMA
sponsored quarter finalist Italy and a total of 78 players. To highlight our commit-
ment to the sport, PUMA launched the latest evolution of the PUMA ONE football
boot as the „PUMA ONE Trailblazer“, exclusively worn by our leading female
players. PUMA is now in the position to have a title-contending presence in all
major football leagues and with the national teams of Egypt and Morocco joining
the PUMA family in 2019, we now sponsor 12 federations.

Our PUMA teams were also successful in other team sports: Denmark took the
title at the Handball World Championships in Denmark and Germany. New Zea-
land won the Women’s Netball World Championships and the Richmond Tigers
were victorious in the AFL Grand Final in Australia. PUMA also played an im-
portant role in the Rugby World Cup, with Duane Vermeulen being voted Player of
the Match in the final.

110

➔Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTThe World Athletics Championships in Doha were an important event for our
track and field athletes. PUMA enjoyed a high level of visibility during the tourna-
ment by supporting a total of 115 athletes and 12 national federations. Norwegi-
an hurdler Karsten Warholm successfully defended his title over 400m hurdles
and was later voted European Male Athlete of the Year. During the tournament 22
medals were won by athletes wearing PUMA.

PUMA also welcomed new partners in Motorsport, where we signed a long-term
contract with Porsche to become the exclusive technical partner for racing appa-
rel and footwear. We launched a separate collaboration with Porsche Design to
create premium lifestyle products inspired by motorsports, which aim at the hig-
her end of the market.

Our Formula 1 teams Mercedes AMG Petronas, Scuderia Ferrari and Aston Mar-
tin Red Bull Racing once again dominated the Formula 1 season, where PUMA
further expanded its leading presence by becoming the official trackside retail
partner during F1 race weekends. Our brand ambassador Lewis Hamilton was
crowned Formula 1 Champion for the sixth time.

Making sure we also support the female champions of tomorrow, PUMA partne-
red with W Series, the first racing competition for upcoming female talent in
motorsport.

In our Golf category, we celebrated the 10-year anniversary with golf ambassa-
dor Rickie Fowler, one of the most vibrant ambassadors of the brand. Our latest
addition to our roster of golf players, Gary Woodland, won the US Open in June.

Also in North America, PUMA’s first full NBA Basketball season - after our re-
turn to the sport in 2018 - saw Toronto Raptors shooting guard Danny Green be-
come the first PUMA athlete to win the NBA Finals since Isiah Thomas in 1990.
We launched our first basketball shoe, the CLYDE COURT, in several new colors
as well as two additional performance basketball shoes, the UPROAR and the
CLYDE HARDWOOD. Both products were highly visible on court throughout the
NBA Season, the All-Star Game, the Playoffs and the NBA Finals.

Deriving straight from the basketball court, the lifestyle shoe RALPH SAMPSON
was one of our most important footwear styles in 2019. In the “chunky”-shoe ca-
tegory, several new colorways and collaborations within the RS-X-franchise con-

tinued to resonate well with our customers. Sneakers with a bulkier appearance,
often referred to as “chunky” or “dad” shoes, have been an important trend over
the past two years. The CALI franchise, presented by PUMA’s ambassador Selena
Gomez, was successful within the women’s lifestyle category.

Selena also launched her second collection with PUMA, but she was not the only
women’s brand ambassador to get creative with personal collections in 2019:
Cara Delevingne teamed up with PUMA and French luxury fashion house Bal-
main, while Adriana Lima presented a line of products reflecting her experience
in fitness and boxing.

As esports is becoming increasingly relevant for our consumers, PUMA announ-
ced its first-ever partnership in virtual sports with esports team cloud9. We also
created our first products to meet the needs of esports athletes and gamers,
such as an active gaming seat and active gaming socks. Through these part-
nerships, we are positioning ourselves to benefit from the fast-growing gaming
and esports markets. Keeping it high-tech, our first-ever smartwatch helps ath-
letes train, stay motivated, track goals and connect with others while on the go.

On the operational side, we continued to invest in our distribution and logistical
network as well as in organizational processes. We celebrated the topping out
ceremony for our new multichannel distribution center in Geiselwind, Germany,
which is expected to be operational in early 2021. In addition, PUMA North Ame-
rica announced the opening of a new distribution hub just outside of Indianapolis
for 2020. In August, we opened our New York flagship store on Fifth Avenue,
which provides a deeply immersive brand experience and marks another miles-
tone for our company.

PUMA’s net sales increased in the financial year 2019 by 16.7% currency-adjus-
ted. In the reporting currency, the Euro, this corresponds to an increase in sales
of 18.4% from € 4,648 million in the previous year to € 5,502 million in 2019. The
increase of our brand heat and the continued focus on the improvement of our
product range significantly contributed to the sales growth. This was particularly
a result of the consistent implementation of our "Forever Faster" corporate stra-
tegy. Furthermore, we once again demonstrated our ability to react quickly and
flexibly to changes and trends in our market environment. Despite the increase in
uncertainty in the economic environment, as a result of the trade conflict bet-
ween the United States of America and China, and in connection with Brexit,

111

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTPUMA was able to achieve strong sales growth in the financial year 2019. There-
fore, the currency-adjusted sales growth of around 10% prospected in the pre-
vious Combined Management Report for 2019 and the forecast of a currency-ad-
justed sales growth of around 15%, that was adjusted upwards during the year,
were exceeded. As a consequence, PUMA was able to exceed the € 5 billion sales
mark for the first time in the history of the company.

In addition to the strong sales growth, the increased gross profit margin contri-
buted significantly to the increase in profitability in the financial year 2019.
PUMA's gross profit margin improved by 40 basis points from 48.4% in the pre-
vious year to 48.8% in 2019. The main drivers for the development of the gross
profit margin were the product mix and the regional mix and a higher proportion
of our own retail sales. A slightly positive currency effect also contributed to the
improved gross profit margin.

Other operating income and expenses in total increased in 2019 by 17.8%. The
increase was mainly driven by higher sales-related costs, including costs for lo-
gistics, and higher expenses for marketing and investments in our own retail
stores. The slightly lower increase compared to sales reflects the achieved ope-
rating leverage and results in a decrease of our cost ratio from 41.5% in the pre-
vious year to 41.3% in 2019. The continued focus on strict control of other opera-
ting income and expenses also significantly contributed to our improved profita-
bility in 2019.

The operating result (EBIT) increased in the past financial year by 30.5% from €
337.4 million to € 440.2 million and was therefore above the guidance from the
beginning of 2019, which had originally forecast an operating result within a ran-
ge of between € 395 million and € 415 million. We were also able to slightly ex-
ceed the guidance, as adjusted during the year, for an operating result within a
range of between € 420 million and € 430 million. The improvement in profitabi-

lity is overall the result of the strong sales growth in combination with an impro-
ved gross profit margin and a slight operating leverage. This is also reflected in
the development of consolidated net earnings and earnings per share, which in-
creased by 40.0% compared to the previous year. Consolidated net earnings in-
creased from € 187.4 million in the previous year to € 262.4 million, and earnings
per share increased accordingly from € 1.25 in the previous year to € 1.76. As a
result, PUMA was able to fully achieve or even slightly exceed the financial tar-
gets of the previous financial year.

The strong business development enables the Management Board and the Su-
pervisory Board to propose to the Annual General Meeting on May 7, 2020, a divi-
dend payout of € 0.50 per share for the financial year 2019. This corresponds to a
payout ratio of 28.5% of net earnings and means a dividend increase of 42.8%
compared to the previous year. The dividend proposal is in accordance with
PUMA's dividend policy, which foresees a payout ratio of 25% to 35% of consoli-
dated net earnings. In the previous year, a dividend of € 0.35 per share was dis-
tributed (payout ratio previous year: 27.9%).

To make PUMA more attractive for retail investors and in order to further diversi-
fy its shareholder base, the Management Board decided in 2019 to exercise a
stock split with a 1:10 ratio. The stock split was subsequently approved by the
Annual General Meeting on April 18, 2019. The stock split was carried out on
June 10, 2019. The shareholders received nine additional shares for every share
held on this date. The market price per share was accordingly adjusted at a ratio
of 1:10. The PUMA share price developed very well in 2019. At the end of the year,
the share price was at € 68.35. Taking the stock split into account, this repres-
ents an increase of 60.1% compared to the previous year’s € 42.70. The market
capitalization of the PUMA Group increased accordingly to around € 10.2 billion
at year-end 2019 (previous year: € 6.4 billion).

112

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTPUMA GROUP ESSENTIAL INFORMATION

COMMERCIAL ACTIVITIES AND ORGANIZATIONAL STRUCTURE

PUMA SE operates as a European stock corporation with Group headquarters in
Herzogenaurach, Germany. In the internal reporting, our business activities are
mapped according to three regions (EMEA, the Americas and Asia/Pacific) and
three product divisions (footwear, apparel and accessories). A detailed descripti-
on can be found in the segment reporting in chapter 26 of the Notes to the Con-
solidated Financial Statements.

Our revenues are derived from the sale of products from the PUMA and Cobra
Golf brands via the wholesale and retail trade, as well as from sales directly to
consumers in our own retail stores and online stores. We market and distribute
our products worldwide primarily via our own subsidiaries. There are distribution
agreements in place with independent distributors in a small number of
countries.

As of December 31, 2019, 101 subsidiaries were controlled directly or indirectly
by PUMA SE. Our subsidiaries carry out various tasks at the local level, such as
distribution, marketing, product development, sourcing and administration. A full
list of all subsidiaries can be found in chapter 2 of the Notes to the Consolidated
Financial Statements.

113

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTTARGETS AND STRATEGY

PUMA has continued to focus on six strategic priorities to guide it on its way to
become the fastest sports brand in the world. We focus on brand heat, a compe-
titive product range, a leading offer for women, improving our distribution quality
and organizational speed as well as leveraging our re-entry into basketball to
strengthen our position on the North American market.

For more than 70 years, PUMA has created
by partnering with the
greatest athletes: Usain Bolt, Lewis Hamilton, Pelé, Maradona, Tommie Smith,
Boris Becker, Linford Christie, Serena Williams, Heike Drechsler and Martina
Navratilova, just to name a few. Today, PUMA continues to strengthen its position
as a sports brand through partnerships with some of the most elite ambassa-
dors: the Italian national football team, star strikers Antoine Griezmann, Romelu
Lukaku, Sergio Agüero and Luis Suarez, top football manager Pep Guardiola, in-
ternational top clubs Manchester City, Borussia Dortmund, Valencia CF and AC
Milan, golf stars Lexi Thompson and Rickie Fowler, the six-time Formula 1 world
champion Lewis Hamilton, Norwegian hurdler and world champion Karsten War-
holm, Canadian sprinter André De Grasse and the Jamaican and Cuban Olympic
Federations. Teaming up with the best athletes, teams and federations is key in
keeping PUMA’s brand credibility at high levels.
To connect with young, trend-setting consumers, PUMA also drives brand heat by
working with icons of culture and fashion such as Selena Gomez, Cara Deleving-
ne and Adriana Lima. This has made PUMA one of the hottest sports and fashion
brands for young consumers.

PUMA aims to design “cool stuff that works” and in 2019, we significantly impro-
Our most important performance footwear styles inclu-
ved our
ded the PUMA FUTURE football boot and our running & training shoes based on
our LQD CELL and HYBRID technology platforms. In Sportstyle, our bestselling
models were the RS-X, CALI and the RALPH SAMPSON. At the end of the year,
we launched the RS-X3, CALI SPORT and the RIDER, which is inspired by one of
the first jogging shoes launched in the 1980s. With these models, we see oursel-
ves in a good starting position for 2020. In apparel, we saw strong growth across
the portfolio, especially from “Big Cat” logo applications and motorsport apparel.

remains a priority for PUMA, to capi-
Creating a leading product offer for
talize on this growing segment in the global sportswear market. More and more
women take up sports worldwide and athletic wear has long made its way into
everyday outfits. “Where the gym meets the runway” continues to be the theme
for our initiatives in the women´s segment. In 2019, our best-selling sneakers
for women were the CALI, DEFY and MUSE.

, with an approach that resonated well beyond the court,
Returning to
was an important step towards increasing our credibility as a sports brand in
North America. With the support of JAY-Z, our Creative Director for basketball,
we added the UPROAR and the CLYDE HARDWOOD as new performance shoes to
this category in 2019. We added young and highly talented NBA players to our
roster such as RJ Barrett (New York Knicks), Kyle Kuzma (Los Angeles Lakers)
and Marcus Smart (Boston Celtics). While revenues from basketball performance
products are still small, as expected, we are already seeing the benefits of being
back on court, as sales of Sportstyle products and other performance categories
in the US have picked up. Bringing back the court-style sneaker RALPH SAMP-
SON from our basketball archive, now one of our best-selling shoes in 2019,
would not have been possible without re-entering basketball.

PUMA improved the quality of its
and expanded its presence in key
sports performance and Sportstyle accounts around the world. We continued to
strengthen our relationships with key retailers by being a flexible and service-
oriented business partner. By improving sell-through, we further expanded the
shelf space given to us in our partners’ retail stores. As sell-through in wholesale
improved, we expanded our retail store network and achieved like-for-like sales
growth, while registering continued strong growth of our eCommerce business.
Furthermore, PUMA upgraded its owned-and-operated retail store network with
further refurbishments. On a regional basis, the Asia/Pacific, driven by China,
and Americas regions contributed with double-digit increases, while EMEA conti-
nued to grow, despite a difficult market environment.

114

brand heatproduct offering.womenbasketballdistributionAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORTOperationally, we continued to improve
, processes and systems
that are required to support our overall growth ambition. In 2019, a strong focus
was put on expanding our logistical network with the project launch of two new
multi-channel distribution center initiatives, one in Geiselwind, Germany and one
outside of Indianapolis, USA – both are expected to be operational in 2020 and
early 2021. Beyond distribution center expansion, PUMA continued to focus on
standardization of ERP systems and enhancements of product development
tools. This, combined with improvements of the overall IT infrastructure, enables
us a faster and better communication and information exchange. PUMA’s global
trading entity (PUMA International Trading GmbH - PIT), which manages global
order and invoice flows centrally, has extended its scope in order to support
streamlining transactional processes and ensuring faster lead times for growing
markets and allowing us to come one step closer to our mantra of being “Forever
Faster”. In sourcing, the long-term collaboration with suppliers remains the key
component of our sourcing strategy to ensure a stable sourcing base, consistent
quality of our products and being well prepared for changes in the trade
environment.

In addition to our business priorities, social, economic and environmental
remains a core value for PUMA. In 2019, we delivered our 10FOR20
sustainability targets and developed our next set of sustainability targets for
2025, with a renewed focus on increasing the amount of sustainable products. In
addition, we continued our leading role at the Fashion Charter for Climate Action
under the umbrella of UN Climate and signed the Fashion Pact. The Fashion Pact
is a global coalition of companies in the fashion and textile industry, along with
suppliers and distributors, all committed to a common core of environmental
goals in three areas: stopping global warming, restoring biodiversity and protec-
ting the oceans. The Pact was launched at the 2019 G7 summit in France. Our
long-standing social compliance program has been supplemented by the aspect
of a more responsible procurement policy and has been recognized by the rene-
wed accreditation by the Fair Labor Association.

115

infrastructuresustainabilityAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORTPRODUCT DEVELOPMENT AND DESIGN

Building on more than 70 years of sports innovation and leading design, PUMA is
in the very fortunate situation of having an inspiring archive of products. PUMA’s
designers can take inspiration from iconic historic styles to mix the past and the
present. In 2019, many of our most successful models derived from our history.

As the heir of RS Running System series, which was first introduced some 40 ye-
ars ago, the RS-X continued to do well in the “Chunky Shoe” segment. In 2019,
the RS-X made a bold entry into the market as the RS-X Trophy in black and gold
and dropped in several other versions during the year.

In 2019, PUMA also built on its CELL technology platform, which uses hexagonal
cells in the heel for superior cushioning and stability. We used CELL in the retro
CELL Alien and CELL Endura models, which stayed true to their ancestors from
the 80s. We also went one step further by creating new CELL shapes, using the
updated LQD CELL technology. LQD CELL is versatile enough to work across a
variety of shoe designs and offers stable cushioning as a constant benefit. The
first product to use this new technology was the LQD CELL Origin AR sneaker,
which came to life with an augmented reality app on mobile phones. LQD CELL
technology was deployed throughout the year in several training products.

After returning to basketball last year, PUMA relaunched the “Ralph Sampson”
sneaker, named after the legendary basketball star, which was first introduced in
the 1980s. This shoe is a new successful addition to our offering and was presen-
ted in different colors and styles throughout 2019.

Towards the end of 2019, PUMA revived the RIDER, one of the first jogging shoes.
Launched in October as the FAST RIDER OG, our designers reinterpreted the
“Federbein” sole, which imitates the shock-absorbing qualities of a car suspen-

sion for additional comfort and high rebound. PUMA will continue to add new
products to the RIDER franchise in 2020.

The CALI and the NOVA, presented by our brand ambassadors Selena Gomez and
Cara Delevingne respectively, continued to be our most successful Sportstyle
franchises for women. Both ambassadors were deeply involved in the design pro-
cess and created their own collections. Cara Delevingne teamed up with PUMA
and French luxury brand Balmain for a boxing-inspired line of products. Super-
model and women’s training ambassador Adriana Lima also presented a collec-
tion aimed at women who want to look their best, even during the toughest work-
outs. PUMA also teamed up with a selected number of brands and designers,
such as Ader Error, Helly Hansen and Les Benjamins to create cool and stylish
collections.

Throughout its history, PUMA has catered to the needs of professional athletes.
We launched new versions of our PUMA FUTURE football boot in 2019. Made for
agile players, the FUTURE allows for sharp turns and complex movements on the
football pitch.

Together with Swiss apparel technology group X-Bionic, PUMA launched a
collection of thermoregulating running gear, which keeps athletes at an optimal
temperature at all times.

We also started a line of products for professional gamers and esports athletes.
Together with Dutch gaming accessories maker PLAYSEAT, PUMA launched a
gaming seat, which takes gamers away from slouching on the sofa and towards a
more active sitting position. The seat was accompanied by the launch of gaming
socks, a further example of how our Innovation department is looking for new
ways to provide products for this fast-growing market.

116

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTKeeping it high-tech, PUMA also launched its first smartwatch in 2019, which
should help athletes get the best out of their workouts with a built-in heart rate
tracking, GPS and many of their favorite apps.

Research and product development at PUMA mainly comprise the areas of inno-
vation (new technologies), product design and model and collection development.
The research and product development activities range from the analysis of sci-
entific studies and customer surveys through the generation of creative ideas to
the implementation of innovations in commercial products. The activities in rese-
arch and product development are directly linked to sourcing activities.

As of December 31, 2019, a total of 999 people were employed in research and
development/ product management (previous year: 946). In 2019, research and
development/ product management expenses totaled € 114.3 million (previous
year: € 97.8 million), of which € 61.7 million (previous year: € 54.0 million) rela-
ted to research and development.

117

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTSOURCING

THE SOURCING ORGANIZATION

PUMA Group’s sourcing functions, referred to as PUMA Group sourcing (PGS),
manages all sourcing related activities for PUMA and Cobra, including vendor
selection, product development, price negotiation and production control. These
activities are centrally managed by PUMA International Trading GmbH (PIT), the
group’s global trading entity, with its head office in the Corporate headquarters in
Herzogenaurach (Germany). In addition, PIT is responsible for procurement and
supply into the PUMA distribution channels worldwide. PIT receives volume fore-
casts from PUMA subsidiaries and licensees worldwide, translates these fore-
casts into production plans which are subsequently distributed to the referenced
vendors. The PUMA subsidiaries confirm their forecasts into purchase orders to
PIT, which in turn consolidates these requirements and purchases from the ven-
dors. There is a clear buy/sell relationship between the sales-subsidiaries and
PIT and between PIT and the vendors, for added transparency.

The centralization of both the sourcing and procurement functions, along with
the rollout of a cloud-based purchase order collaboration and payment platform,
linking the sales-subsidiaries, PIT and the vendors, has enabled the digitalization
of the supply chain creating transparency, operational efficiency and reducing
complexity. For example, container fill rates are optimized, foreign currency risks
are managed by PIT directly via a centralized currency hedging policy, and all
payments to vendors are automated and paper free.

In order to meet our customers’ requirements concerning service, quality, social
and environmental compliance we focus on six core strategic pillars of collabora-
tion, product, quality, growth management, margins and landed cost, and
sustainability. The centralization of sourcing and procurement allows for conti-
nuous improvements in all of these areas. Furthermore, the integration of the
PUMA sustainability function (social, environment, chemical and occupational
health and safety) into operations, since 2016, has ensured these areas are part
of our day to day business.

In 2019 further operating improvements were realized in sourcing, in particular
with regards to the centralization and standardization of processes and systems,
capacity management and data analysis. To avoid production peaks and subse-
quent delays on product availability, sourcing has proactively coordinated orde-
ring windows for earlier production visibility and additionally, reduced production
lead time by prepositioning supply of materials. Short-lead time programs have
been further increased to react on latest developments and trends in the mar-
kets. In this regard sourcing has extended its local supply chain for the China sa-
les-subsidiary to provide the right organizational setup with a focus on design,
costing and lead time. To mitigate the negative impact of the international trade
environment, alternative sourcing locations have been allocated for the US mar-
ket in the fourth quarter of 2019.

2019 saw the continued growth and expansion of the PUMA Vendor Finance Pro-
gram for our suppliers. This innovative program launched in 2016 allows vendors
to be paid earlier and the rate of interest charged is dependent on their sustaina-
bility performance. PUMA developed this program initially with the International
Finance Corporation (IFC), the trade finance arm of the World Bank. The program
has been expanded for the first time to include private international banks. Since
the program is based on PUMA’s credit rating our vendors are able to benefit
from the best possible interest rates and maintain their own lines of credit.

118

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTTHE SOURCING MARKETS

During the financial year 2019, PIT purchased from 131 independent suppliers
(previous year: 152) in 32 countries worldwide. The strategic cooperation with
long-term partners remained to be one of the key competitive advantages in 2019
to ensure stable sourcing of a significantly increased sourcing volume, in particu-
lar in the apparel division.

production country with a total of 33%. China followed at 25%. Bangladesh, which
focuses on apparel, is in third place at 15%. Bangladesh thus continued to in-
crease its share of the sourcing volume by two percentage points compared to
2019. Cambodia was in fourth place at 13%. Indonesia, which focuses on footwe-
ar production, produces 4% of the total volume and is in fifth place. India is in
sixth place at 3%.

Asia remains the strongest sourcing region overall with 95% of the total volume,
followed by EMEA with 3% (thereof Europe with 1.5% and Africa with 1.5%) and
the Americas with 2%.

As a result, the six most important sourcing countries (93% of the total volume)
are all located on the Asian continent. Once more, Vietnam was the strongest

Rising wage costs and macroeconomic influences, such as changes in the trade
environment due to tariffs, have continued to influence sourcing markets in 2019.
Such impacts need to be taken into account in allocating the production. This is a
significant component of our sourcing strategy to ensure secure and competitive
sourcing of products and, furthermore, to successfully manage the increasing
sourcing volumes due to the positive business development.

➔

G.01 SOURCING REGIONS OF PUMA

(in %)

119

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTEMPLOYEES

NUMBER OF EMPLOYEES

was 13,348 employees in
The global number of employees on a
2019 compared to 12,192 in the previous year. This increase resulted mainly from
the retail area due to the increased number of own retail stores.

Personnel expenses in 2019 increased overall by 14.6% from € 553.8 million to €
634.5 million. On average, personnel expenses per employee were € 47.5
thousand compared to € 45.4 thousand in the previous year.

➔

G.02 DEVELOPMENT EMPLOYEES

➔

G.03 EMPLOYEES (Year-end)

the number of employees was 14,332, compared to
As of
12,894 in the previous year. This represents a 11.2% increase in the number of
employees compared to the previous year. The development in the number of
employees per area is as follows:

TALENT RECRUITMENT AND DEVELOPMENT

In a business environment undergoing rapid change, PUMA must be able to ad-
apt quickly to new market situations to ensure success over the long term. We
have therefore created a modern working environment that fosters agile thin-
king, creativity and interaction. We provide our employees with general working
conditions and flexible working opportunities that offer them a good work-life ba-
lance. We ensure that our employees are familiar with agile working methods
and encourage them to be versatile and adaptable. During this change process
and the associated impact on the organization, the employee is always the focus
of our actions. In order to take this into account both internally and externally, we
have renamed the Human Resources department “People & Organization”.

To support our company strategy and to ensure our business success, our main
focus is on acquiring and developing talent. Having and retaining highly qualified
and motivated personnel in the long term is the main part of our strategy to en-

120

yearly averageDecember 31, 2019,Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTsure future competitiveness and growth. This becomes particularly important in
an ever-changing, increasingly complex environment. We use digital platforms
and social media for our target group-specific, individual recruiting measures, as
well as our career website, to attract external candidates. A range of initiatives at
universities gives us the opportunity to approach potential employees and identi-
fy suitable candidates. Extensive networks of qualified applicants and current
candidate pools help us to quickly fill vacancies. In the competitive labor market,
being an attractive employer, and being perceived as such by current and potenti-
al employees are of critical importance. Top employer rankings and multiple
awards evidence PUMA’s attractiveness.

The digitalization, the related simplification and acceleration of business proces-
ses made further progress. "Workday", one of the leading human capital ma-
nagement systems, which we introduced globally in 2017, contains the modules
"recruiting", "talent and performance", "time recording and absence manage-
ment" and "learning". As a result, only one software solution is used for major
parts of important personnel processes. In 2019, we continued to link Workday
with other systems and have steadily increased the number of employees and
applicants who regularly and actively use the system. The evaluation of our cen-
trally available global data enables us to conduct large-scale analyses. The re-
sulting conclusions offer a solid basis for continuous process improvement and
decisions.

Our aim is to help each of our employees to develop in an international environ-
ment and at the same time successfully and sustainably retain them in our com-
pany. Based on the Workday software, a systematic succession plan is created as
part of talent management in addition to the performance assessment and tar-
get-setting. We identify the talent available within the group as part of annual
performance reviews and foster talent development based on individual develop-
ment plans. This type of talent management means that we can offer our em-
ployees attractive career and development opportunities.

The ongoing professional and personal development of our employees also en-
sures that our workforce has the necessary expertise to guarantee continuous
growth and market competence particularly in times of digital change. The range
of training we provide therefore includes a number of online and offline training
Using Speed Up and Speed Up , we conduct development programs for em-
ployees on different levels. Various groups consisting of top talents are given in-

courses and workshops that are standardized or tailored to individual needs. The
constant development of our PUMA training programs ensures that our em-
ployees have innovative and diverse opportunities to expand their qualifications
and develop their existing skills or acquire new skills at any time. This approach
helps employees to achieve their personal goals and PUMA to reach its corporate
goals.

In 2019, we have started to train employees to become "agile coaches" in order to
prepare and motivate our workforce for the digital change. These coaches apply
agile working methods, can pass on their knowledge to other colleagues on site
and are also available as experts on the subject. In addition to the management
content already available on the ILP (International Leadership Program), we send
our staff on external and internal training courses to qualify in agile methods
such as Scrum, Design Thinking and KanBan. The high level of interest and stea-
dily increasing numbers of staff attending these courses show that we are on the
right path.

To provide adequate entry-level and development opportunities to talented indivi-
duals at all levels, including the range of different apprenticeships and dual-stu-
dy programs, we also promote the systematic training of our professionals and
managers.
To ensure a common understanding of leadership throughout the company, all
managers complete our international leadership training program comprising
the seminar series ILP and ILP . The program helps to develop participants over
a longer period, provides them with the opportunities to apply the newly acquired
knowledge in practice between the individual modules and to share knowledge
with other seminar participants to learn from each other. Our goal is to provide
our staff with the required skills and expertise to successfully lead their teams.
They receive intensive training and coaching, including interactive learning, role-
play simulations and best practice learning, as well as joint projects. The digita-
lization and the changing work environment lead to new challenges for mana-
gers in particular. The key topics are therefore coaching, mindful leadership and
agile working methods. The training course “from employee to manager” prepa-
res staff that are about to take on a management role for the first time. In additi-
on to the training module, the program also offers individual coaching.

121

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTsure future competitiveness and growth. This becomes particularly important in

courses and workshops that are standardized or tailored to individual needs. The

an ever-changing, increasingly complex environment. We use digital platforms

constant development of our PUMA training programs ensures that our em-

and social media for our target group-specific, individual recruiting measures, as

ployees have innovative and diverse opportunities to expand their qualifications

well as our career website, to attract external candidates. A range of initiatives at

and develop their existing skills or acquire new skills at any time. This approach

universities gives us the opportunity to approach potential employees and identi-

helps employees to achieve their personal goals and PUMA to reach its corporate

fy suitable candidates. Extensive networks of qualified applicants and current

goals.

candidate pools help us to quickly fill vacancies. In the competitive labor market,

being an attractive employer, and being perceived as such by current and potenti-

In 2019, we have started to train employees to become "agile coaches" in order to

al employees are of critical importance. Top employer rankings and multiple

prepare and motivate our workforce for the digital change. These coaches apply

awards evidence PUMA’s attractiveness.

agile working methods, can pass on their knowledge to other colleagues on site

and are also available as experts on the subject. In addition to the management

The digitalization, the related simplification and acceleration of business proces-

content already available on the ILP (International Leadership Program), we send

ses made further progress. "Workday", one of the leading human capital ma-

our staff on external and internal training courses to qualify in agile methods

nagement systems, which we introduced globally in 2017, contains the modules

such as Scrum, Design Thinking and KanBan. The high level of interest and stea-

"recruiting", "talent and performance", "time recording and absence manage-

dily increasing numbers of staff attending these courses show that we are on the

ment" and "learning". As a result, only one software solution is used for major

right path.

parts of important personnel processes. In 2019, we continued to link Workday

with other systems and have steadily increased the number of employees and

applicants who regularly and actively use the system. The evaluation of our cen-

trally available global data enables us to conduct large-scale analyses. The re-

sulting conclusions offer a solid basis for continuous process improvement and

managers.

decisions.

To provide adequate entry-level and development opportunities to talented indivi-

duals at all levels, including the range of different apprenticeships and dual-stu-

dy programs, we also promote the systematic training of our professionals and

To ensure a common understanding of leadership throughout the company, all

managers complete our international leadership training program comprising

Our aim is to help each of our employees to develop in an international environ-

the seminar series ILP and ILP . The program helps to develop participants over

ment and at the same time successfully and sustainably retain them in our com-

a longer period, provides them with the opportunities to apply the newly acquired

pany. Based on the Workday software, a systematic succession plan is created as

knowledge in practice between the individual modules and to share knowledge

part of talent management in addition to the performance assessment and tar-

with other seminar participants to learn from each other. Our goal is to provide

get-setting. We identify the talent available within the group as part of annual

our staff with the required skills and expertise to successfully lead their teams.

performance reviews and foster talent development based on individual develop-

They receive intensive training and coaching, including interactive learning, role-

ment plans. This type of talent management means that we can offer our em-

play simulations and best practice learning, as well as joint projects. The digita-

ployees attractive career and development opportunities.

lization and the changing work environment lead to new challenges for mana-

gers in particular. The key topics are therefore coaching, mindful leadership and

agile working methods. The training course “from employee to manager” prepa-
res staff that are about to take on a management role for the first time. In additi-
on to the training module, the program also offers individual coaching.

tensive preparation for the next step in their careers by taking on interdisciplina-
ry projects and tasks, targeted training courses, mentoring, and coaching as well
as job rotations. Increased visibility to upper management, the creation of cross-
functional cooperation and establishing a strong network are also important
components of this program.

In the past year, we conducted a global employee survey with the help of the ex-
ternal provider Wills Towers Watson in order to get feedback from our employees
and involve them in the design of their work environment. More than 9,750 em-
ployees participated and used the opportunity to share their opinion on their
workplace and work life. We are proud of 91% employee engagement and appre-
ciate the high level of commitment of our employees and their loyalty to the
brand. The category “change” received the lowest positive responses with 63%
and was identified as an important future area of action. The results were com-
municated on a global, local and departmental level and necessary improvement
measures were defined.

WORKS COUNCIL

The trust-based collaboration with the Works’ Councils is an important part of
our corporate culture. In 2019, the European Works Council of PUMA SE repre-
sented employees from 15 European countries and had 18 members. The Ger-
man Works Council of PUMA SE has 15 members and represents the employees
of the PUMA Group in Germany. A designated member of the Works Councils re-
presents the interests of employees with disabilities.

COMPENSATION

We at PUMA offer our employees a targeted and competitive compensation sys-
tem, which consists of several components. In addition to a fixed base salary, the
PUMA bonus system, profit-sharing programs and various social benefits and
intangible benefits form part of a performance-based compensation system. We
also offer long-term incentive programs for the senior management level that
honor the sustainable development and performance of the business. The bonus
system is transparent and globally standardized. Incentives are exclusively linked
to company goals.

122

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTMANAGEMENT SYSTEM

our performance in relation to our top
We use a variety of
within
corporate goals. We have defined
finance-related areas. Our focus therefore is on improving sales, gross profit
margin, and operating result (EBIT). These are the financial control parameters
that are of particular significance. Moreover, we aim to minimize working capital
has
and improve free cash flow. Our Group's
been designed to provide a variety of instruments in order to assess current
business developments and derive future strategy and investment decisions. This
involves the continuous monitoring of key financial indicators within the PUMA
Group and a monthly comparison with budget targets. Any deviations from the
targets are analyzed in detail and appropriate countermeasures are taken in the
event such deviations have a negative impact.

des an adjustment for incoming and outgoing payments that are associated with
investments in companies.

in order to assess the financial position.
We use the indicator
Working capital is essentially the difference between current assets - including
in particular inventories and trade receivables - and current liabilities. Cash and
cash equivalents, the positive and negative market values of derivative financial
instruments and current finance and lease liabilities are not included in working
capital.

Non-financial performance indicators are of only minor importance as control
variables at PUMA.

Changes in net sales are also influenced by
This is
why we also state any changes in sales in Euro, the reporting currency, adjusted
for currency exchange effects in order to provide information that is relevant to
the decision-making process when assessing the revenue position. Currency-
adjusted sales volumes are used for comparison purposes and are based on the
values that would arise if the foreign currencies included in the consolidated fi-
nancial statements were not translated at the average rates for the previous re-
porting year, but were instead translated at the corresponding average rates for
the current year. As a result, currency-adjusted figures are not to be regarded as
a substitute or as superior financial indicators, but should instead always be re-
garded as additional information.

in order to determine the change in cash and
We use the indicator
cash equivalents after deducting all expenses incurred to maintain or expand the
organic business of the PUMA Group. Free cash flow is calculated from the cash
flow from operating activities and investment activities. We also use the indicator
, which goes beyond free cash flow and inclu-

PUMA's working capital is calculated based on the sum of current assets less
the sum of current liabilities. In addition, cash and cash equivalents and positive

The calculation of key financial control parameters that PUMA uses are defined
as follows:

The recognition of net sales is based on the provisions of IFRS 15 Revenue from
contracts with customers.

PUMA's gross profit margin is calculated as cost of sales divided by net sales.
Cost of sales mainly comprise the carrying amounts of inventory that were reco-
gnized as expenses during the reporting period.

PUMA's operating result (EBIT) is the sum of net sales and royalty and commissi-
on income, minus cost of sales and other operating income and expenses
(OPEX). EBIT is defined as operating result, less depreciation and amortization,
provisions and impairment loss, before interest (= financial result) and before ta-
xes. The financial result contains interest income and interest expenses and cur-
rency conversion differences and the income from associated companies in the
previous year. The EBIT margin is calculated as EBIT divided by net sales.

123

indicators to managegrowth and profitability as key targetsPlanning and Management Systemcurrency exchange effects.free cash flowfree cash flow before acquisitionsworking capitalAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORTMANAGEMENT SYSTEM

We use a variety of

our performance in relation to our top

des an adjustment for incoming and outgoing payments that are associated with

corporate goals. We have defined

within

investments in companies.

finance-related areas. Our focus therefore is on improving sales, gross profit

margin, and operating result (EBIT). These are the financial control parameters

We use the indicator

in order to assess the financial position.

that are of particular significance. Moreover, we aim to minimize working capital

Working capital is essentially the difference between current assets - including

and improve free cash flow. Our Group's

been designed to provide a variety of instruments in order to assess current

has

in particular inventories and trade receivables - and current liabilities. Cash and

cash equivalents, the positive and negative market values of derivative financial

business developments and derive future strategy and investment decisions. This

instruments and current finance and lease liabilities are not included in working

involves the continuous monitoring of key financial indicators within the PUMA

capital.

Group and a monthly comparison with budget targets. Any deviations from the

targets are analyzed in detail and appropriate countermeasures are taken in the

event such deviations have a negative impact.

variables at PUMA.

Non-financial performance indicators are of only minor importance as control

Changes in net sales are also influenced by

This is

why we also state any changes in sales in Euro, the reporting currency, adjusted

as follows:

The calculation of key financial control parameters that PUMA uses are defined

The recognition of net sales is based on the provisions of IFRS 15 Revenue from

contracts with customers.

PUMA's gross profit margin is calculated as cost of sales divided by net sales.

Cost of sales mainly comprise the carrying amounts of inventory that were reco-

gnized as expenses during the reporting period.

PUMA's operating result (EBIT) is the sum of net sales and royalty and commissi-

on income, minus cost of sales and other operating income and expenses

(OPEX). EBIT is defined as operating result, less depreciation and amortization,

provisions and impairment loss, before interest (= financial result) and before ta-

xes. The financial result contains interest income and interest expenses and cur-

rency conversion differences and the income from associated companies in the
previous year. The EBIT margin is calculated as EBIT divided by net sales.

for currency exchange effects in order to provide information that is relevant to

the decision-making process when assessing the revenue position. Currency-

adjusted sales volumes are used for comparison purposes and are based on the

values that would arise if the foreign currencies included in the consolidated fi-

nancial statements were not translated at the average rates for the previous re-

porting year, but were instead translated at the corresponding average rates for

the current year. As a result, currency-adjusted figures are not to be regarded as

a substitute or as superior financial indicators, but should instead always be re-

garded as additional information.

We use the indicator

in order to determine the change in cash and

cash equivalents after deducting all expenses incurred to maintain or expand the

organic business of the PUMA Group. Free cash flow is calculated from the cash
flow from operating activities and investment activities. We also use the indicator
, which goes beyond free cash flow and inclu-

PUMA's working capital is calculated based on the sum of current assets less
the sum of current liabilities. In addition, cash and cash equivalents and positive
and negative market values of derivative financial instruments are deducted. The
market values of derivative financial instruments are recognized in the balance
sheet in the items Other Current Assets and Other Current Liabilities not attribu-
table to working capital. Current finance and lease liabilities are also not part of
working capital.

In order to present the impact of the first-time application of IFRS 16 Leases on
the results of operations of the PUMA Group as transparently as possible, we
also present the impact of the new accounting standard on the operating result
before interest (= financial result), taxes and depreciation and amortization
(EBITDA). EBITDA is calculated based on the operating result (EBIT) adding
depreciation and amortization, which may also contain any incurred impairment
expenses relating to property, plant and equipment and financial assets. The
EBITDA margin is calculated as EBITDA divided by net sales.

124

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTindicators to managegrowth and profitability as key targetsPlanning and Management Systemcurrency exchange effects.free cash flowfree cash flow before acquisitionsworking capitalINFORMATION REGARDING THE NON-FINANCIAL REPORT

In accordance with Sections 289b and 315b of the German Commercial Code
(HGB), we are required to make a non-financial declaration for PUMA SE and the
PUMA Group within the Combined Management Report or present a non-financi-
al report external to the Combined Management Report, in which we report on
environmental, social and other non-financial aspects. PUMA has been publis-
hing Sustainability Reports since 2003 under the provisions of the Global Re-
porting Initiative (GRI) and since 2010 has published financial data and key
sustainability indicators in one report. In this context, we report the information
required under Sections 289b and 315b of the HGB in the Sustainability chapter
of our Annual Report. The Non-financial Report for the financial year 2019 will be
available by April 30, 2020, at the latest on the following page of our website: http
s://about.puma.com/en/investor-relations/financial-reports

Furthermore, important sustainability information can be found on PUMA’s web-
site in the section Sustainability at any time: http://about.puma.com/en/sustaina-
bility

125

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTECONOMIC REPORT

GENERAL ECONOMIC CONDITIONS

GLOBAL ECONOMY

According to the winter forecast of the Kiel Institute for the World Economy (ifw
Kiel) dated December 11, 2019, the momentum of the global economy has slo-
wed down in 2019. The experts at ifw Kiel expect global gross domestic product
(GDP) to rise by 3.0% in 2019. This represents a slight decline of 0.2% compared
to the summer forecast. The forecast for 2019 is also 0.7% below the growth in
global GDP in 2018 (3.7%).

In 2019, the global economy was burdened by an intensification of the trade con-
flict between the United States of America and China. The increase in customs
duties and the extension of tariffs to additional product groups has greatly redu-
ced trade between the two countries, leading to greater economic uncertainty in
world trade and weaker industrial production. In the advanced economies, the
overall economic situation continued to deteriorate. In the United States of Ame-
rica, the strong fiscal stimuli, particularly in the form of the tax reform from
2018, have expired. In contrast, the pace of expansion in the euro zone has not
slowed further, primarily due to brisk private consumer demand. In Japan and
the United Kingdom, industrial production even picked up. Overall, the economic
gap between the advanced economies, which had been observed in the previous
year, narrowed in the course of 2019.

In the emerging markets, on the other hand, economic momentum has stabilized
in 2019, as the financial environment in particular has improved. A more expansi-
ve monetary policy and lower interest rates in the United States of America have
led to less devaluation pressure on the currencies in the emerging markets and
enabled a noticeable reduction in key interest rates. However, the economic de-
velopment in the individual emerging markets varies. While GDP growth rates
declined in China and India, Brazil, Russia and the other Asian emerging markets
recorded an increase in the pace of expansion.

SPORTING GOODS INDUSTRY

Despite geopolitical tensions and trade conflicts, the sporting goods industry
continued to grow strongly worldwide in 2019. More exercise and physical activity,
as well as an increasingly healthy and sustainable lifestyle, continued to gain in
importance for an ever-increasing proportion of the world's population. In additi-
on, the popularity of athletic footwear and apparel as an integral part of everyday
fashion ("athleisure") increased. In addition, higher household incomes due to a
stable labor market led to an increase in consumer spending on sporting goods.

126

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTSALES

ILLUSTRATION OF SALES DEVELOPMENT IN 2019 COMPARED TO THE OUTLOOK

PUMA’s 2018 Management Report had predicted a currency-adjusted growth in
net sales of around 10% for the financial year 2019. This forecast was increased
several times throughout the year and PUMA ultimately expected a currency-ad-
justed sales growth of around 15% for the financial year 2019. PUMA was able to
surpass the revised forecast for the financial year 2019, exceeding the originally
planned sales target.

More details on sales development are provided below.

NET SALES

In the financial year 2019, PUMA's net sales grew in the reporting currency, the
Euro, by 18.4% to € 5,502.2 million and, as a result, sales exceeded the € 5 billion
mark for the first time. The currency-adjusted sales growth was 16.7%. All regi-
ons and all product divisions contributed to this development with double-digit
growth.

➔

G.07 SALES

(€ million)

division, sales increased in the reporting currency, the Euro, by
In the
16.8% to € 2,552.5 million. Currency-adjusted sales increased by 15.6%. The
strongest growth was therefore achieved in the Sportstyle, Running and Training,
and Motorsport categories. The share of this division in total net sales fell slightly
from 47.0% in the previous year to 46.4% in 2019.

division, sales increased in the reporting currency, the Euro, by
In the
22.6% to € 2,068.7 million. Currency-adjusted sales increased by 20.5%. As a re-
sult, sales in the Apparel division exceeded the € 2 billion mark for the first time.
The Sportstyle category was the main driver of sales growth. The Running and
Training, and Motorsport categories also contributed to this growth. The share of
the Apparel division increased to 37.6% of Group sales (previous year: 36.3%).

The
division reported an increase in sales in the reporting currency,
the Euro, by 13.5% to € 881.1 million. This corresponds to a currency-adjusted
sales growth of 11.1%. Higher sales, particularly with socks and bodywear, as
well as Cobra golf clubs contributed to this increase in sales. The division's share
in Group sales decreased slightly from 16.7% in the previous year to 16.0% in
2019.

127

FootwearApparelAccessoriesAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORT➔

G.08 SALES BY PRODUCT DIVISIONS

(€ million)

RETAIL BUSINESSES

PUMA’s retail activities include direct sales to our consumers (“Direct to Consu-
mer business”). This includes selling to our customers in PUMA’s own retail
stores, the so-called “Full Price Stores”, “Factory Outlets”, and the e-commerce
business on our own online platforms. Our own retail businesses ensure regional
availability of PUMA products and the presentation of the PUMA brand in an envi-
ronment suitable to our brand positioning.

PUMA’s retail sales increased by 22.0% currency-adjusted to € 1,395.3 million in
the financial year 2019. This corresponds to a share of 25.4% in total sales (pre-
vious year: 24.3%). The increase in sales resulted from both the increase in like-

for-like sales and from the targeted expansion of our portfolio of own retail
stores. In addition to the opening of additional retail stores at selected locations
worldwide, such as on Fifth Avenue in New York, we continued optimizing our
portfolio of own retail stores in the past financial year, which also included mo-
dernizing existing retail stores in line with the "Forever Faster" store concept.
This makes it possible to improve the shopping experience for our customers
even further and to present PUMA products and related technologies in an even
more attractive environment. This strengthens PUMA’s position as a sports
brand.

128

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTOur e-commerce business continued to record far above-average growth in 2019.
This was brought about by, for example, the expansion of the product range in
online stores worldwide and by our targeted sales promotions in the online busi-
ness. In addition, our e-commerce activities on special days in the online busi-
ness, such as Singles’ Day in China, the world’s biggest online shopping day, the
so-called “Black Friday” and “Cyber Monday”, turned out to be particularly
successful.

➔

G.09 RETAIL SALES

LICENSING BUSINESS

For various products (such as watches, eyewear, and fragrances), PUMA issues
licenses authorizing independent partners to design, develop, manufacture, and
sell these products. Sales revenue from license agreements also includes some
distribution licenses for different markets. PUMA's licensing and commission in-
come increased in the financial year 2019 by 53.9% to € 25.1 million. The increa-
se was the result of new collaborations.

129

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTREGIONAL DEVELOPMENT

In the following explanation of the regional distribution of sales, the sales are al-
located to the customer’s actual region (“customer site”). It is divided into three
geographic regions (EMEA, America and Asia/Pacific). A more detailed regional
presentation of the sales according to the registered office of the respective
Group company can be found in chapter 26 in the Notes to the Consolidated Fi-
nancial Statements.

PUMA's net sales increased in the reporting currency, the Euro, by 18.4% in the
financial year 2019. This corresponds to a currency-adjusted sales growth of
16.7% compared to the previous year. All regions contributed to this development
with double-digit growth.

region, sales rose in the reporting currency, the Euro, by 11.2% to
In the
€ 2,001.4 million (currency-adjusted +11.2%). As a result, the EMEA region ex-
ceeded the 2 billion Euro sales mark for the first time. Particularly strong growth
came from Germany, Italy and Spain, which recorded sales growth in the double
digits. Russia, Ukraine and Turkey also developed very well with double-digit
growth rates. The EMEA region accounted for 38.7% of Group sales compared to
36.4% in the previous year.

With regards to product divisions, sales revenue from footwear recorded curren-
cy-adjusted growth of 8.6%. Sales from apparel increased by 14.8% currency-ad-
justed and sales from accessories grew by 10.6% currency-adjusted.

➔

G.10 EMEA SALES

(€ million)

region, sales increased in the reporting currency, the Euro, by
In the
20.6% to € 1,944.0 million. Currency-adjusted sales increased by 17.9%. Both
North America and Latin America contributed with double-digit growth rates to
the increase in sales. While North America recorded positive currency exchange
effects, the weakness of the Argentine Peso compared to the Euro, however, re-
sulted in a noticeably negative currency exchange effect on the sales in the re-
porting currency (Euro). The share of the Americas region in Group sales increa-
sed slightly from 34.7% in the previous year to 35.3% in 2019.

With regards to product divisions, both footwear (currency-adjusted +19.2%) and
apparel (currency-adjusted +21.5%) recorded excellent sales growth compared to
the previous year. Accessories sales were up by 8.8% currency-adjusted.

130

EMEAAmericasAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORT➔

G.11 AMERICAS SALES

(€ million)

In the
region, sales growth was particularly strong. Here, sales in-
creased in the reporting currency, the Euro, by 26.0% to € 1,556.9 million. This
corresponds to a currency-adjusted increase in sales of 22.8%. The main drivers
of growth in the region were Greater China and India in particular, with both
countries recording above-average double-digit growth rates. The share of the
Asia/Pacific region in Group sales increased from 26.6% in the previous year to
28.3% in 2019.

In terms of product divisions footwear (currency-adjusted +20.1%) and apparel
(currency-adjusted +26.0%) as well as accessories (currency-adjusted +21.8%)
developed very well with double-digit growth rates.

➔

G.12 ASIA/PACIFIC SALES

(€ million)

131

Asia/PacificAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORTRESULT OF OPERATIONS

➔

T.01 INCOME STATEMENT

Net sales

Cost of sales

Gross profit

Royalty and commission income

Other operating income and expenses

Operating result (EBIT)

Financial result / income from associated companies

Earnings before tax (EBT)

Taxes on income

Tax rate

Net earnings attributable to non-controlling interests

Net earnings

Weighted average shares outstanding (million)*

Weighted average shares outstanding, diluted (million)*

Earnings per share in €*

Earnings per share, diluted in €*

2019

2018

€ million

+/- %

5,502.2

-2,815.8

2,686.4

25.1

-2,271.3

440.2

-22.6

417.6

-108.6

-26.0%

-46.6

262.4

149.52

1.76

100.0%

-51.2%

48.8%

0.5%

-41.3%

8.0%

-0.4%

7.6%

-2.0%

-0.8%

4.8%

4,648.3

-2,399.0

2,249.4

16.3

-1,928.4

337.4

-24.0

313.4

-83.6

-26.7%

-42.4

187.4

149.47

1.25

100.0%

-51.6%

48.4%

0.4%

-41.5%

7.3%

-0.5%

6.7%

-1.8%

-0.9%

4.0%

18.4%

17.4%

19.4%

53.9%

17.8%

30.5%

-5.8%

33.3%

30.0%

10.0%

40.0%

0.0%

40.0%

132

* The earnings per share and the number of outstanding shares in the prior-year period were retrospectively adjusted to the stock split, carried out in Q2 2019, at a ratio of 1:10

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTIMPACT OF THE FIRST-TIME APPLICATION OF IFRS 16 LEASES

The following explanations refer to the impact of the first-time application of the
new accounting standard IFRS 16 Leases as of 1 January 2019. As part of the
transition to the new accounting for leases, PUMA elected to use the partial ex-
emption provision and has not performed a retrospective adjustment of previous
years' numbers. The comparative numbers presented in the IFRS Income State-
ment above for the financial year 2018 remained unchanged and have been cal-
culated based on the previous accounting standard for leases in accordance with
IAS 17.
We will therefore present below the impact of the first-time application of IFRS
16 on the results of operations of the PUMA Group in the financial year 2019 to
ensure in this way a full comparability with the reported numbers in the previous
year.
The first-time application of IFRS 16 in the financial year 2019 had a positive ef-
fect on the operating result (EBIT) in the amount of € +19.2 million. This was cau-
sed by a decrease in rental expenses by € 167.3 million and an increase in depre-
ciation relating to the rights of use recognized in the balance sheet of
€ 148.1 million. Taking the interest effects (€ -29.7 million) and deferred tax ef-
fects (€ +2.8 million) into account, there was overall a slightly negative effect on
the consolidated net earnings in the amount of € -7.7 million in the financial year
2019. In relation to the earnings per share and the diluted earnings per share,
this corresponds to a decrease of € -0.05.
Please refer to the Notes to the Consolidated Financial Statements, chapter 1
General for a detailed description of the new accounting standards and the ef-
fects of the first-time application of IFRS 16 Leases.

financial year 2019.
The forecasts for the operating result were adjusted upward several times
throughout the year, and PUMA now expected an operating result (EBIT) within a
range of between € 420 million and € 430 million. In accordance with previous
forecasts, the Management Board continued to expect a significant improvement
in net earnings for the financial year 2019.

PUMA was able to fully achieve the increased forecasts in 2019, and even slightly
exceed them with regard to the operating result. This means that PUMA slightly
exceeded the originally targeted improvement in operating result for 2019. More
details on earnings development are provided below.

GROSS PROFIT MARGIN

PUMA's gross profit in the financial year 2019 increased by 19.4% from
€ 2,249.4 million to € 2,686.4 million. The gross profit margin improved by 40 ba-
sis points from 48.4% to 48.8%. The main drivers for the development of the
gross profit margin were the product mix and the regional mix and a higher pro-
portion of our own retail sales. A slightly positive currency effect also contributed
to the improved gross profit margin.
The gross profit margin in the Footwear division increased from 45.8% in the pre-
vious year to 46.4% in 2019. The Apparel gross profit margin improved from
50.9% to 51.1% and in Accessories, it also increased from 50.3% to 50.5%.

ILLUSTRATION OF EARNINGS DEVELOPMENT IN 2019 COMPARED TO THE OUTLOOK

In the outlook of the 2018 Annual Report, PUMA forecasted a slight improvement
in the gross profit margin for the financial year 2019. PUMA expected a slightly
weaker increase of other operating income and expenses (OPEX) compared to
net sales. The forecast for the operating result (EBIT) was within a range of bet-
ween € 395 million and € 415 million. This forecast already included the impact
of the application of the new accounting rules for leases in accordance with IFRS
16. In addition, a significant improvement in net earnings was expected for the

133

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT➔

G.13 GROSS PROFIT/GROSS PROFIT MARGIN

➔

G.14 OPERATING EXPENSES

(% of sales)

OTHER OPERATING INCOME AND EXPENSES

In the financial year 2019, further targeted expenditures were made for marke-
ting and investments in our own retail to position PUMA as the fastest sports
brand in the world and to increase PUMA’s brand heat. Investments in retail were
also made to have an even more attractive presentation of PUMA products and
related innovations and technologies. In addition to investments in the moder-
nization of our own retail stores, many additional retail stores were also opened
at select locations across the globe in 2019, such as on Fifth Avenue in New York.
Moreover, further progress was made in modernizing our IT infrastructure. The
strong increase in sales has also caused an increase in sales-related costs, par-
ticularly in the logistics area. This led to an increase in operating income and ex-
penses
in the financial year 2019 of 17.8% from € 1,928.4 million to
€ 2,271.3 million. As a percentage of sales, the cost ratio improved from 41.5% to
41.3% due to the slightly lower increase of those expenses. The consistent focus
on the strict cost control continued to be a top priority for PUMA, and the achie-
ved operating leverage, reflected in the decrease of the cost ratio by 0.2%, signifi-
cantly contributed to the improved profitability and achievement of the financial
goals in 2019.

Within sales expenses, the expenses for marketing/retail grew by 19.4% from
€ 931.2 million to € 1,112.1 million. This development is primarily connected to
the consistent implementation of the “Forever Faster” brand campaign and the
increased number of own retail stores. At 20.2% of sales, the cost ratio remained
almost unchanged compared to the previous year. Other sales expenses, which
mainly include sales-related costs and transport costs, increased by 19.7% to
€ 709.2 million. This increase is primarily due to a higher number of own retail
stores and higher sales-related expenses in the e-commerce area. The cost ratio
of the other sales expenses was 12.9% of sales in 2019.

Research and development/ product management expenses increased by 16.9%
to € 114.3 million compared to the previous year and the cost ratio remained sta-
ble at 2.1%. Other operating income in the past financial year amounted to
€ 4.2 million and consisted primarily of income arising from the release of provi-
sions for purchase price liabilities and income from the sale of non-current as-
sets. Administrative and general expenses increased in 2019 by 3.6% from
€ 328.1 million to € 340.0 million. The cost ratio of administrative and general
expenses decreased accordingly from 7.1% to 6.2%. Depreciation and amortizati-
on is included in the relevant costs and total € 246.4 million (previous year:
€ 81.5 million). The increase year-on-year is mainly the result from the deprecia-
tion of rights of use assets in relation with the first-time application of IFRS 16
Leases.

134

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTRESULT BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)

The result before interest (= financial result), taxes, depreciation and amortizati-
RESULT BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)
on increased by 63.7% in the financial year 2019 from € 419.5 million to
The result before interest (= financial result), taxes, depreciation and amortizati-
€ 686.6 million. The increase was positively impacted in the amount of
on increased by 63.7% in the financial year 2019 from € 419.5 million to
€ 167.2 million by the first-time application of the new accounting standard for
€ 686.6 million. The increase was positively impacted in the amount of
leases (IFRS 16). Without this effect from the first-time application of IFRS 16,
€ 167.2 million by the first-time application of the new accounting standard for
PUMA's EBITDA would have improved by around € 100 million or 23.8% to
leases (IFRS 16). Without this effect from the first-time application of IFRS 16,
€ 519.4 million year-on-year.
PUMA's EBITDA would have improved by around € 100 million or 23.8% to
€ 519.4 million year-on-year.

OPERATING RESULT (EBIT)

In the financial year 2019, the operating result increased by 30.5% from
OPERATING RESULT (EBIT)
€ 337.4 million in the previous year to € 440.2 million. This result is slightly
In the financial year 2019, the operating result increased by 30.5% from
above the adjusted EBIT forecast within a range of between € 420 million and
€ 337.4 million in the previous year to € 440.2 million. This result is slightly
€ 430 million. The significant improvement in profitability in 2019 resulted from
above the adjusted EBIT forecast within a range of between € 420 million and
the strong sales growth combined with the slight improvement in gross profit
€ 430 million. The significant improvement in profitability in 2019 resulted from
margin and the slightly lower increase in other operating income and expenses
the strong sales growth combined with the slight improvement in gross profit
compared to sales. The EBIT margin rose accordingly from 7.3% in the previous
margin and the slightly lower increase in other operating income and expenses
year to 8.0%.
compared to sales. The EBIT margin rose accordingly from 7.3% in the previous
year to 8.0%.

➔
➔

G.15 OPERATING RESULT - EBIT
G.15 OPERATING RESULT - EBIT

FINANCIAL RESULT

The financial result improved from overall € -24.0 million in the previous year to
FINANCIAL RESULT
€ -22.6 million in 2019, despite the additional interest expense of € 29.7 million
The financial result improved from overall € -24.0 million in the previous year to
from the compounding of lease liabilities in connection with the new accounting
€ -22.6 million in 2019, despite the additional interest expense of € 29.7 million
standard for leases (IFRS 16). This positive development is primarily the result of
from the compounding of lease liabilities in connection with the new accounting
gains from currency conversion differences of € 10.2 million in 2019, compared
standard for leases (IFRS 16). This positive development is primarily the result of
to a loss from the currency conversion of € -14.4 million in the previous year. In
gains from currency conversion differences of € 10.2 million in 2019, compared
addition, interest income of € 4.0 million in the previous year increased to
to a loss from the currency conversion of € -14.4 million in the previous year. In
€ 7.2 million in 2019, and interest expenses fell from € 14.6 million in the pre-
addition, interest income of € 4.0 million in the previous year increased to
vious year to € 13.9 million this year.
€ 7.2 million in 2019, and interest expenses fell from € 14.6 million in the pre-
vious year to € 13.9 million this year.

135

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTEARNINGS BEFORE TAX (EBT)

In the financial year 2019, PUMA generated earnings before taxes of € 417.6 mil-
lion. This corresponds to an increase of 33.3% year-on-year (€ 313.4 million). Tax
expenses were € 108.6 million compared to € 83.6 million in the previous year,
and the tax ratio decreased slightly from 26.7% to 26.0% in 2019.

NET EARNINGS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS

Net earnings attributable to non-controlling interests relate to companies in the
North American market, in each of which the same shareholder holds a minority
stake. The earnings attributable to this shareholder increased by 10.0% to
€ 46.6 million in the financial year 2019 (previous year: € 42.4 million). These
companies concern PUMA North America and PUMA United Canada, which were
created in the past financial year from a merger and renaming of the companies,
Janed, PUMA Accessories and PUMA Kids Apparel. The business purpose of the-
se companies is the sale of socks, bodywear and children's apparel on the North
American market.

NET EARNINGS

Consolidated net earnings increased in the financial year 2019 by 40.0% from
€ 187.4 million to € 262.4 million. The significant improvement in net earnings
mainly resulted from the strong sales growth combined with the improvement in
the gross profit margin and operating leverage. The improved financial result and
a slightly lower tax rate also had a positive effect on the net earnings in 2019. Ta-
king the stock split at a ratio of 1:10 into account, the earnings per share and di-
luted earnings per share increased accordingly by 40.0% from € 1.25 in the pre-
vious year to € 1.76 in 2019.

136

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTDIVIDENDS

The Management Board and the Supervisory Board will propose to the Annual
General Meeting on May 7, 2020, to distribute a dividend of € 0.50 per share for
the financial year 2019 from PUMA SE’s net profit. This corresponds to an overall
increase in the dividend or dividend payout of 42.8% in 2019 compared to the pre-
vious year. The payout ratio for financial year 2019 is 28.5% of consolidated net
earnings. This is in accordance with PUMA SE’s dividend policy, which foresees a
payout ratio of 25% to 35% of consolidated net earnings. The payment of the divi-
dend is to take place in the days after the Annual General Meeting that decides
on the distribution. A dividend of € 0.35 per share was distributed for the pre-
vious year, taking into account the 1:10 stock split.

➔

G.16 EARNINGS / DIVIDEND PER SHARE

(in €)

* Earnings per share and the number of outstanding shares for the prior periods were adjusted retroac-
tively to the 1:10 stock split carried out in the second quarter of 2019
** one/time special dividend

137

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTNET ASSETS AND FINANCIAL POSITION

➔

T.02 BALANCE SHEET

Cash and cash equivalents

Inventories

Trade receivables

Other current assets (working capital)

Other current assets

Current assets

Deferred taxes

Right-of-use assets*

Other non-current assets

Non-current assets

Total assets

Current financial liabilities

Trade payables

Other current liabilities (working capital)

Current lease liabilities*

Other current liabilities

Current liabilities

Deferred taxes

Pension provisions

Non-current lease liabilities*

Other non-current liabilities

Non-current liabilities

Shareholders' equity

Total liabilities and shareholders' equity

Working capital

- in % of sales

* Right-of-use assets / lease liabilities due to the first-time application of IFRS 16 Leases as of January 1, 2019

12/31/2019

12/31/2018

€ million

+/- %

11.8%

25.4%

14.0%

4.5%

1.0%

56.7%

5.4%

16.4%

21.5%

43.3%

100.0%

0.2%

19.3%

12.0%

3.3%

0.8%

35.6%

1.2%

0.8%

13.7%

4.8%

20.5%

43.9%

100.0%

518.1

1,110.2

611.7

196.0

45.2

2,481.2

237.7

719.0

940.3

1,897.0

4,378.2

10.2

843.7

524.9

144.8

35.3

1,558.9

53.0

34.1

600.5

211.4

899.0

1,920.3

4,378.2

549.4

10.0%

14.5%

28.5%

17.3%

5.9%

2.3%

68.4%

6.5%

0.0%

25.2%

31.6%

100.0%

0.6%

22.0%

13.9%

0.0%

0.7%

37.3%

1.5%

0.9%

0.2%

6.4%

9.0%

53.7%

100%

463.7

915.1

553.7

187.7

72.6

2,192.8

207.6

0.0

806.8

1,014.4

3,207.2

20.5

705.3

447.3

0.8

21.3

1,195.2

47.7

28.9

7.5

205.7

289.7

1,722.2

3,207.2

503.9

10.8%

11.7%

21.3%

10.5%

4.4%

-37.8%

13.2%

14.5%

–

16.5%

87.0%

36.5%

-50.3%

19.6%

17.3%

–

65.7%

30.4%

11.0%

18.1%

–

2.8%

210.3%

11.5%

36.5%

9.0%

138

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT
IMPACT OF THE FIRST-TIME APPLICATION OF IFRS 16 LEASES

The following explanations refer to the impact of the first-time application of the
new accounting standard IFRS 16 Leases as of January 1, 2019. As a result of the
new standard all leases must be accounted for in the form of a right-of-use asset
on the asset side of the balance sheet and a related current or non-current lease
liability on the liabilities side of the balance sheet. As part of the transition to the
new accounting for leases, PUMA elected to use the partial exemption provision
and has not performed a retrospective adjustment of the previous year’s figures.
In the balance sheet above, the rights-of-use relating to assets and the lease lia-
bilities were added as additional balance sheet items. The previous year's figures
remained unchanged. In order to ensure full comparability with the reported pre-
vious year's figures, the impacts of the first-time application of IFRS 16 on PUMA
Group’s net assets in the financial year 2019 will be presented and explained
below.

The recognition in the balance sheet of the right-of-use assets in the amount of
€ 719.0 million and the related current lease liabilities (€ 144.8 million) and non-
current lease liabilities (€ 600.5 million) resulted in a significant increase of the
balance sheet total as of the balance sheet date on December 31, 2019. The
right-of-use assets refer to own retail stores totaling € 419.6 million, warehou-
ses and distribution centers totaling € 175.7 million and other lease items, main-
ly technical equipment and machines and motor vehicles totaling € 123.7 million
as of December 31, 2019.

The significantly increased balance sheet total specifically resulted in a decrease
of the equity ratio. The equity ratio, calculated as a quotient of equity and balance
sheet total, decreased from 53.7% in the previous year to 43.9% as of December
31, 2019. In absolute numbers, the equity of the PUMA Group, however, increased
by 11.5% from € 1,722.2 million to € 1,920.3 million. If the lease liabilities reco-
gnized in the balanced sheet were disregarded for comparison purposes, the
equity ratio as of December 31, 2019 would be almost unchanged at 52.9%.

The new leasing standard analogously caused a significant increase of the debt
ratio, calculated as the quotient of debt capital to equity. The ratio of debt to equi-
ty was at 86% at the end of 2018. Due to the recognition of the lease liabilities on

the balance sheet, the debt ratio has now increased to 128% as of December 31,
2019. If, for comparison purposes, the lease liabilities recognized on the balance
sheet were disregarded, this would result in an almost unchanged debt ratio of
89.2% as of December 31, 2019.

Please refer to the Notes to the Consolidated Financial Statements, chapter 1
General for a detailed description of the new accounting standards and the ef-
fects of the first-time application of IFRS 16 Leases.

139

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTEQUITY RATIO

PUMA continues to have an extremely solid capital base. As of the balance sheet
date, the shareholders' equity of the PUMA Group increased by 11.5% from
€ 1,722.2 million in the previous year to € 1,920.3 million as of December 31,
2019. Due to the previously explained impact of the first-time application of IFRS
16 Leases, the balance sheet total rose by 36.5% from € 3,207.2 million in the
previous year to € 4,378.2 million. This resulted in a calculated decrease of the
equity ratio from 53.7% in the previous year to 43.9% as of December 31, 2019.

➔

G.17 TOTAL ASSETS / EQUITY RATIO

spective financial year, this corresponds to a decrease of the working capital ra-
tio from 10.8% in the previous year to 10.0% as of year-end 2019.

Inventories increased by 21.3% from € 915.1 million to € 1,110.2 million as of the
balance sheet date. This increase is related to early purchase of products to ba-
lance supplier capacities and to secure product availability for our customers. In
addition, a higher number of own retail stores and the expected increase in sales
resulted in higher inventory. Trade receivables increased by 10.5% from
€ 553.7 million to € 611.7 million due to the active receivables management.
Other current assets included in working capital increased slightly by 4.4% from
€ 187.7 million to € 196.0 million.

On the liabilities side, trade payables increased by 19.6% from € 705.3 million to
€ 843.7 million. Other current liabilities included in working capital increased by
17.3% from € 447.3 million to € 524.9 million. The increase in other current liabi-
lities was primarily the result of higher customer bonus and warranty provisions
due to the strong sales growth.

➔

G.18 WORKING CAPITAL

WORKING CAPITAL

Despite the significant increase in net sales and the increased number of our
own retail stores, working capital rose only by 9.0% in the past financial year
from € 503.9 million to € 549.4 million. As a percentage of total sales of the re-

140

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTOTHER ASSETS AND OTHER LIABILITIES

Other current assets, which only include the positive market value of derivative
financial instruments, decreased compared to the previous year from € 72.6 mil-
lion to € 45.2 million.

Right-of-use assets of € 719.0 million and related current and non-current lease
liabilities resulted from the first-time application of IFRS 16 Leases. The right-
of-use assets referred to own retail stores totaling € 419.6 million, warehouses
and distribution centers totaling € 175.7 million, and other leased items, mainly
technical equipment, machines and motor vehicles totaling € 123.7 million as of
December 31, 2019.

Other non-current assets, which mainly comprise intangible assets and property,
plant and equipment, rose as a consequence of the investment in non-current
assets by 16.5% from € 806.8 million to € 940.3 million.

Other current liabilities, which include the negative market value of derivative fi-
nancial instruments, increased compared to the previous year from € 21.3 milli-
on to € 35.3 million.

Pension provisions increased from € 28.9 million in the previous year to
€ 34.1 million.

Other non-current liabilities, which mainly include the promissory note loans to-
taling € 160.0 million, were € 211.4 million on the balance sheet date (previous
year: € 205.7 million).

141

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTCASH FLOW

➔

T.03 CASH FLOW STATEMENT

Earnings before tax (EBT)

Financial result and non-cash affected expenses and income

Gross cash flow

Change in current assets, net

Tax payments and dividends received

Net cash from operating activities

Payments for acquisitions/ proceeds from the sale of shareholdings

Payments for investing in fixed assets

Other investing activities

Net cash used in investing activities

Free cash flow

Free cash flow (before acquisitions)

- in % of sales

Dividend payments to equity holders of the parent company

Dividend payments to non-controlling interests

Proceeds from borrowings

Repayments of borrowings

Repayments of lease liabilities

Other proceeds/ payments

Net cash used in financing activities

Exchange rate-related changes in cash and cash equivalents

Changes in cash and cash equivalents

Cash and cash equivalents at the beginning of the financial year

Cash and cash equivalents at the end of the financial year

2019

€ million

2018

€ million

417.6

287.2

704.8

-44.5

-111.5

548.8

-1.2

-218.4

0.8

-218.7

330.0

331.2

6.0%

-52.3

-18.6

0.0

-17.6

-140.8

-43.6

-272.9

-2.8

54.3

463.7

518.1

313.4

84.7

398.0

-38.0

-81.9

278.1

23.5

-130.2

1.4

-105.3

172.9

149.4

3.2%

-186.8

-55.7

145.2

-16.6

-1.8

-12.6

-128.3

4.2

48.7

415.0

463.7

+/- %

33.3%

–

77.1%

17.3%

36.1%

97.3%

–

67.7%

-43.6%

107.8%

90.9%

121.7%

-72.0%

-66.6%

-100.0%

5.8%

–

112.7%

–

11.5%

11.7%

142

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTIMPACT OF THE FIRST-TIME APPLICATION OF IFRS 16 LEASES

NET CASH FROM OPERATING ACTIVITIES

The first-time application of the new accounting standard IFRS 16 Leases as of
January 1, 2019 resulted in a significant change in the presentation of lease pay-
ments in the cash flow statement. Previously, all lease payments from operating
leases were allocated to net cash from operating activities in accordance with
IAS 17. Starting in financial year 2019, lease payments were recognized as part of
net cash used in financing activities since these payments are now considered to
be repayments of lease liabilities. This consequently also affected free cash flow
which is calculated as the sum of net cash from operating activities and investing
activities. In order to ensure full comparability with the unadjusted previous
year’s figures, the impacts of the first-time application of IFRS 16 on the PUMA
Group’s cash flow statement in the financial year 2019 will be presented and ex-
plained below.
In relation to the depreciation of right-of-use assets recognized in the balance
sheet and the interest expenses linked to lease liabilities, the first-time applicati-
on of IFRS 16 in the financial year 2019 led to an increase in gross cash flow and
net cash from operating activities of € 170.5 million. This is because the depre-
ciation and interest are non-cash expenses. This also resulted in an increase of
free cash flow and free cash flow before acquisitions of € 170.5 million. Lease
payments in the financial year 2019 were allocated to net cash used in financing
activities. This cash outflow was accordingly charged an additional € 170.5 milli-
on compared to the previous year.
The first-time application of IFRS 16 had no impact on cash and cash equival-
ents.
Please refer to the Notes to the Consolidated Financial Statements, chapter 1
General for a detailed description of the new accounting standards and the ef-
fects of the first-time application of IFRS 16 Leases.

The increased earnings before taxes (EBT +33.3%) and the significantly increased
non-cash expenses, particularly with the depreciation of the right-of-use assets
recognized on the balance sheet in the financial year 2019, resulted in an increa-
se in gross cash flow of 77.1% from € 398.0 million to € 704.8 million.

➔

G.19 GROSS CASH FLOW

(€ million)

The continuing strong focus on working capital management significantly contri-
buted to the fact that the cash outflow from the change in net current assets*
only increased from € -38.0 million in the previous year to € -44.5 million in the
financial year 2019. Cash outflow from tax payments and dividends received in-
creased from € -81.9 million in the previous year to € -111.5 million in the finan-
cial year 2019. Overall, this resulted in an improvement of net cash from opera-
ting activities by € 270.7 million from € 278.1 million to € 548.8 million. Even wi-
thout the aforementioned one-off effect of € 170.5 million relating to the first-
time application of IFRS 16 Leases, net cash from operating activities would have
improved by slightly more than € 100 million in 2019 compared to the previous
year.

* Net current assets include normal working capital line items plus current assets and liabilities, which
are not normally part of the working capital calculation. Current lease liabilities are not part of the net
current assets.

143

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTNET CASH USED IN INVESTING ACTIVITIES

Net cash used in investing activities rose from € 105.3 million to € 218.7 million
in the financial year 2019. The investments in fixed assets increased in accor-
dance with our investment plan from € 130.2 million in the previous year to
€ 218.4 million in 2019. The increase referred primarily to investments in own re-
tail stores and into the new multi-channel distribution center in Germany. In ad-
dition, investments into the improvement of the IT infrastructure continued.
Payments for acquisitions in 2019 were related to the acquisition of the remai-
ning shares of the Genesis Group International Ltd.

ons was 6.0% of sales compared to 3.2% in the previous year.
Without the one-off positive effect of € 170.5 million as a result of the first-time
application of IFRS 16 Leases, the free cash flow before acquisitions would have
improved by 7.6% or € 11.3 million in 2019 compared to the previous year.

➔

G.20 FREE CASH FLOW (BEFORE ACQUISITIONS)

(€ million)

FREE CASH FLOW BEFORE ACQUISITIONS

The free cash flow before acquisitions is the balance of the cash inflows and out-
flows from operating and investing activities. In addition, an adjustment is made
for incoming and outgoing payments that relate to shareholdings.
Free cash flow before acquisitions increased from € 149.4 million in the previous
year to € 331.2 million in the financial year 2019. Free cash flow before acquisiti-

144

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTNET CASH USED IN FINANCING ACTIVITIES

Net cash used in financing activities mainly includes € 52.3 million in dividend
payments to shareholders of PUMA SE in the financial year 2019 (previous year:
€ 186.8 million) and dividend payments to non-controlling interests of € 18.6 mil-
lion (previous year: € 55.7 million). Furthermore, the net cash used in financing
activities for the first time contains the repayment of lease liabilities and related
interest expenses totaling € 170.5 million. Overall, the net cash used in financing
activities was € 272.9 million in 2019 (previous year: cash outflows of
€ 128.3 million).
Without the one-off negative effect of € 170.5 million as a result of the first-time
application of IFRS 16 Leases, net cash used in financing activities would have
decreased by € 25.9 million in 2019 compared to the previous year.

As of December 31, 2019, PUMA had cash and cash equivalents of € 518.1 milli-
on, an increase of 11.7% compared to the previous year (€ 463.7 million). The
PUMA Group also had credit lines totaling € 687.6 million as of December 31,
2019 (previous year: € 691.9 million). Unutilized credit lines totaled € 514.1 milli-
on on the reporting date, compared to € 501.0 million in the previous year.

145

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTSTATEMENT REGARDING THE BUSINESS DEVELOPMENT AND THE OVERALL SITUATION OF THE GROUP

Overall, we are very satisfied with the business and economic development of the
PUMA Group in the past financial year. In 2019, PUMA was able to fully achieve or
even slightly exceed its financial targets, which had already been raised during
the year. We owe this in particular to the further consistent implementation of
our "Forever Faster" corporate strategy. We have therefore continued to make
targeted investments in marketing and concluded contracts with internationally
renowned football clubs, such as Manchester City and Valencia CF, to strengthen
our position as a sports brand and further increase our brand heat. Moreover, the
strategic focus on the further improvement of our product range for women and
the return to basketball have significantly contributed to the successful business
performance in 2019. The opening of our new flagship store on Fifth Avenue in
New York and the project launch of our new multi-channel distribution centers in
Germany and the U.S. represented additional milestones in PUMA's organizatio-
nal development in the past financial year.

PUMA was again able to record a strong growth in sales with a currency-adjusted
sales growth of 16.7% in 2019. All regions and all product divisions contributed to
this development with double-digit growth. In 2019, we were also once again able
to make significant improvements in terms of profitability. In 2019, the operating
result (EBIT), net earnings and earnings per share increased by more than 30%
compared to the previous year. In addition to the strong sales growth, this is pri-
marily due to the improvement in the gross profit margin and also to the decrea-
se in the cost ratio of other operating expenses. In the past financial year, the
operating result of € 440.2 million was even slightly above our forecast of € 420
million to € 430 million, which had been raised during the year. Earnings per

share rose by 40% from € 1.25 to € 1.76 compared to the previous year. This me-
ans we fully achieved and even slightly exceeded our profitability targets in the
past financial year.

With regards to the balance sheet, we believe that PUMA has continued to have
an extremely solid capital base. On the balance sheet date, the equity of the
PUMA Group was more than € 1.9 billion (previous year: € 1.7 billion) and the
equity ratio was just under 44%. Furthermore, the consistent focus on working
capital management contributed to the fact that working capital increased by
only 9% compared to the previous year despite the significant increase in sales.
The increase in earnings before taxes (EBT) and the working capital management
in the past financial year also contributed to a significant improvement in cash
flow. Free cash flow before acquisitions improved in 2019 by 7.6% or € 11.3 milli-
on to € 331.2 million, even if the one-off positive effect of € 170.5 million from
the first-time application of IFRS 16 is disregarded. Cash and cash equivalents
amounted to € 518.1 million on the balance sheet date (previous year: € 463.7
million).

As a result, the asset, financial and income situation of the PUMA Group is over-
all solid at the time the Combined Management Report was prepared. This
enables the Management Board and the Supervisory Board to propose to the An-
nual General Meeting on May 7, 2020, a dividend of € 0.50 per share for the fi-
nancial year 2019. This corresponds to a payout ratio of 28.5% in relation to the
consolidated net earnings and is in line with our dividend policy.

146

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTCOMMENTS ON THE FINANCIAL STATEMENTS OF PUMA SE
IN ACCORDANCE WITH THE GERMAN COMMERCIAL CODE
(HGB)

PUMA SE’s financial statements have been prepared pursuant to the rules of the
German Handelsgesetzbuch (HGB - German Commercial Code).

PUMA SE is the parent company of the PUMA Group. PUMA SE's results are si-
gnificantly influenced by the directly and indirectly held subsidiaries and share-
holdings. The business development of PUMA SE is essentially subject to the
same risks and opportunities as the PUMA Group.

PUMA SE is responsible for wholesale business in the DACH region, consisting of
the home market of Germany, Austria, and Switzerland. Furthermore, PUMA SE
is also responsible for the pan-European distribution for individual key accounts
and sourcing products from European production countries as well as global li-
censing management. In addition, PUMA SE acts as a holding company within
the PUMA Group and is as such responsible for international product develop-
ment, merchandising, international marketing, the global areas of finance, ope-
rations and PUMA’s strategic direction.

RESULTS OF OPERATIONS

➔

T.04 PROFIT AND LOSS STATEMENT (GERMAN GAAP, HGB)

Net sales

Other operating income

Material Expenses

Personnel Expenses

Depreciation

Other operating expenses

Total expenses

Financial Result

Income before taxes

Income Tax

Net income

2019

€ million

722.3

62.1

-233.8

-107.2

-24.8

-560.8

-926.6

223.5

81.3

-12.8

68.5

100.0%

8.6%

-32.4%

-14.8%

-3.4%

-77.6%

-128.3%

30.9%

11.3%

-1.8%

9.5%

2018

€ million

675.3

50.8

-224.9

-101.7

-20.1

-492.1

-838.8

212.9

100.1

-16.8

83.3

+/- %

100.0%

7.5%

-33.3%

-15.1%

-3.0%

-72.9%

-124.2%

31.5%

14.8%

-2.5%

12.3%

7.0%

22.4%

3.9%

5.5%

23.5%

13.9%

10.5%

5.0%

-18.7%

-23.5%

-17.8%

147

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT fell in 2019 by 18.7% from € 100.1 million to € 81.3 million.
amounted to € 12.8 million (previous year: € 16.8 million). The-
se include current income taxes for 2019 totaling € 2.1 million, taxes on income
from previous years of € 0.1 million, and expenditures for foreign withholding ta-
xes on license and dividend payments in 2019 of € 15.8 million. In addition, inco-
me tax reimbursements of € 5.2 million for previous years, after a mutual agree-
in the financial year
ment procedure has been settled, are included.
2019 was € 68.5 million compared to € 83.3 million in the previous year.

rose in the financial year 2019 overall by 7.0% to € 722.3 million. The
increase resulted from both increased product sales and commission income
from license management. Revenue from PUMA SE product sales increased by
7.6% to € 354.6 million. The royalty and commission income included in net sales
increased by 10.7% to € 335.6 million. The other revenue, which mainly consisted
of recharges of costs to affiliated companies was € 32.1 million in 2019 (previous
year: € 42.4 million).

amounted to € 62.1 million in 2019 (previous year:
€ 50.8 million) and includes in particular realized and unrealized gains from cur-
rency conversion related to the measurement of receivables and payables in for-
eign currencies on the balance sheet date.

from material expenses, personnel expenses, depreciation
The total
and other operating expenses increased by 10.5% to € 926.6 million compared to
the previous year (previous year: total € 838.8 million). The increase in material
expenses was associated with the increase in sales. Depreciation increased pri-
marily due to investments in IT and the expansion of the administration building
in Herzogenaurach in the previous year. Other operating expenses increased
compared to the previous year due to higher marketing expenditures as a result
of new sponsoring agreements with clubs and athletes. Furthermore, higher
warehousing and freight costs, in relation to the increase in sales and higher in-
ventory, contributed to the increase in other operating expenses.

improved compared to the previous year by 5.0% to
The
€ 223.5 million. The improvement was due to higher dividends from affiliated
companies, while the income from the transfer of profits from affiliated compa-
nies decreased and expenses from loss transfers increased.

148

Net salesOther operating incomeexpenditurefinancial resultIncome before taxesTaxes on incomeNet incomeAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORTNET ASSETS

➔

T.05 BALANCE SHEET (GERMAN GAAP, HGB)

12/31/2019

12/31/2018

€ million

% € million

% +/- %

Total non-current assets

1,053.7

63.0%

657.9

48.4%

60.2%

Inventories

59.8

3.6%

52.9

3.9%

13.2%

Receivables and other current
assets

504.8

30.2%

576.4

42.4% -12.4%

Cash and cash equivalents

47.2

2.8%

59.5

4.4% -20.6%

Total current assets

611.8

36.6%

688.8

50.6% -11.2%

Other

Total assets

8.0

0.5%

13.9

1.0% -42.5%

1,673.5 100.0%

1,360.6 100.0%

23.0%

Shareholders' equity

582.8

34.8%

564.3

41.5%

3.3%

Accruals / provisions

112.1

6.7%

101.5

7.5%

10.5%

978.6

58.5%

694.5

51.0%

40.9%

Liabilities

Other

, inventories increased by 13.2% to € 59.8 million. By con-
Within
trast, trade receivables and other assets fell by 12.4% to € 504.8 million compa-
red to the previous year. This development is primarily due to the decrease in re-
ceivables from affiliated companies. Cash and cash equivalents decreased by
20.6% to € 47.2 million compared to the previous year.

side, equity increased by 3.3% to € 582.8 million due to the net
On the
income for 2019, taking into account the dividend paid out in 2019. Provisions in-
creased by 10.5% to € 112.1 million compared to the previous year due to higher
provisions for personnel and outstanding invoices. The increase in liabilities by
40.9% to € 978.6 million was mainly the result of an increase in liabilities to affi-
liated companies. Due to this development, the equity ratio fell from 41.5% to
34.8% on the balance sheet date.

FINANCIAL POSITION

➔

T.06 CASH FLOW STATEMENT (GERMAN GAAP, HGB)

2019

2018

€ million

+/- %

0.0

0.0%

0.3

0.0% -100.0%

Net cash from operating activities

27.6

-12.9

> -100%

Total liabilities and shareholders'
equity

1,673.5 100.0%

1,360.6 100.0%

23.0%

increased in 2019 by 60.2% to € 1,053.7 million. The increase
was mainly due to capital increases at the subsidiaries of PUMA SE, leading to an
increase in these investments in affiliated companies. The investments in a new
building with showrooms at the Herzogenaurach location and in IT also contribu-
ted to the increase.

Net cash used in investing
activities

Free cash flow

Net cash from financing activities

Change in cash and cash
equivalents

Cash and cash equivalents at
beginning of the financial year

Cash and cash equivalents at the
end of the financial year

-114.0

-86.4

74.2

-72.7

-85.6

25.7

56.8%

1.0%

>100%

-12.2

-59.9

-79.6%

59.5

47.2

119.4

-50.2%

59.5

-20.6%

149

Non-current assetscurrent assetsliabilitiesAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORT improved to € 27.6 million. This is primarily
the result of a reduction in working capital as of the balance sheet date due to
in-
higher liabilities to affiliated companies.
creased from € -72.7 million to € -114.0 million due to investments in non-cur-
rent assets and equity interests in affiliated companies. Free cash flow remained
nearly unchanged at € -86.4 million compared to the previous year
(€ -85.6 million).

showed a cash inflow of € 74.2 million in 2019
(previous year: € 25.7 million). The cash inflow was mainly due to an increase in
liabilities to affiliated companies. This led to an overall reduction in cash and
cash equivalents from € 59.5 million to € 47.2 million. In addition, PUMA SE has
access to a syndicated credit line of € 350.0 million, which at the balance sheet
date had not been utilized. The credit line is to be used for general corporate fi-
nancing purposes, such as the financing of short-term, seasonal financing needs
from goods purchases. In addition, medium- and long-term funding needs are
covered by a promissory note loan of € 160.0 million (previous year:
€ 160.0 million).

OUTLOOK
For the financial year 2020 we expect an increase of sales at a mid-single-digit
rate and a moderate increase of income before taxes.

150

Net cash from operating activitiesNet cash used in investing activitiesNet cash from financing activitiesAnnual Report 2019 ↗ COMBINED MANAGEMENT REPORTFURTHER INFORMATION

INFORMATION CONCERNING TAKEOVERS

The following information, valid December 31, 2019, is presented in accordance
with Art. 9 p. 1 c) (ii) of the SE Regulation in conjunction with Sections 289a, 315a
German Commercial Code (HGB). Details under Sections 289a, 315a HGB which
do not apply at PUMA SE are not mentioned.

On the balance sheet date, subscribed capital totaled € 150,824,640.00 and was
divided into 150.824.640 no-par-value shares with a proportional amount in the
statutory capital of EUR 1.00 per share. As of the balance sheet date, the Compa-
ny held 1,276,839 treasury shares.

As of December 31, 2019, there was one shareholding in PUMA SE that exceeded
10% of the voting rights. It was held by the Pinault family via several companies
controlled by them (ranked by size of stake held by the Pinault family: Financière
Pinault S.C.A., Artémis S.A.S. and Kering S.A.). The shareholding of Kering S.A. in
PUMA SE amounted to 15.7% of the share capital according to Kering’s press re-
lease from May 16, 2018. The shareholding of Artémis S.A.S. and Kering S.A.
amounts to 44.22% of the share capital according to their voting rights notif-
ication as of May 24, 2018.

Regarding the appointment and dismissal of the members of the Management
Board, reference is made to the applicable statutory requirements of § 84 Ger-
man Stock Corporation Act (AktG). Moreover, Section 7[1] of PUMA SE’s Articles
of Association stipulates that Management Board shall consist of two members

in the minimum; the Supervisory Board determines the number of members in
the Management Board. The Supervisory Board may appoint deputy members of
the Management Board and appoint a member of the Management Board as
chairperson of the Management Board. Members of the Management Board may
be dismissed only for good cause, within the meaning of Section 84[3] of the Ger-
man Stock Corporation Act (AktG) or if the employment agreement is terminated,
in which case a resolution must be adopted by the Supervisory Board with a sim-
ple majority of the votes cast.

Amendments to the Articles of Association of the Company require a resolution
by the Annual General Meeting. Resolutions of the Annual General Meeting re-
quire a majority according to Art. 59 SE Regulation and Sections 133[1], 179 [2]
[1] German Stock Corporation Act (AktG) (i.e. a simple majority of votes and a
majority of at least three quarters of the share capital represented at the time
the resolution is adopted). The Company has not made use of Section 51 SEAG.

The authority of the Management Board to issue shares result from Section 4 of
the Articles of Association and from the statutory provisions:

Authorized Capital

The Management Board shall be authorized with the approval of the Supervisory
Board to increase the share capital of the Company by up to EUR 15,000,000.00
by issuing, once or several times, new no par-value bearer shares against contri-
butions in cash and/or kind until 11 April 2022 (Authorized Capital 2017). In case
of capital increases against contributions in cash, the new shares may be acqui-
red by one or several banks, designated by the Management Board, subject to
the obligation to offer them to the shareholders for subscription (indirect pre-
emption right).

151

Composition of the subscribed capital (Sections 289a [1][1][1], 315a [1][1][3] HGB)Shareholdings exceeding 10% of the voting rights (Sections 289a [1][1][3], 315a[1][1][3] HGB)Statutory provisions and regulations of the Articles of Association on the appoint-ment and dismissal of the members of the Management Board and on amend-ments to the Articles of Association (Sections 289a [1][1][6], 315a [1][1][6] HGB)Authority of the Management Board to issue or repurchase shares (Sections 289a[1][1][7], 315a [1][1][7] HGB)Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTThe shareholders shall generally be entitled to pre-emption rights. However, the
Management Board shall be authorized with the approval of the Supervisory
Board to partially or completely exclude pre-emption rights

al property rights and receivables against the Company or any compa-
nies controlled by it in the sense of Section 17 AktG.

to avoid peak amounts;

in case of capital increases against contributions in cash if the pro-ra-
ted amount of the share capital attributable to the new shares for which
pre-emption rights have been excluded does not exceed 10% of the sha-
re capital and the issue price of the newly created shares is not signifi-
cantly lower than the relevant exchange price for already listed shares
of the same class, Section 186 (3) sentence 4 AktG. The 10% limit of the
share capital shall apply at the time of the resolution on this authorizat-
ion by the Annual General Meeting as well as at the time of exercise of
the authorization. Shares of the Company (i) which are issued or sold
during the term of the Authorised Capital 2017 excluding shareholders’
pre-emption rights directly or respectively applying Section 186 (3) sen-
tence 4 AktG or (ii) which are or can be issued to service option and con-
vertible bonds applying Section 186 (3) sentence 4 AktG while excluding
shareholders’ pre-emption rights during the term of the Authorised Ca-
pital 2017, shall be counted towards said limit of 10%.;

in case of capital increases against contributions in cash insofar as it is
required to grant pre-emption rights regarding the Company’s shares to
holders of option or convertible bonds which have been or will be issued
by the Company or its direct or indirect subsidiaries to such an extent to
which they would be entitled after exercising option or conversion rights
or fulfilling the conversion obligation as a shareholder;

in case of capital increases against contributions in kind for carrying out
mergers or for the (also indirect) acquisition of companies, participation
in companies or parts of companies or other assets including intellectu-

The total amount of shares issued or to be issued based upon this authorization
while excluding shareholders’ pre-emption rights may neither exceed 20% of the
share capital at the time of the authorization becoming effective nor at the time
of exercising the authorization; this limit must include all shares which have
been disposed of or issued or are to be issued during the term of this authorizati-
on based on other authorizations while excluding pre-emption rights or which
are to be issued because of an issue of option or convertible bonds during the
term of this authorization while excluding pre-emption rights.

The Management Board shall be entitled with the approval of the Supervisory
Board to determine the remaining terms of the rights associated with the new
shares as well as the conditions of the issuance of shares.

The Management Board of PUMA SE did not make use of the existing Authorized
Capital 2017 in the current reporting period.

Conditional Capital

The Annual General Meeting of 12 April 2018 has authorized the Management
Board until 11 April 2023 with the approval of the Supervisory Board to issue
once or several times, in whole or in part, and at the same time in different tran-
ches bearer and/or registered convertible bonds and/or bonds with warrants,
and participation rights and/or participating bonds or combinations thereof with
or without maturity restrictions in the total nominal amount of up to EUR
1,000,000,000.00 (Conditional Capital 2018).

152

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTThe share capital is conditionally increased by up to EUR 30,164,920.00 by issue
of up to 30,164,920 new no-par bearer shares. The conditional capital increase
shall only be implemented to the extent that option/conversion rights are exer-
cised or the option/conversion obligations are performed or tenders are carried
out and to the extent that other forms of performance are not applied.

No use has been made of this authorization to date.

Authorization to purchase treasury shares

The resolution adopted by the Annual General Meeting on May 6, 2015 authorized
the company to purchase treasury shares up to a value of 10% of the share capi-
tal until May 5, 2020.

Material financing agreements of PUMA SE with its creditors contain the stan-
dard change-of-control clauses. In the case of change of control the creditor is
entitled to termination and early calling-in of any outstanding amounts.

For more details, please refer to the relevant disclosures in the Notes to the Con-
solidated Financial Statements (chapter 18).

153

Significant agreements of the Company which are subject to a change of controlas a result of a takeover bid and the resulting effects (Section 289a [1][1][8], 315a[1][1][8] HGB)Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTCOMPENSATION REPORT

COMPENSATION PHILOSOPHY

The Management Board compensation system is designed to create incentives
for a sustainable and profit-oriented company performance. The objective of the
compensation system is to stimulate the implementation of long-term Group
strategy by ensuring that the relevant success parameters that govern the per-
formance-based compensation are aligned with the PUMA SE management sys-
tem. Furthermore, the long-term interests of our shareholders are taken into ac-
count by making the variable compensation strongly dependent on the perfor-
mance of the PUMA SE share.
With a greater share of performance-based and therefore variable compensati-
on, the intention is to reward the contribution of our Management Board mem-
bers towards a sustainable development of our Company, while negative deviati-
ons from the set targets will result in a significant reduction of variable
compensation.

GOVERNANCE IN COMPENSATION MATTERS

It is the responsibility of the PUMA SE Supervisory Board to determine the com-
pensation of the Management Board. The entire Supervisory Board decides on
matters relating to the compensation of the Management Board members based
on the respective recommendations of the Personnel Committee which is com-
prised of members of the Supervisory Board. Criteria for calculating the total
compensation are the responsibilities and performance of the individual Ma-
nagement Board member, the economic situation, long-term strategic planning
and related goals, the sustainability of targeted results and the company’s long-
term prospects.

OVERVIEW OF COMPENSATION ELEMENTS

The compensation of the Management Board consists of non-performance-ba-
sed and performance-based components. The non-performance-based compon-
ents comprise the basic compensation, company pension contributions and other
fringe benefits, while the performance-based components are divided into two
parts, a bonus and a component with long-term incentive effect:

154

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT➔

G.21 TARGET COMPENSATION STRUCTURE

* Figures in % of target compensation (total 100 %)
CEO: Chief Executive Officer / OBM: Ordinary Board Member

155

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTNON-PERFORMANCE-BASED COMPENSATION AND FRINGE BENEFITS

BASIC COMPENSATION

The members of the Management Board receive a fixed basic salary which is
paid monthly. This salary is based on the duties and responsibilities of the mem-
ber of the Management Board. For employment periods of less than twelve
months in a calendar year, all compensation payments are paid on a prorated
basis.

FRINGE BENEFITS

In addition, the Management Board members receive in-kind compensation,
such as use of company cars, accident insurance and D&O insurance. These are
part of the non-performance-based compensation.

COMPANY PENSION

PERFORMANCE-BASED COMPENSATION

defined financial and non-financial targets. It consists of a bonus and a compo-
nent with a long-term incentive effect. In the event of any outstanding perfor-
mance, the Supervisory Board may, at its discretion, grant the members of the
Management Board a voluntary one-off payment.

SHORT-TERM VARIABLE COMPENSATION – BONUS

As part of the performance-based compensation, the bonus is primarily based on
the financial goals of the operating result (EBIT) and free cash flow (FCF) of the
PUMA Group and the individual performance of the respective Management
Board member as well as the attainment of Group-wide sustainability targets.
The Supervisory Board assesses the individual performance of the Management
Board member based on previously defined criteria, such as sustainable lea-
dership, strategic vision and good corporate governance. The sustainability tar-
gets include goals to reduce CO emissions, compliance targets and occupational
health and safety objectives, are applied throughout the PUMA Group and mea-
sured quantitively on a standardized basis. The two financial success targets are
weighted with 60% for EBIT and 20%, respectively, for FCF. The individual perfor-
mance is included in the calculation with a weighting of 15%. The degree to
which the sustainability targets have been achieved is taken into account in the
calculation with a weighting of 5%. If 100% of the target is achieved ("target bo-
nus"), the amount of the bonus, is 100% of the annual basic compensation for the
Chair of the Management Board and the Management Board members.

The aforementioned performance targets are combined. For EBIT, FCF and the
sustainability targets, the bandwidth of possible target attainments ranges from
0% to 150%. It is therefore possible that no short-term variable compensation at
all is paid out if minimum targets are not attained.

156

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT➔

G.22 STI-PLAN

An identical target attainment curve has been created, respectively, for the two
financial goals. If the budget target for EBIT or FCF is reached, the target attain-
ment is 100% (target value). If EBIT/FCF are less than 95% of the target value,
this results in a target attainment of 0%. If EBIT/FCF reach 95% of the target va-
lue, the target attainment is 50%. If EBIT/FCF reach 120% or more above target
value, the target attainment is limited to 150% (maximum value). Target attain-
ments between the determined target attainment points are interpolated on a
linear basis. This results in the following target attainment curve for the EBIT
and FCF performance targets:

➔

G.23 TARGET ATTAINMENT CURVE EBIT/FCF

157

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTTARGET ATTAINMENT SUSTAINABILITY TARGETS

The Supervisory Board determines four target criteria for calculating the
sustainability targets every year. At the end of the performance period, the Su-
pervisory Board evaluates the degree of attainment of the target criteria. For
every target criterion that has been met or exceeded, a target attainment percen-
tage of 1.25% is credited.

LONG-TERM VARIABLE SHARE-BASED COMPENSATION – PUMA MONETARY UNITS
PLAN 2019 (LTI)

The long-term variable compensation program of PUMA SE (PUMA Monetary
Units Plan) is designed as a future-oriented, virtual shareholding with cash pay-
ments. As part of this program, virtual shares of PUMA SE, the "Monetary Units",
are allocated at the start of a three-year vesting period, at the end of which the
holder is eligible to receive a cash payment. The amount of the allocation value is
240% of the annual basic salary for the Chair of the Management Board and
110% of the basic salary for the other Management Board members. The num-
ber of the allocated Monetary Units is determined by dividing the allocation value
by the value of one PUMA Monetary Unit. The relevant value of a Monetary Unit
for the tranche of the following year is calculated once per year at the end of De-
cember as the average value of the PUMA SE share over the past 30 trading days.
The amount of the cash payment is therefore a result of the absolute develop-
ment of the PUMA SE share. At the end of the three-year vesting period, the Ma-
nagement Board members are able to exercise their Monetary Units within a pe-
riod of two years. The payment of the amount can be requested on a quarterly
basis. The value of the Monetary Units is the average value of the PUMA SE share
over the last 30 trading days before the next quarterly report. The fundamental
exercise condition after the vesting period is the existence of an active employ-
ment relationship with PUMA SE until the end of the vesting period.

158

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT➔

G.24 LTI-PLAN

* The value of one Monetary Unit is equal to the Ø share price over the last 30 trading days before the beginning of the blocking period respectively 30 trading days before the next quarterly report.

RULES FOR TERMINATING MANAGEMENT BOARD ACTIVITY AND OTHER
CONTRACTUAL PROVISIONS

In the event of a temporary disablement due to illness, the Management Board
member retains his or her entitlement to full contractual compensation up to a
total duration of six months but for no longer than the end of the employment
contract. The Management Board member must offset payments received from
health insurance companies or pension insurances in the form of sick pay or
pension benefits against the compensation payments, insofar as these benefits
are not fully based on contributions by the Management Board member.

is based on the total compensation of the past financial year and also on any ex-
pected total compensation for the current financial year. In the event of an early
termination of the employment contract before the end of the relevant perfor-
mance period for the bonus and/or the three-year vesting period of the long-
term variable compensation, the contract makes no provision for an early payout
of the variable compensation components. If the member of the Management
Board becomes permanently disabled during the term of the employment
contract, the contract is terminated on the day on which the permanent disability
is determined. A permanent disability exists within the meaning of this provision,
if the member of the Management Board is no longer able, due to illness or acci-
dent, to fulfill the responsibilities assigned to him or her. In this respect, the spe-
cific duties and particular responsibility of the member of the Management
Board must be taken into account.

If the member of the Management Board dies during the term of the employment
contract, his or her widow or widower and children, provided they have not yet

159

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTreached the age of 27, are entitled as joint creditors to receive the unreduced
continued payment of the fixed compensation for the month in which the death
occurred and for the six following months, but for no longer than up to the end of
the regular term of the contract.

MANAGEMENT BOARD COMPENSATION

The following tables show the compensation paid during the financial year and
inflows during or for the reporting year and the total related pension expenses
for all Management Board members.*

➔

T.07 COMPENSATION PAID

(€ million)

Fixed compensation

Fringe Benefits

Total

Short-term variable compensation

Long-term variable share-based
compensation

LTI 2019 (2019 to 2021)

LTI 2018 (2018 to 2020)

Total variable compensation

Pension expenses

Total compensation

2018

2019

2019
(min)

2019
(max)

2.3

0.1

2.4

2.8

4.3

7.0

0.5

9.9

2.0

0.1

2.1

2.7

2.0

0.1

2.1

0.0

2.0

0.1

2.1

3.0

3.9

0.0

11.8

6.6

0.4

9.1

0.0

0.4

2.4

14.8

0.4

17.3

*
The grants and inflows shown below include the portion of the compensation of Ms. Anne-Laure Des-
cours granted to Ms. Descours for her services as a member of the Management Board of PUMA SE. In
addition, Ms. Descours receives compensation for her function as General Manager PUMA Group Sour-
cing of World Cat Ltd, Hong Kong, a subsidiary of PUMA SE.

➔

T.08 INFLOW

(€ million)

Fixed compensation

Fringe Benefits

Total

Short-term variable compensation

Long-term variable share-based compensation

LTI 2016 (2016 to 2018)

LTI 2015 (2015 to 2017)

Total variable compensation

Pension expenses

Total compensation

2018

2019

2.3

0.1

2.4

2.8

8.8

11.6

0.5

14.4

2.0

0.1

2.1

2.7

1.7

4.3

0.4

6.8

Pension benefits are available for the members of the Management Board in the
form of deferred compensation paid out of the performance-based and/or the
non-performance-based compensation, for which the Company has taken out
pension liability insurance. The proportion of the pension capital that is already
financed through contributions to the pension liability insurance is deemed to be
vested. During the financial year, PUMA allocated € 0.4 million for members of
the Management Board (previous year: € 0.5 million). The present value of the
pension benefits granted to active Management Board members of € 10.8 million
as of December 31, 2019 (previous year: € 10.1 million) was netted against the
pledged asset value of the pension liability insurance on the balance sheet.

160

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT
COMPENSATION FOR FORMER MANAGEMENT BOARD MEMBERS

The appointment of Lars Radoor Sørensen as member of the Management Board
was terminated by mutual agreement with effect from the end of January 31,
2019. At this point, Mr. Sørensen's Management Board employment contract had
a remaining term through December 31, 2020. Mr. Sørensen's Management
Board employment contract was terminated by mutual agreement with effect
from the end of January 31, 2020. For the period from January 31, 2019 until Ja-
nuary 31, 2020, the basic salary and short-term variable compensation was paid
out assuming a target attainment of 100%. The tranche of the long-term variable
compensation was prorated for 2018-2020 and reduced by 11/36. No tranche was
granted for 2019-2021. The compensation components for Mr. Sørensen based
on his work as a Management Board member are included in section “Manage-
ment Board Compensation”.

There were pension obligations to former members of the Management Board
and their widows/widowers amounting to € 3.3 million (previous year: € 3.2 milli-
on) as well as contribution-based pension commitments in connection with the
deferred compensation of former members of the Management Board and Ma-
naging Directors amounting to € 11.6 million (previous year: € 10.6 million). Both
items were recognized as liabilities within pension provisions to the extent they
were not offset against asset values of an equal amount. Pension obligations to
former members of the Management Board and their widows/widowers were in-
curred amounting to € 0.2 million (previous year: € 0.2 million).

SUPERVISORY BOARD COMPENSATION SYSTEM

The Supervisory Board compensation system consists of two components. As for
the Management Board, the relevant criteria for calculating the compensation
are the responsibilities and performance of the individual Supervisory Board
member, the long-term strategic planning and related goals, the sustainability of
achieved results and the Company’s long-term prospects. For this reason, the

first component of the Supervisory Board compensation is a fixed, non-perfor-
mance-based amount, while the second component is a performance-based
compensation.

The non-performance-based component conforms to § 15 of the Articles of As-
sociation, according to which each Supervisory Board member receives a fixed
annual compensation of € 25,000.00. This amount is payable after the Annual
General Meeting for the respective financial year. In addition to the fixed, annual
compensation, the members of the Supervisory Board are entitled to an increase
of their fixed compensation based on their position on the board and their partici-
pation in committees. The Chair of the Supervisory Board and the Vice Chair re-
ceive an additional fixed annual amount of € 25,000.00 respectively € 12,500.00.
The chair of a committee additionally receives € 10,000.00, and the members of a
committee € 5,000.00, respectively. The respective committees are the Personnel
Committee, the Audit Committee and the Sustainability Committee.

In addition to the fixed compensation, each Supervisory Board member receives
annual performance-based compensation equal to € 20.00 for each € 0.01 by
which the earnings per share figure as disclosed in the consolidated financial
statements exceeds a minimum amount of € 16.00 per share. The performance-
based compensation amounts to a maximum of € 10,000.00 per year. If earnings
per share in the financial year are below the minimum amount, no performance-
related compensation is payable. The Chair of the Supervisory Board receives
€ 40.00 for every € 0.01 exceeding the minimum amount per share and a maxi-
mum of € 20,000.00 per year. The Vice Chair receives € 30.00 for every € 0.01 ex-
ceeding the minimum amount per share and a maximum of € 15,000.00 per year.

A member of the Supervisory Board who is only active for part of a financial year
receives prorated remuneration calculated on the basis of the period of activity
determined for full months.

161

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTSUPERVISORY BOARD COMPENSATION

The compensation for the Supervisory Board for financial years 2018 and 2019
are shown in the table below.

➔

T.09 SUPERVISORY BOARD COMPENSATION

(€ million)

Fixed
compensation

Variable
compensation

Committee
compensation

Total

2018

2019

2018

2019

2018

2019

2018

2019

Total

0.2

–

0.0

0.2

162

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTCORPORATE GOVERNANCE REPORT INCLUDING THE STATEMENT ON CORPORATE GOVERNANCE IN ACCORDANCE WITH SECTION
289F AND SECTION 315D HGB

STATEMENT OF COMPLIANCE PURSUANT TO SECTION 161 AKTG FOR 2019:

Effective implementation of the principles of corporate governance is an im-
CORPORATE GOVERNANCE REPORT INCLUDING THE STATEMENT ON CORPORATE GOVERNANCE IN ACCORDANCE WITH SECTION
portant aspect of PUMA's corporate policy. Transparent and responsible corpora-
289F AND SECTION 315D HGB
te governance is a key prerequisite for achieving corporate targets and for incre-
asing the Company’s value in a sustainable manner. The Management and the
Supervisory Board work closely with each other in the interests of the entire
Company to ensure that the Company is managed and monitored in an efficient
Effective implementation of the principles of corporate governance is an im-
way that will ensure sustainable added value through good corporate governan-
portant aspect of PUMA's corporate policy. Transparent and responsible corpora-
ce. In the following the Management Board and the Supervisory Board report on
te governance is a key prerequisite for achieving corporate targets and for incre-
the corporate governance at PUMA SE in accordance with Section 3.10 of the
asing the Company’s value in a sustainable manner. The Management and the
German Corporate Governance Code. This section also includes the Statement of
Supervisory Board work closely with each other in the interests of the entire
Compliance in accordance with Art. 9(1) c(ii) of the SE Regulation (SE-VO) in con-
Company to ensure that the Company is managed and monitored in an efficient
junction with Section 289f and Section 315d HGB. Pursuant to Section 317 (2)
way that will ensure sustainable added value through good corporate governan-
Sentence 6 of the German Commercial Code (HGB), the purpose of the audit of
ce. In the following the Management Board and the Supervisory Board report on
the statements pursuant to Section 289f (2) and (5) and Section 315d of the HGB
the corporate governance at PUMA SE in accordance with Section 3.10 of the
is limited to determining whether such statements have actually been provided.
German Corporate Governance Code. This section also includes the Statement of
PUMA SE has the legal form of a European company (Societas Europaea, or SE).
Compliance in accordance with Art. 9(1) c(ii) of the SE Regulation (SE-VO) in con-
Being an SE headquartered in Germany, PUMA SE is subject to European and
junction with Section 289f and Section 315d HGB. Pursuant to Section 317 (2)
German law for SEs while remaining subject to German stock corporation law.
Sentence 6 of the German Commercial Code (HGB), the purpose of the audit of
As a company listed in Germany, PUMA SE adheres to the German Corporate Go-
the statements pursuant to Section 289f (2) and (5) and Section 315d of the HGB
vernance Code (DCGK).
is limited to determining whether such statements have actually been provided.

In their Statement of Compliance the Management Board and the Supervisory
Board of PUMA SE declare at least once a year whether the DCGK has been and
is being observed. On November 9, 2019, the Management Board and the Super-
visory Board declared that PUMA SE has complied and will comply with the re-
commendations of the DCGK (version dated February 7, 2017) since the last
STATEMENT OF COMPLIANCE PURSUANT TO SECTION 161 AKTG FOR 2019:
Statement of Compliance dated November 9, 2018, with the following exceptions
In their Statement of Compliance the Management Board and the Supervisory
and, if not, why not.
Board of PUMA SE declare at least once a year whether the DCGK has been and
is being observed. On November 9, 2019, the Management Board and the Super-
visory Board declared that PUMA SE has complied and will comply with the re-
commendations of the DCGK (version dated February 7, 2017) since the last
Statement of Compliance dated November 9, 2018, with the following exceptions
and, if not, why not.

EXCEPTIONS TO THE CODE’S RECOMMENDATIONS

PUMA SE has a dual management system featuring strict personal and functio-
PUMA SE has the legal form of a European company (Societas Europaea, or SE).
nal separation between the Management Board and the Supervisory Board (two-
Being an SE headquartered in Germany, PUMA SE is subject to European and
tier board). Accordingly, the Management Board manages the company while the
German law for SEs while remaining subject to German stock corporation law.
Supervisory Board monitors and advises the Management Board.
As a company listed in Germany, PUMA SE adheres to the German Corporate Go-
vernance Code (DCGK).

PUMA SE has a dual management system featuring strict personal and functio-
nal separation between the Management Board and the Supervisory Board (two-
tier board). Accordingly, the Management Board manages the company while the
Supervisory Board monitors and advises the Management Board.

EXCEPTIONS TO THE CODE’S RECOMMENDATIONS

In derogation of No. 3.8 p. 3 of the Code, members of the Supervisory
Board are provided with D&O insurance with no deductible. The Supervi-
sory Board feels that it can dispense with a deductible for members of
the Supervisory Board, because the D&O insurance is group insurance
for people in Germany and abroad, and a deductible is fairly unusual
abroad.
In derogation of No. 3.8 p. 3 of the Code, members of the Supervisory
According to No. 4.2.3 p. 2 s. 4 of the Code both positive and negative
Board are provided with D&O insurance with no deductible. The Supervi-
developments shall be taken into account when determining variable re-
sory Board feels that it can dispense with a deductible for members of
muneration components. As regards negative developments this recom-
the Supervisory Board, because the D&O insurance is group insurance
mendation is deviated from, since the structure of the PUMA Monetary
for people in Germany and abroad, and a deductible is fairly unusual
Unit Plan may not fully comply with the purpose of the recommendation,
abroad.
but it comes fairly close.
According to No. 4.2.3 p. 2 s. 4 of the Code both positive and negative
In derogation of No. 4.2.3 p. 2 s. 6 of the Code the compensation of the
developments shall be taken into account when determining variable re-
members of the Management Board does not show the maximum
muneration components. As regards negative developments this recom-
amount limits in total or their variable compensation components. This
mendation is deviated from, since the structure of the PUMA Monetary
is due to the fact that neither the existing PUMA Monetary Units Plans
2016/2017/2018 nor the PUMA Board Member Bonus Plan nor the dis-
163
cretionary extra bonus clause provide for a maximum amount.

In derogation of No. 5.4.6. p. 3 of the Code, the compensation of the Su-

pervisory Board members is not shown individually. In the opinion of

PUMA SE, this is not additional information relevant to the capital mar-

ket as the respective remuneration regulations included in the Articles

of Association are in the public domain.

Herzogenaurach, November 09, 2019
PUMA SE
For the Management Board | For the Supervisory Board

RELEVANT DISCLOSURES OF CORPORATE GOVERNANCE PRACTICES THAT ARE

APPLIED BEYOND THE REGULATORY REQUIREMENTS

CORPORATE SOCIAL RESPONSIBILITY

In order to fulfill our ecological and social responsibility as a global sporting

goods manufacturer, PUMA has developed groupwide guidelines on environmen-

tal management and on compliance with workplace and social standards. PUMA

is convinced that only on such a foundation can a lasting and sustainable corpo-

rate success be achieved. That is why PUMA is committed to the principles of the

UN Global Compact. The PUMA Code of Conduct prescribes ethical and environ-

mental standards with which both employees and suppliers are required to com-

ply. The PUMA Code of Conduct was revised in 2016 and explicitly addresses

PUMA's obligation and commitment in respect of human rights and combating

corruption. Detailed information on the company's corporate social responsibility

strategy can be found in the Sustainability section of the Annual Report or on the

company's homepage (http://about.PUMA.com under "SUSTAINABILITY").

According to No. 4.2.3 p. 3 of the Code the target level of pension bene-

Bjørn Gulden

Michael

Jean-François Palus

Lämmermann

In derogation of No. 4.2.3 p. 2 s. 8 of the Code subsequent amendments

to the performance targets or comparison parameters are not excluded.

This provides the possibility to the supervisory board to react to extraor-

dinary effects using its equitable discretion.

fits for every pension commitment shall be established by the Supervi-

sory Board. Due to the defined contribution plans, PUMA does not com-

ply with this recommendation.

In accordance with the authorization by the Annual General Meeting on

April 12, 2018, pursuant to Section 286 p. 5 HGB, the Company shall not

publish the amounts of compensation for individual members of the Ma-

nagement Board until the authorization expires (Nos. 4.2.4 and 4.2.5 of

the Code). The members of the Management Board shall adhere to the

authorization when they prepare the annual financial statements. Based

on the authorization of the Annual General Meeting, and in derogation of

No. 4.2.5 p. 3 of the Code the information stated in this Section regar-

ding the compensation of the members of the Management Board is not

included in the Compensation Report.

In derogation of No. 5.4.6 p. 2 s. 2 of the Code, members of the Supervi-

sory Board receive performance-based compensation that is not linked

to the sustainable success of the Company. The compensation was aut-

horized by the Annual General Meeting on April 12, 2018, it is stipulated

in the Articles of Association and is deemed to be proper and correct by

PUMA SE.

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTUnit Plan may not fully comply with the purpose of the recommendation,
but it comes fairly close.

Unit Plan may not fully comply with the purpose of the recommendation,
In derogation of No. 4.2.3 p. 2 s. 6 of the Code the compensation of the
but it comes fairly close.
members of the Management Board does not show the maximum
amount limits in total or their variable compensation components. This
In derogation of No. 4.2.3 p. 2 s. 6 of the Code the compensation of the
is due to the fact that neither the existing PUMA Monetary Units Plans
members of the Management Board does not show the maximum
2016/2017/2018 nor the PUMA Board Member Bonus Plan nor the dis-
amount limits in total or their variable compensation components. This
cretionary extra bonus clause provide for a maximum amount.
is due to the fact that neither the existing PUMA Monetary Units Plans
2016/2017/2018 nor the PUMA Board Member Bonus Plan nor the dis-
In derogation of No. 4.2.3 p. 2 s. 8 of the Code subsequent amendments
cretionary extra bonus clause provide for a maximum amount.
to the performance targets or comparison parameters are not excluded.
This provides the possibility to the supervisory board to react to extraor-
In derogation of No. 4.2.3 p. 2 s. 8 of the Code subsequent amendments
dinary effects using its equitable discretion.
to the performance targets or comparison parameters are not excluded.
This provides the possibility to the supervisory board to react to extraor-
According to No. 4.2.3 p. 3 of the Code the target level of pension bene-
dinary effects using its equitable discretion.
fits for every pension commitment shall be established by the Supervi-
sory Board. Due to the defined contribution plans, PUMA does not com-
According to No. 4.2.3 p. 3 of the Code the target level of pension bene-
ply with this recommendation.
fits for every pension commitment shall be established by the Supervi-
sory Board. Due to the defined contribution plans, PUMA does not com-
In accordance with the authorization by the Annual General Meeting on
ply with this recommendation.
April 12, 2018, pursuant to Section 286 p. 5 HGB, the Company shall not
publish the amounts of compensation for individual members of the Ma-
In accordance with the authorization by the Annual General Meeting on
nagement Board until the authorization expires (Nos. 4.2.4 and 4.2.5 of
April 12, 2018, pursuant to Section 286 p. 5 HGB, the Company shall not
the Code). The members of the Management Board shall adhere to the
publish the amounts of compensation for individual members of the Ma-
authorization when they prepare the annual financial statements. Based
nagement Board until the authorization expires (Nos. 4.2.4 and 4.2.5 of
on the authorization of the Annual General Meeting, and in derogation of
the Code). The members of the Management Board shall adhere to the
No. 4.2.5 p. 3 of the Code the information stated in this Section regar-
authorization when they prepare the annual financial statements. Based
ding the compensation of the members of the Management Board is not
on the authorization of the Annual General Meeting, and in derogation of
included in the Compensation Report.
No. 4.2.5 p. 3 of the Code the information stated in this Section regar-
ding the compensation of the members of the Management Board is not
In derogation of No. 5.4.6 p. 2 s. 2 of the Code, members of the Supervi-
included in the Compensation Report.
sory Board receive performance-based compensation that is not linked
to the sustainable success of the Company. The compensation was aut-
In derogation of No. 5.4.6 p. 2 s. 2 of the Code, members of the Supervi-
horized by the Annual General Meeting on April 12, 2018, it is stipulated
sory Board receive performance-based compensation that is not linked
in the Articles of Association and is deemed to be proper and correct by
to the sustainable success of the Company. The compensation was aut-
PUMA SE.
horized by the Annual General Meeting on April 12, 2018, it is stipulated
in the Articles of Association and is deemed to be proper and correct by
PUMA SE.

In derogation of No. 5.4.6. p. 3 of the Code, the compensation of the Su-
pervisory Board members is not shown individually. In the opinion of
PUMA SE, this is not additional information relevant to the capital mar-
In derogation of No. 5.4.6. p. 3 of the Code, the compensation of the Su-
ket as the respective remuneration regulations included in the Articles
pervisory Board members is not shown individually. In the opinion of
of Association are in the public domain.
PUMA SE, this is not additional information relevant to the capital mar-
ket as the respective remuneration regulations included in the Articles
of Association are in the public domain.

Herzogenaurach, November 09, 2019
PUMA SE
For the Management Board | For the Supervisory Board
Herzogenaurach, November 09, 2019
PUMA SE
For the Management Board | For the Supervisory Board

Bjørn Gulden

Michael
Lämmermann

Jean-François Palus

RELEVANT DISCLOSURES OF CORPORATE GOVERNANCE PRACTICES THAT ARE
APPLIED BEYOND THE REGULATORY REQUIREMENTS

CORPORATE SOCIAL RESPONSIBILITY
RELEVANT DISCLOSURES OF CORPORATE GOVERNANCE PRACTICES THAT ARE
APPLIED BEYOND THE REGULATORY REQUIREMENTS
In order to fulfill our ecological and social responsibility as a global sporting
goods manufacturer, PUMA has developed groupwide guidelines on environmen-
CORPORATE SOCIAL RESPONSIBILITY
tal management and on compliance with workplace and social standards. PUMA
In order to fulfill our ecological and social responsibility as a global sporting
is convinced that only on such a foundation can a lasting and sustainable corpo-
goods manufacturer, PUMA has developed groupwide guidelines on environmen-
rate success be achieved. That is why PUMA is committed to the principles of the
tal management and on compliance with workplace and social standards. PUMA
UN Global Compact. The PUMA Code of Conduct prescribes ethical and environ-
is convinced that only on such a foundation can a lasting and sustainable corpo-
mental standards with which both employees and suppliers are required to com-
rate success be achieved. That is why PUMA is committed to the principles of the
ply. The PUMA Code of Conduct was revised in 2016 and explicitly addresses
UN Global Compact. The PUMA Code of Conduct prescribes ethical and environ-
PUMA's obligation and commitment in respect of human rights and combating
mental standards with which both employees and suppliers are required to com-
corruption. Detailed information on the company's corporate social responsibility
ply. The PUMA Code of Conduct was revised in 2016 and explicitly addresses
strategy can be found in the Sustainability section of the Annual Report or on the
PUMA's obligation and commitment in respect of human rights and combating
company's homepage (http://about.PUMA.com under "SUSTAINABILITY").
corruption. Detailed information on the company's corporate social responsibility
strategy can be found in the Sustainability section of the Annual Report or on the
company's homepage (http://about.PUMA.com under "SUSTAINABILITY").

164

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTCOMPLIANCE MANAGEMENT SYSTEM

PUMA’s management acts in compliance with laws and self-imposed standards
of conduct. PUMA has set up a Compliance Management System (CMS) to syste-
matically prevent, detect and sanction violations in the areas of corruption, mo-
ney laundering, conflicts of interest, antitrust law, fraud and embezzlement. Vio-
lations of the law or internal guidelines will not be tolerated.

The PUMA Code of Ethics is an important building block of the CMS and is bin-
ding for employees of all subsidiaries worldwide. It defines the guidelines and
values that shape PUMA's identity. PUMA expects all employees to be aware of
these values and to act accordingly. The Code of Ethics contains rules, among
other things, on dealing with conflicts of interest and personal data and prohibits
insider trading, anti-competitive behavior and corruption in any form. In order to
familiarize employees with the rules of the Code of Ethics and to establish uni-
form behavioral guidelines, the Code of Ethics is flanked by specific Group-wide
guidelines.

All employees are familiarized with the regulatory areas of the Code of Ethics
through ongoing mandatory e-learning. In addition, employees selected on the
basis of risk-based principles are given in-depth knowledge in classroom trai-
ning. In the past fiscal year, comprehensive face-to-face training courses were
held in particular in the areas of anti-corruption and antitrust law. In 2019, all
PUMA employees were encouraged by the CEO of PUMA SE to complete the e-
learning on the Code of Ethics on the topics of anti-corruption, data protection
and inappropriate behavior in the workplace. The clear Tone from the Top resul-
ted in 99% of PUMA employees successfully completing the e-learning on the
Code of Ethics.

The Management Board is responsible for the proper functioning of the CMS. It is
supported by a compliance organization consisting of the Chief Compliance Offi-
cer and compliance officers in the main operating Group companies. The Chief
Compliance Officer of PUMA SE reports directly to the CEO of PUMA SE. The lo-
cal Compliance Officers also serve as direct contact persons for employees and
support them by appropriate communication measures as well as in dealing with
and processing compliance incidents. The Audit Committee of the Supervisory
Board of PUMA SE is regularly informed about the current status of the imple-
mentation of compliance structures and serious compliance violations. The Chief

Compliance Officer works closely with the Legal Department and Internal Audit.
In addition, regular meetings of the "PUMA SE Risk & Compliance Committee"
take place. At the meetings of this committee, compliance risks are analyzed and
evaluated and appropriate measures (guidelines, training, etc.) are defined and
approved. The review of the implementation of the requirements in the complian-
ce guidelines is regularly part of the audit plan of the internal audit department.

PUMA has a Group-wide electronic whistleblower platform, which is operated by
an external provider and to which employees and third parties can report protec-
ted illegal or unethical conduct. Violations from all risk areas can be reported.
Insofar as they do not fall within the competence of the compliance organization,
the responsible specialist departments are responsible for identifying and taking
measures. The introduction of the platform was communicated throughout the
Group by the CEO and the communication was flanked by appropriate informati-
on material. Every year, the local compliance officers expressly draw attention to
the whistleblower system through appropriate communication measures or in
face-to-face training sessions. Whistleblowers who report misconduct in good
faith are protected from retaliation. All reports are followed up immediately and,
if confirmed, appropriate measures are taken. In 2019, the Compliance Depart-
ment at headquarters received 33 reports of alleged violations. In three of these
cases, allegations of corruption were made. In two of these cases, the investiga-
tion is still ongoing; in the third case, the investigation has been completed and
could not confirm the allegation. In addition to the whistleblower platform, there
is a global hotline for whistleblowers from the supply chain.

165

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTDESCRIPTION OF THE WORKING PRACTICES OF THE MANAGEMENT BOARD AND THE
SUPERVISORY BOARD

PUMA SE has three bodies – the Management Board, the Supervisory Board and
the Annual General Meeting.

MANAGEMENT BOARD

The Management Board of PUMA SE manages the company on its own responsi-
bility with the goal of sustainable value creation. It develops PUMA's strategic
orientation and coordinates it with the Supervisory Board. In addition, it ensures
group-wide compliance with legal requirements and an effective risk manage-
ment and internal control system.

The members of the Management Board are appointed by the Supervisory Board.
The Supervisory Board has set a general age limit of 70 years for the members
Management Board. The Management Board currently consists of three mem-
bers and has a CEO. Further information on the areas of responsibility of the
members of the Management Board can be found in the Notes to the Consolida-
ted Financial Statements (last chapter).

The members of the Management Board are obliged to disclose conflicts of inte-
rest to the Supervisory Board without delay and to inform the other members of
the Management Board accordingly. They may only assume secondary activities,
in particular supervisory board and comparable mandates outside the PUMA
Group, with the prior consent of the Supervisory Board. In the past fiscal year, the
members of the Management Board of PUMA SE did not report any conflicts of
interest.

The principles of cooperation of the Management Board of PUMA SE are set out
in the Rules of Procedure for the Management Board, which can be viewed at htt
p://about.PUMA.com under "Corporate Governance".

SUPERVISORY BOARD

The German Codetermination Act does not apply to PUMA SE as a European
company. Rather, the size and composition of the Supervisory Board are determi-
ned by the Articles of Association of PUMA SE and the Agreement on the Involve-
ment of Employees in PUMA SE dated 11 July 2011 and its amendment dated 7
February 2018. The Supervisory Board of PUMA SE consists of six members, four

of whom are shareholder representatives and two of whom are employee repre-
sentatives. CVs of the individual Supervisory Board members are available on the
Internet and are updated regularly. The term of office of the current Supervisory
Board members ends at the end of the Annual General Meeting which resolves
on the discharge of the members of the Supervisory Board for the financial year
2022. Further information on the members of the Supervisory Board can be
found in the Notes to the Consolidated Financial Statements (last chapter).

The Supervisory Board appoints the members of the Management Board and
may dismiss them at any time for good cause. Initial appointments are generally
for three years. The Supervisory Board determines the remuneration system for
the Management Board and reviews it regularly (most recently in 2018). It deter-
mines the individual total compensation of each member of the Board of Ma-
nagement, taking into account the ratio of the Management Board compensation
to compensation in the MDAX (horizontal comparison) and to the average com-
pensation of the first management level below the Management Board (n-1) as
well as to the average compensation of all employees (vertical comparison). The
relevant workforce is the workforce of PUMA SE. Variable compensation compo-
nents have a multi-year, mainly future-related assessment basis. Variable remu-
neration components that last several years are not paid out prematurely. Star-
ting in the 2019 fiscal year, the Supervisory Board has set maximum limits for the
individual compensation of the Management Board both in total and with regard
to its variable components.

The Supervisory Board monitors and advises the Management Board on the im-
plementation of the strategy. The Management Board informs the Supervisory
Board regularly, promptly and comprehensively about all issues of relevance to
the Company relating to strategy, planning, business development, the risk situa-
tion, risk management and compliance management system. It deals with devia-
tions in the course of business from the established plans and targets, stating
the reasons. The Supervisory Board is involved by the Management Board in de-
cisions of paramount importance for the company or beyond the ordinary course
of business of PUMA SE and the PUMA Group to which it has rights of approval.
The Supervisory Board receives regular reports on succession planning and the
criteria applied by the Management Board in this regard.

166

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTPrior to Supervisory Board meetings, the Management Board regularly speaks
separately to the employee representatives and the shareholder representatives.
At the end of the regular meetings, the Supervisory Board always has the oppor-
tunity to discuss issues even in the absence of the Management Board. It also
makes regular use of this opportunity. The members of the Supervisory Board
also participate in the meetings by telephone or video conference.

The Supervisory Board regularly reviews the efficiency of its activities. The last
time this review took place was at the beginning of 2019.

The members of the Supervisory Board attend on their own responsibility cour-
ses of training and further training that might be necessary for the performance
of their tasks, and are supported by the Company in doing so. In an onboarding
program, new members of the Supervisory Board not only receive training from
the legal department on their rights and duties, but also have the opportunity in
particular to meet the members of the Management Board and other executives
for a bilateral exchange on current management issues and thus gain an over-
view of relevant topics of the Company.

SHAREHOLDERS AND ANNUAL GENERAL MEETING

The shareholders of PUMA SE exercise their rights, in particular their informati-
on and voting rights, at the Annual General Meeting. Each share has one vote.
Our shareholders can exercise their voting rights themselves or through a proxy
appointed by the company and bound by instructions. All documents and infor-
mation on the Annual General Meeting are available on the website of PUMA SE.

As part of our comprehensive investor relations and public relations work, we are
in close contact with our shareholders. We inform shareholders, financial ana-
lysts, shareholders' associations, the media and the interested public compre-
hensively and regularly about the situation of the Company and inform them im-
mediately about significant business changes. The Chairman of the Supervisory
Board is also prepared to discuss Supervisory Board-specific issues with inves-
tors within an appropriate framework.

In addition to other communication channels, we make intensive use of the Com-
pany's website for our investor relations work. At about.puma.com/en/investor-r
elations, all material information published in the 2019 financial year, including

annual, quarterly and half-yearly financial reports, press releases, voting rights
announcements by major shareholders, presentations and the financial calendar,
can be accessed.

DESCRIPTION OF THE WORKING PRACTICES AND THE COMPOSITION OF THE
COMMITTEES OF THE SUPERVISORY BOARD

The Supervisory Board meets at least every three months. Meetings must also
be held if the best interests of the Company so require or if a member of the Su-
pervisory Board requests that the meeting be convened. The Supervisory Board
has established three committees to perform its duties and receives regular re-
ports on their work. The principles of cooperation of the Supervisory Board of
PUMA SE and the duties of the committees are set out in the Rules of Procedure
for the Supervisory Board, which can be viewed at http://about.PUMA.com under
"Corporate Governance".

The Personnel Committee consists of three members. The Personnel Committee
is responsible for entering into and making changes to the Management Board
members’ employment contracts and for establishing policies for Human Re-
sources and personnel development. The entire Supervisory Board decides on
issues involving the Management Board members’ compensation based on re-
commendations from the Personnel Committee.

The Audit Committee consists of three members. The Chairman of the Audit
Committee must be an independent shareholder representative and must have
expertise in the fields of accounting and auditing in accordance with Section
100(5) AktG. In particular, the Audit Committee is responsible for accounting is-
sues and monitoring the accounting process, the effectiveness of the internal
control system, the risk management system, internal audits, compliance and
the statutory audit of the financial statements, with particular regard to the re-
quired independence of the statutory auditors, issuing the audit mandate to the
statutory auditors, defining the audit areas of focus, any additional services to be
performed by the auditors and the fee agreement. The recommendation of the
Supervisory Board on the selection of the statutory auditors must be based on a
corresponding recommendation by the Audit Committee. Once the Annual Gene-
ral Meeting has appointed the statutory auditors, and the Supervisory Board has

167

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTissued the audit assignment, the Audit Committee shall work with the statutory
auditors to specify the scope of the audit and the audit areas of focus. The statu-
tory auditors shall attend a meeting to review the annual financial statements
and the consolidated financial statements and shall report on the key findings of
their audit. They shall also inform the Committee about other services they have
provided in addition to auditing services and shall confirm their independence.
Each month, the Audit Committee shall receive financial data on the PUMA
Group, which will allow the tracking of developments in net assets, financial po-
sition, results of operations and the order books on a continual basis. The Audit
Committee shall also deal with issues relating to the balance sheet and income
statement and shall discuss these with the Management Board. In addition,
when the internal audit projects are completed, the Audit Committee shall recei-
ve the audit reports, which must also include any actions taken.

The Nominating Committee has three members, who may only be representati-
ves of the shareholders on the Supervisory Board. The Nominating Committee
proposes suitable shareholder candidates to the Supervisory Board for its voting
recommendations to the Annual General Meeting.

The current composition of the committees can be found in the Notes to the Con-
solidated Financial Statements (last chapter).

DIVERSITY CONCEPT FOR THE SUPERVISORY BOARD

A) OBJECTIVES FOR THE COMPOSITION OF THE SUPERVISORY BOARD

The Supervisory Board of PUMA SE is composed in such a way that its members
as a group possess the appropriate knowledge, skills and professional experi-
ence necessary for the proper performance of their duties. The composition of
the Supervisory Board is primarily determined by appropriate qualification, ta-
king into account diversity and the appropriate involvement of women. Based on
Section 5.4.1 of the Code, the Supervisory Board has set targets for his composi-
tion that have been fulfilled. In detail:

The members of the Supervisory Board as a group have the experience
and knowledge in the field of management and/or monitoring market-

oriented companies as well as in the business segments and sales mar-
kets of PUMA. Details of this are presented under lit. b) of this chapter.

A sufficient number of members have strong international backgrounds.
This target has been clearly surpassed simply because of the internatio-
nal origins of Jean-François Palus, Héloïse Temple-Boyer, Thore Ohls-
son and Fiona May.

Including the employees' representative on the Supervisory Board, the
Supervisory Board has an appropriate number of independent mem-
bers. In the opinion of the Supervisory Board, there are currently no
concrete indications of relevant circumstances that speak against inde-
pendence with regard to any of the shareholder representatives on the
Supervisory Board. No member of the Supervisory Board exercises di-
rectorships or advisory functions for major competitors. With regard to
Supervisory Board members Jean-François Palus and Héloïse Temple-
Boyer, the Supervisory Board is of the opinion that their functions as Di-
recteur Général Délégué of Artémis S.A.S. do not impair their indepen-
dence within the meaning of the German Corporate Governance Code.
The Code does not contain an exhaustive definition of independence, but
only mentions examples of circumstances that speak against it. Accor-
ding to the Code, a member of the Supervisory Board is not considered
independent if he or she has a personal or business relationship with
the company, its executive bodies, a controlling shareholder or a com-
pany affiliated with the latter, and this relationship may give rise to a
material and not merely temporary conflict of interest. It is the task of
the Supervisory Board to assess the independence of the individual Su-
pervisory Board members on the basis of these indications. Artémis
S.A.S. is not a controlling shareholder, as Artémis S.A.S. is neither a
majority shareholder nor does it have a de facto majority at the Annual
General Meeting.

The Chairman of the Audit Committee has specialist knowledge and ex-
perience in the application of accounting principles and internal control
procedures and is independent. Thore Ohlsson has this knowledge and
is independent. Jean-François Palus and Héloïse Temple-Boyer also
bring this knowledge with them.

168

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTThe members have sufficient time to perform his/her mandate in the
Supervisory Board. Prior to each election proposal, the Supervisory
Board examines whether the candidates concerned are able to complete
the time required for the office.

The Supervisory Board prevents potential significant and not only tem-
porary conflicts of interest of its members by regularly monitoring and
critically scrutinizing its members' other activities. There were no indi-
cations of actual conflicts of interest in the 2019 financial year.

According to Section 1(4) of the Rules of Procedure for the Supervisory
Board, Supervisory Board members may, in principle, not be over 70 ye-
ars of age and their maximum term of office may not exceed three
terms. In setting this age limit, the Supervisory Board deliberately deci-
ded against a rigid maximum age limit and in favor of a flexible rule li-
mit that provides the necessary leeway for an appropriate assessment
of the circumstances of the individual case, sufficiently broadly defines
the circle of potential candidates and also allows re-election. Mr Thore
Ohlsson has reached the statutory age limit. After careful consideration,
he was nevertheless proposed by the Supervisory Board for re-election
in 2018 in order to ensure the necessary continuity after the spin-off
from Kering S.A. in the best interests of the company. All other Supervi-
sory Board members did not reach the standard age limit at the time of
their election.

B) PROFILE OF SKILLS AND EXPERTISE

The Supervisory Board has determined a competence profile for the entire
Board. It stipulates that the members of the Supervisory Board as a whole must
cover the following professional competencies:

Managing of large or mid-sized international companies (Jean-François
Palus, Héloïse Temple-Boyer, Thore Ohlsson)

Leadership experience in the sporting or luxury goods industry (Jean-
François Palus, Héloïse Temple Boyer, Thore Ohlsson, Fiona May)

International corporate background (Jean-François Palus, Héloïse
Temple-Boyer, Thore Ohlsson, Fiona May)

Leadership experience with various disribution channels, including e-
commerce (Jean-François Palus, Thore Ohlsson)

Expertise in building strong international brands (Jean-François Palus,
Héloïse Temple-Boyer, Thore Ohlsson, Fiona May)

Marketing, sales and digital know how (Jean-François Palus, Héloïse
Temple-Boyer, Thore Ohlsson)

Financial expertise (accounting, treasury, risk management, corporate
governance) (Jean-François Palus, Thore Ohlsson, Héloïse Temple-
Boyer)

Expertise in serving on the Administrative or Supervisory boards of pu-
blicly listed companies (Jean-François Palus, Heloise Temple-Boyer)

Experience with mergers & acquisitions (Jean-François Palus, Thore
Ohlsson)

Understanding of the industrial constitution law and advocating the in-
terests of the employees (Martin Koeppel, Bernd Illig)

HR expertise (Jean-François Palus)

IT expertise (Bernd Illig).

The Supervisory Board of PUMA SE is currently composed in such a way that it
has the competence profile as an overall body.

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTC) COMMITMENTS TO PROMOTE THE PARTICIPATION OF WOMEN IN MANAGEMENT
POSITIONS IN ACCORDANCE WITH ART. 9(1)C(II) OF THE SE REGULATION (SE-VO) IN
CONNECTION WITH SECTION 76(4), SECTION 111(5) AKTG

The Supervisory Board shall define a target figure for the proportion of women
on the Supervisory Board and the Management Board. The Management Board,
for its part, shall set target figures for the proportion of women in the two ma-
nagement levels below the Management Board.

For the Supervisory Board of PUMA SE, a target figure of 30% has been set for
the targeted proportion of women. As of December 31, 2019, the six-member Su-
pervisory Board included two women, Fiona May and Héloïse Temple-Boyer, re-
sulting in a female representation of 33%.

The Supervisory Board has set a target of 20% for the Management Board, provi-
ded that PUMA SE has five or more members. The Management Board, which
consisted of three members as of December 31, 2019 including Anne-Laure Des-
cours, will be composed of 33% women and 66% men.

Together with the Supervisory Board, the Management Board has set a target of
25% for the first management level below the Management Board and 30% for
the second management level below the Management Board. At Group level, the
proportion of women is to increase to 30% for the first management level below
the Management Board and to 40% for the second management level. The imple-
mentation deadline here, too, is October 31, 2021.

The current composition of the Supervisory Board largely implements the diver-
sity concept.

DIVERSITY CONCEPT FOR THE MANAGEMENT BOARD

The Supervisory Board and the Management Board promote an agile, open cor-
porate culture in which the advantages of diversity are consciously utilized and
everyone can freely unfold their potential for the best of the company. PUMA stri-
ves to fill Management Board positions and senior management positions prima-
rily with people developed within the company.

The Supervisory Board's decision regarding a particular appointment to the Ma-
nagement Board is always taken in consideration of the Company's best interests
based on the professional and personal suitability of the candidate. It must be
ensured that the members of the Management Board as a whole have the know-
ledge, skills and experience required for the best possible fulfillment of the tasks
of a member of the Management Board of a sporting goods manufacturer such
as PUMA. It is not necessary for every member of the Management Board to re-
flect the technical requirements laid out in the following. The diversity concept
for the Management Board therefore stipulates that gender, internationality, age,
educational background and experience must be taken into account in its
composition:

- Gender

PUMA aims to have 20% women on the Management Board by October 31, 2021,
provided that the Board has five or more Management Board members. In order
to achieve this goal, the Management Board ensures that an appropriate propor-
tion of female candidates are included on the succession lists within the frame-
work of the internal global management structure for the development of junior
staff for the Management Board. In the future, the participation of women in the
Management Board is to be guaranteed in the event of a necessary replacement,
in particular by giving special consideration to women in various equally qualified
candidates. Insofar as external candidates are to be appointed, suitably qualified
female candidates shall be considered in particular. The same applies to the fil-
ling of management functions. In order to involve women even more in manage-
ment functions in the future, PUMA promotes the compatibility of family and ca-
reer, for example through part-time and half-day models as well as flexible
working hours and the provision of childcare places. With Anne-Laure Descours
a woman is represented on the Management Board. The proportion of women on
the Management Board is therefore currently 33%.

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORT- Internationality

PUMA is a globally operating company. An appropriate number of board mem-
bers must therefore have international experience either due to their origin or
due to their many years of professional experience abroad. Notwithstanding the
several years of international experience of all board members, this goal has
been exceeded simply because of the international origins of Bjørn Gulden and
Anne-Laure Descours.

Board with regard to corporate management, strategy development, finance and
accounting, supply chain, sales and HR. The same criteria apply here as were de-
veloped for the competence profile of the Supervisory Board. These competen-
cies do not have to be acquired as part of university studies or other educational
training, but may also have been acquired in other ways within or outside PUMA.
The members of the board have all the above mentioned competences.

The current composition of the Management Board largely implements the diver-
sity concept.

- Age

The Supervisory Board ensures a balanced age structure in the Management
Board. This is important to ensure the continuity of the Management Board's
work and to facilitate smooth succession planning. In principle, members of the
Management Board may not be older than 70 years. All members of the Manage-
ment Board are below the standard age limit.

- Training and experience background

With regard to the educational and professional background, the selection of Ma-
nagement Board members should be based on the competencies required in the
PUMA Management Board in general as well as for the respective Management

DIRECTORS’ DEALINGS

Transactions by management personnel in PUMA shares reported to the Compa-
ny are published at https://about.puma.com/de-de/investor-relations/the-puma-
share. Mr. Jean-François Palus reported in May 2019 that he received PUMA sha-
res in 2018 as part of the distribution of a dividend in kind by Kering S.A. (Paris)
to its shareholders. In October and November 2019, Mr. Palus also reported that,
as part of a related transaction, he first sold his PUMA shares and shortly there-
after repurchased the same number. Mr. Bjørn Gulden reported a purchase in
PUMA shares on 3 January 2020.

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTRISK AND OPPORTUNITY REPORT

Entrepreneurial activities are always associated with opportunities and risks.
This is particularly true for the fast-moving sports and lifestyle industry in which
PUMA globally operates and is therefore continuously exposed to risks and op-
portunities that must be identified and managed. We need effective risk and op-
portunity management through which risks and opportunities can be systemati-
cally recognized and monitored. A risk is defined as one or more future events
with unplanned, adverse effects for the company up to any threat to the conti-
nued existence of the company. Similarly, an opportunity is defined as one or
more events with unplanned, positive consequences for the company.

The Management Board of PUMA SE has overall responsibility for the risk and
opportunity management system. The Risk Management Committee (RMC) is a
management-level committee and responsible for the design and monitoring of
the risk management system and therefore also the first point of contact for risk
reporting. The task of operationally coordinating the group-wide risk manage-
ment system has been transferred to Group Internal Audit & Governance, Risk
Management & Internal Control (GRC). Opportunity management is not part of
the risk management. Individual risk interviews are conducted with selected exe-
cutives as risk owners below the Management Board throughout the company at
regular intervals of currently twice a year. The objective of these interviews is to
systematically identify, validate and categorize risks and record countermeasu-
res. The Group Internal Audit & GRC department provides a uniform framework
for the assessment of risks. The assessment considers the probability of occur-
rence, the potential effect and the control of the risk.
The risks identified and assessed during the risk interviews are presented to the
RMC in an aggregated form in a so-called risk heat map. The RMC consists of a
defined group of executives from various corporate divisions, including the Ma-
nagement Board. Chair of the RMC is the Chief Financial Officer as member of
the Management Board. The results of the RMC meetings are reported to the Au-
dit Committee as sub-committee of the Supervisory Board by the Chair of the
RMC and the Head of the Group Internal Audit & GRC department. An integrated

GRC tool used to document the risk management processes is available to the
Group Internal Audit & GRC department and to the risk owners.

PUMA also has a comprehensive reporting and controlling system, which is an
essential component of its risk management approach. PUMA’s reporting and
controlling system is based on monthly financial reporting as well as the review
and plausibility reports on reported information issued by the Controlling
department.

Managers analyze opportunities and risks in annual planning discussions around
the world, setting targets and defining courses of action based on the results.
The comprehensive reporting system continuously monitors and generates re-
ports on compliance with the set targets. This enables PUMA to promptly identify
any deviations or negative developments, and to initiate any necessary counter-
measures in a timely manner.

RISK AND OPPORTUNITY CATEGORIES

The following explanations of opportunities and risks are shown in the order of
their relative importance.

MACROECONOMIC DEVELOPMENTS

As an internationally operating group, PUMA is exposed to global macroecono-
mic developments and the associated risks. For example, economic develop-
ments in important sales markets may have an effect on consumer behavior.
This can have positive or negative effects on the planned sales and results. Like-
wise, political changes and social developments may result in changes in the le-
gal framework conditions, such as in connection for example with Brexit and cur-

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTrency exchange rate fluctuations.
Overall, PUMA manages these challenges with geographic diversification and the
development of alternative scenarios for the possible occurrence of serious
events. This applies in particular to political developments and possible changes
in legal framework conditions which are continuously monitored by PUMA.

BRAND IMAGE

Brand image and brand desirability are of key importance for PUMA, as consu-
mer behavior can have a negative effect on the brand as well as a positive one.
Accordingly, PUMA has formulated the guiding principle of “We want to become
the fastest sports brand in the world” in order to underline the company’s long-
term direction and strategy. The “Forever Faster” brand promise does not just
stand for PUMA’s product range as a sports company, but also applies to all com-
pany processes.
PUMA manages brand image risks in particular through cooperation with brand
ambassadors who embody the core of the brand and PUMA’s brand values (“bra-
ve”, “confident”, “determined” and “joyful”) and have a large potential for influen-
cing PUMA’s target group. PUMA has therefore strengthened its position as
sports brand through partnerships with top athletes, such as star striker Antoine
Griezmann, sprint legend Usain Bolt, multiple Formula 1 world champion Lewis
Hamilton and pro golfer Rickie Fowler. In 2019, we were able to sign further
brand ambassadors, such as the goalkeeper Jan Oblak, the football manager
Pep Guardiola, and Karsten Warholm, the 400-meter hurdles world champion. In
football, PUMA has long-term sponsorship agreements with top clubs, such as
Manchester City, Borussia Dortmund, AC Milan, Olympique Marseille and the Ita-
lian national team. PUMA's return to basketball and its engagement in athletics
and other sports should also be viewed in this context. PUMA reaches young
trendsetters via brand ambassadors and collaborations in the music, movie and
fashion scene, such as with Jay-Z, Meek Mill, Adriana Lima, Cara Delevingne and
Selena Gomez, and also increasingly through influencers in social networks.

INFORMATION TECHNOLOGY

The ongoing digitalization of PUMA's business environment exposes the compa-
ny to risks, but it also increasingly provides opportunities. The failure of IT sys-
tems may significantly disrupt important business procedures and processes.
External attacks or wrong behavior, for example, may result in the loss of confi-
dential and sensitive data, and lead to high costs, loss of revenue and reputatio-
nal damage. Opportunities arise, for example, from improved, tailored communi-
cation with customers via digital channels and new opportunities for product
presentation. In addition, new or more efficiently supported processes may add
value or result in cost optimization.
To mitigate these risks and use the existing opportunities inherent in digitalizati-
on at the same time, PUMA continuously carries out technical and organizational
measures and invests in the renewal and security of its IT landscape. IT systems
are regularly checked, maintained and undergo security tests. In addition, all
employees are continuously sensitized using guidelines, training courses and in-
formation campaigns.

SOURCING AND SUPPLY CHAIN

The majority of PUMA products is produced in selected Asian countries, in parti-
cular in Vietnam, China, Bangladesh, Cambodia, Indonesia and India. Production
in these countries is associated with significant risks for PUMA, which result, for
example, from exchange rate fluctuations, changes in sourcing and wage costs,
supply bottlenecks for raw materials or components, quality issues, but also
from natural disasters and political instability. Moreover, risks may result from
an overdependence on individual manufacturers.
The portfolio is regularly reviewed and adjusted to avoid creating a dependence
on individual suppliers and sourcing markets. Generally, long-term master
framework agreements are agreed upon to secure production capacities requi-
red in the future. A quality assurance process and the direct collaboration with
manufacturers should permanently secure the quality of PUMA products.
Sourcing and the supply chain must also respond to risks and opportunities, in-
cluding changes in duties and tariffs as well as trade restrictions. PUMA accor-
dingly continuously analyzes political and legal framework conditions in order to

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTbe able to react to changes at an early stage.
The transport of products into the distribution countries is exposed to the risk of
delays and disruptions among service providers. The collaboration with service
providers is accordingly secured by selection processes, uniform contractual
terms and permanent monitoring of relevant indicators.

SUSTAINABILITY

Sustainability topics are highly important in sourcing, but also throughout the
entire value chain. There is a risk that suppliers will violate core labor standards
of ILO (International Labour Organization), not comply with environmental stan-
dards or use hazardous chemicals in production. This would violate PUMA's re-
quirements to suppliers and also lead to negative reporting. Adherence to app-
licable standards is ensured through regular audits of supplier companies.
Climate change and increasing customer requirements with regard to sustaina-
bility are leading to a stronger ecological focus both in our own locations and
along the production and supply chain. A more efficient use of resources and re-
duction of greenhouse gas emissions and the increased use of sustainable pro-
duction materials are expressions of PUMA's sustainability strategy.

PRODUCT AND MARKET ENVIRONMENT

The risk posed by market-specific product influences, in particular the risk of
substitutability in the highly competitive sport and lifestyle market, is decisively
countered by the early recognition and taking advantage of relevant consumer
trends. Only those companies that identify these trends at an early stage will be
able to gain an edge over their competitors.
Targeted investments in product design and product development are to ensure
that the characteristic PUMA design of the entire product range is consistent
with the overall brand strategy (“Forever Faster”), thereby creating a unique level
of brand recognition.

COUNTERFEIT PRODUCTS

Counterfeit products can cause damage to consumer confidence in the brand
and can damage PUMA's brand image. For this reason, PUMA has made fighting
brand piracy a high priority. The PUMA team responsible for the protection of in-
tellectual property not only ensures that we have a strong global portfolio of pro-
perty rights, such as brands, designs and patents, but also works closely with
customs and police forces and provides input regarding the implementation of
effective legislation to protect intellectual property.

DISTRIBUTION STRUCTURE

PUMA utilizes various distribution channels, such as the traditional wholesale
business with our retail partners and the PUMA-owned retail and e-commerce
business to reduce its dependency on individual distribution channels. The who-
lesale business represents overall the largest revenue share. The focus on the
company-own retail and e-commerce business is intended to ensure a higher
gross profit margin, better distribution control and exclusive presentation of
PUMA products in the desired brand environment.
In the wholesale business, up-and-coming retailers, including those offering
their own brands, and competitors pose the risk of intensified competition for
consumers and market shares. Consumer purchase behavior is also changing,
focusing more on e-commerce and a combination of stationary and digital trade.
This requires continuous adjustment of the distribution structure. Distribution
through the company's own retail stores and e-commerce channels is, however,
also associated with various risks for PUMA. These include the necessary invest-
ments in expansion and infrastructure, setting up and refurbishing stores, higher
fixed costs and leases with long-term lease obligations. This can have an adverse
impact on profitability should business decline.
In order to avoid risks and take advantage of opportunities, PUMA carries out
permanent monitoring of distribution channels and regular reporting by the Con-
trolling and specialized departments. A detailed location and profitability analysis
is carried out in our distribution channels before making any investment decisi-
on. The company’s reporting and controlling system allows us to detect negative
trends early on, and to take the countermeasures required to manage individual
stores. In e-commerce, global activities are harmonized and investments in the

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTIT platform are made to further optimize purchase transaction settlement and
further improve the shopping experience for consumers.

REPORTING IN THE MEDIA

A negative media report about PUMA, such as a product recall, infringement of
laws, or internal or external requirements, can also cause significant damage to
the brand and ultimately result in the loss of sales and profit, regardless of whe-
ther these events actually happened or were just rumors. PUMA manages this
risk by way of careful press, social media and public relations work which is ma-
naged from its group headquarters in Herzogenaurach, Germany, and its subsi-
diary in the U.S. In addition, PUMA continuously seeks an open dialog with key
external stakeholders, such as suppliers, NGOs and industry initiatives, and has
institutionalized this as part of regularly held "Sustainability Stakeholder
Meetings."

ORGANIZATIONAL CHALLENGES AND PROJECT RISKS

PUMA's organizational structure with its group headquarters in Herzogenaurach,
a central sourcing organization and globally positioned distribution companies
gives the group a global orientation. This results in a risk for PUMA that the flows
of goods and information are not sufficiently supported by modern IT infrastruc-
ture. For this reason, existing business processes must be continually optimized
and adapted. This is carried out systematically through targeted optimization
projects, which are planned and managed centrally by a specialized department.

PERSONNEL DEPARTMENT

The creative potential, commitment and performance of PUMA employees are
important factors for a successful business development and represent a signifi-
cant opportunity for our business. PUMA encourages independent thinking and
action, which are key in an open corporate culture with flat hierarchies. PUMA’s
human resources strategy seeks to ensure this successful philosophy on a long-

term and sustainable basis. To achieve this goal, a control process is in place to
detect and assess human-resource risks. Accordingly, special attention has been
paid to managing talent, identifying key positions and high-potential individuals,
and optimizing talent placement and succession planning. PUMA has instituted
additional national and global regulations and guidelines to ensure compliance
with legal provisions. PUMA will continue to make targeted investments in the
human-resource needs of particular functions or regions in order to meet the fu-
ture requirements of its corporate strategy.

LEGAL RISKS

As an internationally operating group, PUMA is exposed to various legal risks.
These include contractual risks or risks that a third party could assert claims
and litigation for infringement of its trademark rights, patent rights or other
rights. The continuous monitoring of contractual obligations and the integration
of internal and external legal experts in contractual matters is to ensure that any
legal risks are avoided.

COMPLIANCE RISKS

PUMA is exposed to the risk that employees violate laws, directives and company
standards (compliance violations). These risks, such as theft, fraud, breach of
trust, embezzlement and corruption, as well as deliberate misrepresentations in
financial reporting, may lead to significant monetary and reputational damage.
Therefore, PUMA uses various tools to manage these risks. This includes an in-
tegrated compliance management system, the internal control system, group
controlling and the internal audit department. As part of the compliance ma-
nagement system, awareness measures are carried out regarding critical comp-
liance topics, such as corruption prevention and cartel law, and corresponding
guidelines are introduced in the group. PUMA employees also have access to an
integrity system for reporting unethical behavior.

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTCURRENCY RISKS

As an international company, PUMA is subject to currency risks resulting from
the disparity between the respective amounts of currency used on the purcha-
sing and sales sides and from exchange-rate fluctuations.
PUMA’s biggest sourcing market is Asia, where most payments are settled in US
dollars (USD), while sales of the PUMA Group are mostly invoiced in other cur-
rencies. PUMA manages currency risk in accordance with internal guidelines.
Currency forward contracts are used to hedge existing and future financial liabi-
lities in foreign currencies.

To hedge signed or pending contracts against currency risk, PUMA only conclu-
des currency forward contracts on customary market terms with reputable inter-
national financial institutions. As of the end of 2019, the net requirements for the
2020 planning period were adequately hedged against currency effects.

Foreign exchange risks may also arise from intra-group loans granted for finan-
cing purposes. Currency swaps and currency forward transactions are used to
hedge currency risks when converting intra-group loans denominated in foreign
currencies into the functional currencies of the group companies (Euro).

In order to disclose market risks, IFRS 7 requires sensitivity analyses that show
the effects of hypothetical changes in relevant risk variables on earnings and
equity. The periodic effects are determined by relating the hypothetical changes
caused by the risk variables to the balance of the financial instruments held as of
the balance sheet date. The underlying assumption is that the balance as of the
balance sheet date is representative for the entire year.

Currency risks as defined by IFRS 7 arise on account of financial instruments
being denominated in a currency that is not the functional currency and is mone-
tary in nature. Differences resulting from the conversion of the individual financi-
al statements to the group currency are not taken into account. All non-functio-
nal currencies in which PUMA employs financial instruments are generally con-
sidered to be relevant risk variables.

Currency sensitivity analyses are based on the following assumptions:
Material primary financial instruments (cash and cash equivalents, receivables,
interest-bearing and non-interest-bearing liabilities) are either denominated in

the functional currency or are transferred into the functional currency using cur-
rency forward transactions.

Currency forward contracts used to hedge against payment fluctuations caused
by exchange rates are part of an effective cash flow hedging relationship pur-
suant to IAS 39. Changes in the exchange rate of the currencies underlying these
contracts have an effect on the hedge reserve in equity and the fair value of these
hedging contracts.

TAX RISKS

In an international business environment, applicable tax regulations must be ob-
served. By means of appropriate internal rules of conduct, employees are requi-
red to comply with and adhere to the relevant tax regulations. In addition to com-
pliance with national tax regulations to which the individual group companies are
subject, there are increasing risks in the course of intra-group transfer pricing,
which must be applied for various internal business transactions in accordance
with the arm's length principle between individual group companies. In all tax
areas PUMA has taken adequate precautions with internal and external tax ex-
perts in order to comply with the relevant tax regulations, but also to be able to
react to changes in the constantly changing tax environment.
For the group-internal transfer prices a corresponding documentation exists,
which was prepared according to international and national requirements and
standards. There are guidelines and specifications for determining transfer pri-
ces for intra-group transactions that are customary for foreign companies, which
comply with the applicable procedural rules and are binding on the employees
acting on behalf of the group. By means of internal tax reporting, external and
internal tax experts are able to control and monitor tax developments at PUMA
on an ongoing basis. Both the Management Board and the Supervisory Board are
continuously informed about tax developments at PUMA in order to identify and
avoid tax risks as early as possible.

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTDEFAULT RISKS

Because of its business activities, PUMA is exposed to default risk that is mana-
ged by continuously monitoring outstanding receivables and recognizing impair-
ment losses, where appropriate. The default risk is limited where possible by
credit insurance and the maximum default risk is reflected by the carrying
amounts of the financial assets recognized on the balance sheet. Furthermore,
default risks result to a lesser extent from the counterparty’s other contractual
financial obligations such as bank deposits and derivative financial instruments.

LIQUIDITY RISK

PUMA continually analyzes short-term capital requirements through rolling cash
flow planning at the level of the individual companies in coordination with the
central Treasury department. PUMA maintains a liquidity reserve, for example, in
the form of cash and confirmed credit facilities in order to ensure the company’s
solvency, financial flexibility and a strategic liquidity buffer. In this respect, there
was a syndicated credit line amounting to € 350.0 million as of December 31,
2019, which was not utilized as of the balance sheet date.
Medium and long-term funding requirements that cannot be directly covered by
net cash from operating activities are financed by taking out medium and long-
term loans. For this purpose, promissory note loans were issued in four tranches
in July 2018 (one tranche each with a fixed and a variable coupon with a residual
term of 2 years for a total of € 100.0 million and one tranche each with a residual
term of 4 years for a total of € 60.0 million). Furthermore, an additional promis-
sory note loan totaling € 70.0 million was concluded in December 2019 with pay-
out in January 2020. This promissory note loan comprises two tranches with a
fixed and a variable coupon and a term of 5 years.

INTEREST-RATE RISKS

At PUMA, changes in interest rates do not have a significant impact on interest
rate sensitivity and therefore do not require the use of interest rate hedging
instruments.

SUMMARY

The assessment of the overall risk situation of the group and PUMA SE is the re-
sult of a consolidated view of the individual risks described above. The Manage-
ment Board is currently not aware of any significant risks that, either indepen-
dently or in combination with other risks, could jeopardize the continued exis-
tence of the group and PUMA SE. In 2019, there was no significant change in the
overall assessment of the risk situation compared to the previous year.
However, we cannot exclude the possibility that in the future factors that are cur-
rently unknown to us or that we currently assess as immaterial could influence
the continued existence of the group and PUMA SE and its consolidated compa-
nies. Due to the extremely solid balance sheet structure and equity ratio, as well
as the positive business outlook, the Management Board does not see any risks
that could jeopardize the continued existence of the PUMA Group and PUMA SE.

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTMAIN FEATURES OF THE INTERNAL CONTROL AND RISK
MANAGEMENT SYSTEM AS IT RELATES TO THE GROUP’S
ACCOUNTING PROCESS

The Management Board of PUMA SE is responsible for the preparation and accu-
racy of the annual financial statements, the consolidated financial statements
and the combined management report of PUMA SE. The consolidated financial
statements were prepared in accordance with the International Financial Re-
porting Standards that apply in the EU, the requirements of the German Com-
mercial Code (HGB), the German Stock Corporation Act (AktG) and the German
SE Implementation Act (SEAG). Certain disclosures and amounts are based on
current estimates by the Management Board and the management.

The company’s Management Board is responsible for maintaining and regularly
monitoring a suitable internal control and risk management system covering the
consolidated financial statements and the disclosures in the combined manage-
ment report. This control and risk management system is designed to ensure the
compliance and reliability of the internal and external accounting records, the
presentation and accuracy of the consolidated financial statements, and the
combined management report and the disclosures contained therein. It is based
on a series of process-integrated monitoring steps and encompasses the mea-
sures necessary to accomplish these, internal instructions, organizational and
authorization guidelines, the PUMA Code of Ethics, a clear separation of func-
tions within the Group and the dual-control principle. The adequacy and opera-
ting effectiveness of these measures are regularly reviewed by the Group Inter-
nal Audit & GRC department.

For monthly financial reporting and consolidation, PUMA has a group-wide re-
porting and controlling system that allows it to regularly and promptly detect de-
viations from projected figures and accounting irregularities and, where ne-
cessary, to take countermeasures.

The risk management system can regularly, as well as on an ad-hoc basis, iden-
tify events that could affect the company’s economic performance and its ac-
counting process so that it can analyze and evaluate the resulting risks and take
the necessary actions to counter them.

In preparing the consolidated financial statements and the combined manage-
ment report, it is also sometimes necessary to make assumptions and estimates
that are based on the information available on the balance sheet date and which
will affect the reported amounts and recognition of assets and liabilities, income
and expenses, contingent liabilities, and other data that must be reported, as
well as how these are classified.

The Supervisory Board’s Audit Committee meets regularly with the independent
statutory auditors, the Management Board, and the Group Internal Audit & GRC
department to discuss the results of the statutory audits of the financial state-
ments and of the audit review with regard to the internal control and risk ma-
nagement system as it relates to the accounting process. At the annual meeting
on the financial statements, the auditor reports to the Supervisory Board on the
results of the audit of the annual and consolidated financial statements.

In addition to the risk and opportunity management described, the Group Inter-
nal Audit & GRC department carries out so-called Internal Control Self-Assess-
ments (ICSA) at the process level for all essential business processes. In these,
process owners evaluate the existing control framework based on internal and
external guidelines and best-practice standards. The objective is to continuously
improve the internal control system and to identify specific risks at process level
to be able to introduce countermeasures. The results of the ICSA are reported to
the Audit Committee and are used specifically by the Group Internal Audit & GRC
department in risk-oriented audit planning.

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Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTOUTLOOK

GLOBAL ECONOMY

After the dynamics of the global economy have slowed down in 2019, experts at
the Kiel Institute for the World Economy (ifw Kiel) expect global gross domestic
product (GDP) to rise by 3.1% in 2020 (winter forecast dated December 11, 2019).
This corresponds to a slight increase in the GDP growth rate of 0.1% compared to
2019. Accordingly, the global economy is expected to stabilize overall in 2020.

Experts expect that the increase in production in the advanced economies will
remain moderate in 2020. While economic momentum in the United States of
America continues to slow down and the “Brexit” will continue to put a strain on
the UK economy in 2020, ifw Kiel expects the economy in the euro zone to remain
at a similar level compared to 2019. The expansion of the Chinese economy is li-
kely to lose further momentum in 2020. In the other emerging markets, however,
the rise in production is likely to increase slightly. Trade policy uncertainties con-
tinue to weigh on the outlook and remain a risk for the forecast.

Olympics and the European Football Championship, should help to support
growth in the sporting goods industry.

OUTLOOK 2020

Our business developed strongly in 2019, both in terms of sales and profitability.
We are confident that the positive development will continue in 2020.

For the full year 2020, we therefore expect currency-adjusted sales growth of
around 10%. We forecast the gross profit margin to show a slight improvement
compared to last year (2019: 48.8%) and operating expenses (OPEX) to increase
at a slightly lower rate than sales. Based on the current exchange rate levels we
expect an operating result (EBIT) for the financial year 2020 in a range between €
500 million and € 520 million (2019: € 440.2 million). We also expect a significant
improvement of net earnings in 2020.

SPORTING GOODS INDUSTRY

INVESTMENTS

If there are no significant negative effects from the overall economic develop-
ment, we expect the sporting goods industry to continue its stable growth in
2020. It can be assumed that the trend towards sports activities and a healthy
lifestyle will continue and thus the demand for sporting goods will also continue
to rise. In addition, major sporting events in 2020, especially the Tokyo Summer

Investments in fixed assets of around € 200 million are planned for 2020. The
majority of these investments will be in infrastructure in order to create the ope-
rating requirements for the planned long-term growth. The investments mainly
concern own distribution and logistics centers and further investments in the ex-
pansion and modernization of the Group's own retail stores.

179

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTFOUNDATION FOR LONG-TERM GROWTH

The Management Board and the Supervisory Board have set the long-term stra-
tegic priorities. Action plans are being implemented in a targeted and value-ori-
ented manner. We believe that the corporate strategy "Forever Faster" provides
the basis for medium- and long-term positive development. We therefore con-
firm our medium-term target of an average annual growth rate of currency-ad-
justed sales of around 10% (CAGR) and the achievement of a 10% EBIT margin by
2021/ 2022.

Herzogenaurach, January 31, 2020

The Management Board

Gulden

Lämmermann

Descours

180

Annual Report 2019 ↗ COMBINED MANAGEMENT REPORTPURE
PERFORMANCE

Consolidated Financial Statements

182

Consolidated Statement of Financial Position

184

Consolidated Income Statement

185

Consolidated Statement of Comprehensive Income

186

Consolidated Statement of Cash Flows

188

Statement of Changes in Equity

190

Notes to the Consolidated Financial Statements

268

Declaration by the Legal Representatives

269

Independent Auditor’s Report

181

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

➔
➔

T.01 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
T.01 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS
ASSETS
Cash and cash equivalents
Cash and cash equivalents
Inventories
Inventories
Trade receivables
Trade receivables
Income tax receivables
Income tax receivables
Other current financial assets
Other current financial assets
Other current assets
Other current assets
Current assets
Current assets
Deferred tax assets
Deferred tax assets
Property, plant and equipment
Property, plant and equipment
Right-of-use assets
Right-of-use assets
Intangible assets
Intangible assets
Other non-current financial assets
Other non-current financial assets
Other non-current assets
Other non-current assets
Non-current assets
Non-current assets
Total assets
Total assets

12/31/2019
12/31/2019
€ million
€ million

12/31/2018
12/31/2018
€ million
€ million

Notes
Notes

3
4

4
5

5
23

23
6

6
7

8
9

9
10

10
11

11
12

12
12

518.1

518.1
1,110.2

1,110.2
611.7

611.7
34.2

34.2
76.6

76.6
130.5

130.5
2,481.2

2,481.2
237.7

237.7
394.8

394.8
719.0

719.0
454.6

454.6
71.5

71.5
19.3

19.3
1,897.0

1,897.0
4,378.2

4,378.2

463.7

463.7
915.1

915.1
553.7

553.7
33.9

33.9
111.2

111.2
115.2

115.2
2,192.8

2,192.8
207.6

207.6
294.6

294.6
0.0

0.0
437.5

437.5
65.4

65.4
9.4

9.4
1,014.4

1,014.4
3,207.2

3,207.2

182

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS
LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES AND SHAREHOLDERS' EQUITY
Current financial liabilities

Current financial liabilities
Trade payables

Trade payables
Income taxes

Income taxes
Current lease liabilities

Current lease liabilities
Other current provisions

Other current provisions
Other current financial liabilities

Other current financial liabilities
Other current liabilities

Other current liabilities
Current liabilities

Current liabilities
Non-current lease liabilities

Non-current lease liabilities
Deferred tax liabilities

Deferred tax liabilities
Pension provisions

Pension provisions
Other non-current provisions

Other non-current provisions
Liabilities from acquisitions

Liabilities from acquisitions
Other non-current financial liabilities

Other non-current financial liabilities
Other non-current liabilities

Other non-current liabilities
Non-current liabilities

Non-current liabilities
Subscribed capital

Subscribed capital
Capital reserve

Capital reserve
Retained earnings

Retained earnings
Treasury stock

Treasury stock
Equity attributable to the shareholders of the parent

Equity attributable to the shareholders of the parent
Non-controlling interest

Non-controlling interest
Shareholders' equity

Shareholders' equity
Total liabilities and shareholders' equity

Total liabilities and shareholders' equity

12/31/2019

12/31/2019
€ million

€ million

12/31/2018

12/31/2018
€ million

€ million

Notes

13
13

13
23

23
10

10
16

16
13

13
13

10
8

8
15

15
16

16
17

17
13

13
13

18
18

18, 30

10.2

10.2
843.7

843.7
88.9

88.9
144.8

144.8
34.8

34.8
60.5

60.5
376.0

376.0
1,558.9

1,558.9
600.5

600.5
53.0

53.0
34.1

34.1
43.2

43.2
0.0

0.0
163.8

163.8
4.4

4.4
899.0

899.0
150.8

150.8
83.0

83.0
1,668.0

1,668.0
-28.1

-28.1
1,873.6

1,873.6
46.7

46.7
1,920.3

1,920.3
4,378.2

4,378.2

20.5

20.5
705.3

705.3
68.0

68.0
0.8

0.8
39.6

39.6
56.4

56.4
304.6

304.6
1,195.2

1,195.2
7.5

7.5
47.7

47.7
28.9

28.9
26.3

26.3
3.3

3.3
173.2

173.2
2.9

2.9
289.7

289.7
38.6

38.6
193.6

193.6
1,499.9

1,499.9
-28.9

-28.9
1,703.3

1,703.3
18.9

18.9
1,722.2

1,722.2
3,207.2

3,207.2

183

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT

➔

T.02 CONSOLIDATED INCOME STATEMENT

Sales

Cost of sales

Gross profit

Royalty and commission income

Other operating income and expenses

thereof impairment losses of trade receivables and other financial assets

Operating result (EBIT)

Result from associated companies

Financial income

Financial expenses

Financial result

Earnings before taxes (EBT)

Taxes on income

Consolidated net earnings for the year

attributable to: Non-controlling interest

Equity holders of the parent (net earnings)

Earnings per share (€)*

Earnings per share (€) - diluted*

Weighted average shares outstanding (million)*

Weighted average shares outstanding, diluted (million)*

Notes

20, 26

18, 30

*The average number and diluted number of shares as well as the earnings per share in the same period of pervious year were adjusted retrospectively to the 1:10 share split in the second quarter.

2019

2018

€ million

5,502.2

-2,815.8

2,686.4

25.1

-2,271.3

-3.4

440.2

0.0

25.8

-48.4

-22.6

417.6

-108.6

309.0

-46.6

262.4

1.76

149.52

4,648.3

-2,399.0

2,249.4

16.3

-1,928.4

-6.2

337.4

-1.5

11.6

-34.1

-24.0

313.4

-83.6

229.8

-42.4

187.4

1.25

149.47

184

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

➔

T.03 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

After tax

Tax impact

Before tax

After tax

Tax impact

Before tax

2019

2018

€ million

Net earnings before attribution

Currency changes

Cash flow hedge

Release to the income statement

Market value for cash flow hedges

Share in the other comprehensive income of at equity
accounted investments

Items expected to be reclassified to the income
statement in the future

Remeasurements of the net defined benefit liability

Neutral effects financial assets through other
comprehensive income (FVTOCI)

Items not expected to be reclassified to the income
statement in the future

Other result

Comprehensive income

attributable to:

Non-controlling interest

Equity holder of the parent

309.0

1.9

34.2

-77.1

0.0

-41.0

-4.1

3.4

-0.7

-41.8

267.3

46.9

220.4

309.0

1.9

35.5

-79.8

0.0

-42.4

-5.2

3.4

-1.8

-44.2

264.9

46.9

218.0

229.8

-11.7

42.9

35.6

-0.2

66.7

0.3

9.1

9.4

76.1

305.9

43.4

262.5

-1.4

2.7

1.3

1.1

2.4

-3.5

-1.6

-5.1

-0.3

-5.4

229.8

-11.7

46.4

37.2

-0.2

71.8

0.6

9.1

9.7

81.5

311.3

43.4

267.8

185

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF CASH FLOWS

➔

T.04 CONSOLIDATED STATEMENT OF CASH FLOWS

Operating activities

Earnings before tax (EBT)

Adjustments for:

Depreciation

Non-realized currency gains/losses, net

Result from associated companies

Financial income

Financial expenses

Changes from the sale of fixed assets

Changes to pension accruals

Other non-cash effected expenses/income

Gross cash flow

Changes in receivables and other current assets

Changes in inventories

Changes in trade payables and other current liabilities

Cash inflow from operating activities

Dividends received

Income taxes paid

Net cash from operating activities

2019

2018

Notes

€ million

417.6

246.4

1.9

0.0

-15.3

48.4

2.1

-1.2

5.0

704.8

-69.8

-188.8

214.1

660.3

0.3

-111.8

548.8

9, 10, 11

5, 6, 7

313.4

81.5

-15.7

1.5

-11.3

19.7

1.0

-0.6

8.6

398.0

-61.2

-122.8

146.0

360.1

0.9

-82.9

278.1

186

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSInvesting activities

Payment for acquisitions

Proceeds from sale of long-term shareholdings

Purchase of property and equipment

Proceeds from sale of property and equipment

Payment for other assets

Interest received

Net cash used in investing activities

Financing activities

Repayment of lease liabilities

Repayment of current financial liabilities

Repayment of non-current financial liabilities

Raising of non-current financial liabilities

Dividend payments to equity holders of the parent

Dividend payments to non-controlling interests

Interest paid

Net Cash used in financing activities

Exchange rate-related changes in cash flow

Change in cash and cash equivalents

Cash and cash equivalents at beginning of the financial year

Cash and cash equivalents at end of the financial year

2019

2018

Notes

€ million

9, 11

18, 30

3, 27

-1.2

0.0

-218.4

2.3

-6.0

4.5

-218.7

-140.8

-10.4

-7.1

0.0

-52.3

-18.6

-43.6

-272.9

-2.8

54.3

463.7

518.1

0.0

23.5

-130.2

1.5

-3.6

3.5

-105.3

-1.8

-16.6

0.0

145.2

-186.8

-55.7

-12.6

-128.3

4.2

48.7

415.0

463.7

187

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSSTATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY

➔
➔

T.05 STATEMENT OF CHANGES IN EQUITY
T.05 STATEMENT OF CHANGES IN EQUITY

(in € million)
(in € million)

188

SubscribedcapitalCapitalreserveReservesTreasurystockEquitybeforenon-controllinginterestsNon-controllinginterestsTOTALequityRevenuereservesincl. retainedearningsDifferencefromcurrency conversionCash flow hedgesAt equityaccountedinvestments12/31/201738.6192.61,681.5-212.6-44.80.2-30.01,625.531.21,656.7Net earnings187.4187.442.4229.8Net income directly recognized in equity9.4-13.078.8-0.275.01.176.1Total comprehensive income196.8-13.078.8-0.2262.543.4305.9Dividends paid to equity holders of the parent company /non-controlling interests-186.8-186.8-55.7-242.5Utilization / Issue of treasury stock1.01.12.22.212/31/201838.6193.61,691.5-225.634.10.0-28.91,703.318.91,722.2Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSSubscribedcapitalCapitalreserveReservesTreasurystockEquitybeforenon-controllinginterestsNon-controllinginterestsTOTALequityRevenuereservesincl. retainedearningsDifferencefromcurrency conversionCash flow hedgesAt equityaccountedinvestments12/31/201738.6192.61,681.5-212.6-44.80.2-30.01,625.531.21,656.7Net earnings187.4187.442.4229.8Net income directly recognized in equity9.4-13.078.8-0.275.01.176.1Total comprehensive income196.8-13.078.8-0.2262.543.4305.9Dividends paid to equity holders of the parent company /non-controlling interests-186.8-186.8-55.7-242.5Utilization / Issue of treasury stock1.01.12.22.212/31/201838.6193.61,691.5-225.634.10.0-28.91,703.318.91,722.2189

SubscribedcapitalCapitalreserveReservesTreasurystockEquitybeforenon-controllinginterestsNon-controllinginterestsTOTALequityRevenuereservesincl. retainedearningsDifferencefromcurrency conversionCash flow hedgesAt equityaccountedinvestments12/31/201838.6193.61,691.5-225.634.10.0-28.91,703.318.91,722.2Net earnings262.4262.446.6309.0Net income directly recognized in equity-0.71.5-42.8-42.00.3-41.8Total comprehensive income261.71.5-42.8220.446.9267.3Dividends paid to equity holders of the parent company /non-controlling interests-52.3-52.3-18.6-70.9Decrease of capital of non-controlling interests-0.5-0.5Increase of capital from the company's own funds112.2-112.2Utilization / Issue of treasury stock1.60.72.32.312/31/2019150.883.01,900.9-224.2-8.80.0-28.11,873.646.71,920.3Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSSubscribedcapitalCapitalreserveReservesTreasurystockEquitybeforenon-controllinginterestsNon-controllinginterestsTOTALequityRevenuereservesincl. retainedearningsDifferencefromcurrency conversionCash flow hedgesAt equityaccountedinvestments12/31/201838.6193.61,691.5-225.634.10.0-28.91,703.318.91,722.2Net earnings262.4262.446.6309.0Net income directly recognized in equity-0.71.5-42.8-42.00.3-41.8Total comprehensive income261.71.5-42.8220.446.9267.3Dividends paid to equity holders of the parent company /non-controlling interests-52.3-52.3-18.6-70.9Decrease of capital of non-controlling interests-0.5-0.5Increase of capital from the company's own funds112.2-112.2Utilization / Issue of treasury stock1.60.72.32.312/31/2019150.883.01,900.9-224.2-8.80.0-28.11,873.646.71,920.3NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

Under the “PUMA” brand name, PUMA SE and its subsidiaries are engaged in the
development and sale of a broad range of sports and sports lifestyle products,
including footwear, apparel and accessories. The company is a European stock
corporation (Societas Europaea/SE) and parent company of the PUMA Group; its
registered office is on PUMA WAY 1, 91074 Herzogenaurach, Germany. The com-
petent registry court is in Fürth (Bavaria), the register number is HRB 13085.

The consolidated financial statements of PUMA SE and its subsidiaries (hereinaf-
ter shortly referred to as the “Group” or “PUMA”) were prepared in accordance
with the “International Financial Reporting Standards (IFRS)” accounting stan-
dards issued by the International Accounting Standards Board (IASB), as they are
to be applied in the EU, and the supplementary accounting principles to be app-
lied in accordance with Section 315e (1) of the German Commercial Code. The
IASB standards and interpretations, as they are to be applied in the EU, which are
mandatory for financial years as of January 1, 2019, have been applied.

The items contained in the financial statements of the individual Group compa-
nies are measured based on the currency that corresponds to the currency of the
primary economic environment in which the Company operates. The consolida-
ted financial statements are prepared in euros (EUR or €). The presentation of
amounts in millions of euros with one decimal place may lead to rounding diffe-
rences since the calculation of individual items is based on figures presented in
thousands.

The cost of sales method is used for the income statement.

The following new and amended standards and interpretations have been used
for the first time in the current financial year:

➔

T.06 NEW AND AMENDED STANDARDS AND INTERPRETATIONS

Standard

Title

First-time adoption in the current
financial year

IFRS 16

Leases

Amendments to IAS 19

Amendment IAS 28

Amendment IFRS 9

IFRIC 23

AIP 2015 – 2017

Plan Amendment, Curtailment or
Settlement

Long-term Interests in Associates and
Joint Ventures

Prepayment Features with Negative
Compensation

Uncertainty Transactions and Advance
Consideration

Improvements to IFRS

The standards and interpretations used for the first time as of January 1, 2019
had the following effects on the consolidated financial statements:

190

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSFIRST-TIME ADOPTION OF IFRS 16 – LEASES

In this financial year, PUMA has for the first time applied IFRS 16 leases as the
new standard became mandatory for financial years commencing on or after Ja-
nuary 1, 2019.

The effect of the new leasing standard IFRS 16 was that all leases, except short-
term and low-value leases, were recognized in the form of a right-of-use asset
and a corresponding leasing liability. A differentiation between operating and fi-
nance leases is no longer required. The impacts of the initial application of IFRS
16 on the consolidated financial statements will be described in the following.

PUMA mainly concludes leasing contracts as an operating lessee. With the appli-
cation of IFRS 16, the reporting of leases previously recognized as operating lea-
ses and not recognized on the balance sheet has changed. In accordance with the
new standard, PUMA recognizes for all leases, except short-term leases with a
duration of less than 12 months and low-value lease assets:

(a) in the consolidated balance sheet, a right-of-use asset and a correspon-
ding lease liability which are initially valued at the present value of future
lease payments;

(b) depreciation of the right-of-use assets and interest expenses for the lea-
se liabilities in the consolidated income statement;

(c) the lease installments in the cash flow statement; here, the repayment
and interest portions are separately recognized within the cash inflows/out-
flows from financing activities.

The first-time application of IFRS 16 by PUMA is done based on the modified re-
trospective method. This method did not require adjustment of the previous
year’s numbers. Instead, at the time of initial application (January 1, 2019), the
cumulated effects of the initial application of IFRS 16 are recognized as a correc-
tion item in the opening balance.

PUMA has made use of the exemption provision which does not require to newly
evaluate whether a contract contains a lease or not during the transition to
IFRS 16. Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC
4 will continue to be applied to those contracts that were concluded or amended

before January 1, 2019. For all contracts that were concluded or amended on or
after January 1, 2019, PUMA already applies the definition of a lease based on
the guidelines stipulated by IFRS 16. As part of the implementation of the new
leasing standard, PUMA has not determined any material changes as a result of
the new definition of leases in accordance with IFRS 16.

PUMA has elected to fully use all recognition exemptions provided for by IFRS 16
for the application of the standard. For the country portfolios of leases, PUMA
has applied a term-specific discount rate. The weighted average of the incre-
mental borrowing rate was 4.6%. The incremental borrowing rate was determi-
ned on a country- and currency-specific basis and with comparable terms based
on the risk-free market rate. Furthermore, a specific risk premium was added
for every subsidiary.

As part of the initial application of IFRS 16, PUMA has decided not to perform an
impairment test. As of December 31, 2018, no provisions existed for onerous
contracts from leases in accordance with IAS 37. Consequently, at the time of in-
itial application on January 1, 2019, no adjustment of the right-of-use assets re-
lating to provisions for onerous contracts from leases was necessary.
In addition, PUMA has elected to use the exemption provisions for short-term
leases with a term of less than 12 months and low-value lease assets and reco-
gnized the underlying lease expense in operating expenses on a straight-line ba-
sis in accordance with IFRS 16. Similarly, initial direct costs when measuring the
right-of-use assets were disregarded at the time of initial application. In addition,
PUMA retrospectively determined the term of the leases, for example with regard
to extension and termination options ("use of hindsight").

191

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe measurement of the right-of-use assets occurred at the transition point in
The measurement of the right-of-use assets occurred at the transition point in
the amount of the lease liabilities that were corrected by the amount of the pre-
the amount of the lease liabilities that were corrected by the amount of the pre-
paid or deferred lease payments recognized on the balance sheet as of Decem-
paid or deferred lease payments recognized on the balance sheet as of Decem-
ber 31, 2018.
ber 31, 2018.

The following table represents the reconciliation of the obligations arising from
The following table represents the reconciliation of the obligations arising from
the operating leases as of December 31, 2018 with the lease liabilities recognized
the operating leases as of December 31, 2018 with the lease liabilities recognized
on the balance sheet as of January 1, 2019:
on the balance sheet as of January 1, 2019:

In addition, lease incentives of the lessee (e.g. rent-free periods and incentive
In addition, lease incentives of the lessee (e.g. rent-free periods and incentive
payments) were recognized during the measurement of the right-of-use asset
payments) were recognized during the measurement of the right-of-use asset
and lease liability, whereas under IAS 17, these were recognized as deferred lia-
and lease liability, whereas under IAS 17, these were recognized as deferred lia-
bilities and reported as a reduction of rental expenses on a straight-line basis.
bilities and reported as a reduction of rental expenses on a straight-line basis.

➔
➔

T.07
T.07

The right-of-use assets recognized on the balance sheet are subject to impair-
The right-of-use assets recognized on the balance sheet are subject to impair-
ment of assets in accordance with IAS 36. In contrast, for operating leases under
ment of assets in accordance with IAS 36. In contrast, for operating leases under
IAS 17, an assessment is made whether the contract is an onerous contract ac-
IAS 17, an assessment is made whether the contract is an onerous contract ac-
cording to IAS 37 with regards to provisions.
cording to IAS 37 with regards to provisions.

With regards to the leases that were previously recognized as finance leases,
With regards to the leases that were previously recognized as finance leases,
PUMA assumed the carrying amount of the leased asset and the lease liability
PUMA assumed the carrying amount of the leased asset and the lease liability
under IAS 17 for the valuation of the right-of-use asset and the lease liability at
under IAS 17 for the valuation of the right-of-use asset and the lease liability at
the time of initial adoption of IFRS 16. The carrying amount of the finance leases
the time of initial adoption of IFRS 16. The carrying amount of the finance leases
was € 8.3 million as of December 31, 2018 as shown in the reconciliation presen-
was € 8.3 million as of December 31, 2018 as shown in the reconciliation presen-
ted below.
ted below.

Obligations from operating leases as of Dec. 31, 2018
Obligations from operating leases as of Dec. 31, 2018
Discounting at the average weighted incremental borrowing rate
Discounting at the average weighted incremental borrowing rate
of 4.6% at the date of first-time application of IFRS 16
of 4.6% at the date of first-time application of IFRS 16
Liabilities from finance leases as of Dec. 31, 2018
Liabilities from finance leases as of Dec. 31, 2018
(less) short-term leases and leases of low-value assets that are
(less) short-term leases and leases of low-value assets that are
recognized as an expense on a straight-line basis
recognized as an expense on a straight-line basis
Operating lease agreements with commencement date after Jan.
Operating lease agreements with commencement date after Jan.
1, 2019
1, 2019
Differences from the exercise of extension options
Differences from the exercise of extension options
Lease liability recognized on Jan. 1, 2019
Lease liability recognized on Jan. 1, 2019

€ million
€ million

875.2
875.2

-113.2
-113.2
8.3
8.3

-8.2
-8.2

-270.2
-270.2
132.0
132.0
623.9
623.9

192

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe change in accounting policies affected the balance sheet as of January 1,
2019 as follows:

➔

T.09

➔

T.08

Decrease in property, plant and equipment

Increase in rights of use

Decrease in advance payments made

Increase in balance sheet total assets

Increase in lease liabilities

Decrease in trade payables

Decrease in other non-current liabilities

Decrease in other current liabilities

Increase in balance sheet total liabilities and shareholders’
equity

Jan. 1, 2019
€ million

-8.4

+615.8

-3.2

+604.2

+615.6

-9.9

-1.3

-0.2

+604.2

2019
(without
application
of IFRS 16)

Effects
from first-
time
application
of IFRS 16

2019 as
reported

€ million

Other operating income and expenses

-2,290.4

Operating result (EBIT)

Financial result

Earnings before taxes (EBT)

Taxes on income

Net earnings

421.1

7.1

428.2

-111.4

270.2

+19.2

-29.7

-10.6

+2.8

-7.7

-2,271.3

440.2

-22.6

417.6

-108.6

262.4

The initial application of IFRS 16 had the following effect on earnings per share
and diluted earnings per share:

There was no impact on retained earnings as of January 1, 2019.

➔

T.10

The change in accounting policies had the following effects on the income state-
ment in financial year 2019:

Effect on earnings per
share

Effect on diluted
earnings per share

2019 € per share

Effect of the first-time
application of IFRS 16

-0.05

193

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe change in accounting policies had the following effects on the cash flow
statement in financial year 2019:

➔

T.11

2019 (without
application of
IFRS 16)

Effects from
first-time
application of

IFRS 16 2019 as reported

€ million

Net cash from operating
activities

Net cash used in investing
activities

Net cash used in financing
activities

Cash and cash equivalents
(without exchange-rate
related changes)

+378.3

+170.5

548.8

-218.7

-102.4

-170.5

-272.9

+57.1

Lease payments from short-term leases and lease payments from leases rela-
ting to low-value assets and variable lease payments which were not taken into
account measuring the lease liabilities are still reported under net cash from
operating activities.

The application of IFRS 16 had no effect on cash and cash equivalents.

The information regarding leases in financial year 2019 is presented in chapter
10.

CHANGES IN IAS 19 PLAN AMENDMENT, CURTAILMENT OR SETTLEMENT

The amendments to IAS 19 require that in the event of an amendment, curtail-
ment or settlement of a defined benefit pension plan, the current service cost
and net interest for the remaining financial year must be revalued applying cur-
rent actuarial assumptions which were used during the required remeasurement
of the net liability (of the asset). In addition, it was clarified that the effect on the
asset ceiling that might arise from the plan amendment, curtailment or settle-
ment must be measured in a second step and recognized in other comprehensive
income. The application of the amendments had no effects on the consolidated
financial statements as respective plan amendments, curtailments or settle-
ments have not occurred.

AMENDMENTS TO IFRIC 23 UNCERTAINTY TRANSACTIONS AND ADVANCE
CONSIDERATION

IFRIC 23 clarifies the accounting of current and deferred tax liabilities where un-
certainties exist regarding their income tax-related treatment. Such uncertain-
ties may arise if the application of the respectively applicable tax law is not clear
with regard to a specific business case and is therefore also dependent on the
interpretation of the law by the taxation authority. PUMA, however, is not aware of
the respective interpretation at the time the financial statements are prepared.
IFRIC 23 specifies that a company should only take these uncertainties into ac-
count with regard to recognized tax liabilities or claims if it is probable that the
respective tax amounts will have to be paid or reimbursed. It is in this case to be
assumed that the taxation authority will exercise its right to review declared
amounts and will have full knowledge of all pertaining information.

In these cases, PUMA will always perform an individual assessment of tax-rela-
ted matters and will measure these with the most probable amount.

The application of IFRIC 23 had no effect on the consolidated financial state-
ments as it did not change the recognized tax liabilities or claims.

The explanations regarding the assumptions made and estimates used with re-
gard to taxes are presented in chapter 2 Significant Consolidation, Accounting
and Valuation Principles.

194

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSCHANGES IN OTHER STANDARDS AND INTERPRETATIONS

The application of the amendment to IAS 28 (Long-term Interests in Associates
and Joint Ventures) had no effect on the consolidated financial statements as
PUMA does not hold any such interests.

The application of the amendment to IFRS 9 (Prepayment features with negative
compensation) had no effect on the consolidated financial statements as PUMA
has not concluded any agreements regarding financial instruments with these
types of termination provisions.

The application of amendments as a result of the annual improvements to the
IFRS (Annual Improvements 2015 – 2017) consecutively apply to step business
combinations (IFRS 3), joint arrangements (IFRS 11), capitalization of borrowing
costs (IAS 23), and income tax consequences of dividend payments (IAS 12). The
application had no effect on the consolidated financial statements.

NEW, BUT NOT YET MANDATORY STANDARDS AND INTERPRETATIONS

The following standards and interpretations have been released but will only be-
come effective in later reporting periods and are not applied earlier by the Group.

➔

T.12

Standard

Title

Date of
adoption*

Planned
adoption

Endorsed

Amendments to IFRS 9,
IAS 39, IFRS 7

Interest Rate Benchmark Reform

1/1/2020

Amendments
Conceptual Framework

Amendments to References to the
Conceptual Framework

1/1/2020

Amendment IAS 1 and
IAS 8

Endorsement pending

Definition of Material

1/1/2020

Amendments to IFRS 3

Definition of a Business

1/1/2020

IFRS 17

Insurance Contracts

1/1/2021

* Adjusted by EU endorsement, if applicable

PUMA does not expect any significant effects on the consolidated financial state-
ments from these amendments.

195

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS2. SIGNIFICANT CONSOLIDATION, ACCOUNTING AND VALUATION PRINCIPLES

CONSOLIDATION PRINCIPLES

The consolidated financial statements were prepared as of December 31, 2019,
the reporting date of the annual financial statements of the PUMA SE parent
company, on the basis of uniform accounting and valuation principles according
to IFRS, as applied in the EU.

and the present value of the residual purchase prices expected due to corporate
performance are included in the capital consolidation as acquisition costs for the
holdings. The costs directly attributable to the purchase and later differences of
the present values of the expected residual purchase prices are recognized in the
income statement in accordance with IFRS 3.

With respect to the remaining controlling interests, losses attributable to non-
controlling interests are allocated to the latter even if this results in a negative
balance in non-controlling interests.

Receivables within the Group are offset against internal liabilities. As a general
rule, any set-off differences arising from exchange rate fluctuations are recogni-
zed in the income statement to the extent that they accrued during the reporting
period. If receivables and liabilities are long-term and capital-replacing in natu-
re, the currency difference is recognized directly in equity and under Other Com-
prehensive Income.

In the course of the expense and income consolidation, inter-company sales and
intra-group income are offset against the expenses attributable to them. Interim
profits not yet realized within the Group as well as intra-group investment inco-
me are eliminated by crediting them in the income statement.

Subsidiaries are companies in which the Group has existing rights that give it the
current ability to direct the relevant activities. The main activities are those that
have a significant influence on the profitability of the company. Control is therefo-
re considered to exist if the Group is exposed to variable returns from its relati-
onship with a company and has the power to govern those returns through its
control of the relevant activities. As a rule, control is based on PUMA’s direct or
indirect majority of the voting rights. Consolidation begins at the point in time
from which control is possible. It ends when this no longer exists.

The recognition of business combinations is based on the acquisition method.
The assets, debts and contingent liabilities that can be identified as part of a
business combination are generally stated at their fair value as of the acquisition
date, regardless of the size of non-controlling interests. At the time of the acqui-
sition, there is a separately exercisable right to vote on whether the interests of
the non-controlling shareholders are valued at fair value or at proportional net
asset value.

The surplus of the consideration transferred that exceeds the Group’s share in
the net assets stated at fair value is reported as goodwill. If the consideration
transferred is lower than the amount of the net assets stated at fair value, the
difference is reported directly in the income statement.

Based on the structure of agreements with shareholders holding non-controlling
interests in specific Group companies, PUMA is the economic owner when it has
a majority stake. The companies are fully included in the consolidated financial
statements and, therefore, non-controlling interests are not disclosed. The pre-
sent value of the capital shares attributable to the non-controlling shareholders

196

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSGROUP OF CONSOLIDATED COMPANIES

In addition to PUMA SE, the consolidated financial statements include all subsi-
diaries in which PUMA SE directly or indirectly holds existing rights that give it
the current ability to direct the relevant activities. At present, control of all Group
companies is based on a direct or indirect majority of voting rights.
Associated companies are generally accounted for in the Group using the equity
method. As of December 31, 2019, the Group does not comprise any associated
companies.

The additions to the group of consolidated companies relate to the formation of:

PUMA Logistik-Verwaltungs GmbH, Germany,

PUMA United Canada Holding, Inc., USA and

PUMA United Canada ULC, Canada

The changes in the number of Group companies (including the parent company
PUMA SE) in the financial year 2019 were as follows:

The disposals in the group of consolidated companies relate to the mergers of
the following companies within the consolidation scope:

➔

T.13

As of

Formation of companies

Disposal of companies

As of

12/31/2018

12/31/2019

104

102

PUMA Kids Apparel North America, LLC, USA

PUMA Kids Apparel Canada, LLC, USA

PUMA Accessories North America, LLC, USA

PUMA North America Accessories Canada, LLC, USA

Furthermore, Sport Equipment TI Cyprus Ltd. u.Li., Cyprus was liquidated during
the financial year.

During the financial year, Janed, LLC, USA was renamed to PUMA United North
America LLC, USA, and the Dobotex companies to "stichd".

The changes in the group of consolidated companies did not have a significant
effect on the net assets, financial position and results of operations.

197

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe Group companies are allocated to regions as follows:

➔

T.14

No.

Companies/Legal Entities

Country

Region/City

Shareholder

Share in Capital

parent company

PUMA SE

EMEA

Austria PUMA Dassler Ges. m.b.H.

stichd austria gmbh

PUMA Czech Republic s.r.o.

PUMA Denmark A/S

PUMA Estonia OÜ

PUMA Finland Oy

PUMA FRANCE SAS

stichd france SAS

PUMA International Trading GmbH

PUMA Europe GmbH

PUMA Sprint GmbH

PUMA Mostro GmbH

stichd Deutschland gmbh

PUMA Logistik-Verwaltungs GmbH

PUMA United Kingdom Ltd.

PUMA Premier Ltd.

STICHD UK LTD

STICHD SPORTMERCHANDISING UK LTD

Genesis Group International Ltd.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

Germany

Herzogenaurach

Austria

Salzburg

Czech Republic

Prague

Denmark

Skanderborg

Estonia

Finland

France

Germany

Tallinn

Helsinki

Illkirch-Graffenstaden

indirect

Boulogne Billancourt

indirect

Herzogenaurach

Düsseldorf

Herzogenaurach

Great Britain

London

Great Britain

Mansfield

Great Britain

London

Great Britain

Manchester

direct

indirect

direct

indirect

direct

100%

100%*

Sport Equipment Hellas S. A. of Footwear, Apparel and Sportswear u.Li. Greece

Athens

* subsidiaries which are assigned to be economically 100% PUMA Group

198

DECEMBER 31, 2019Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS
No.

Companies/Legal Entities

Country

Region/City

Shareholder

Share in Capital

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

41.

42.

43.

44.

45.

46.

47.

48.

49.

50.

PUMA Italia S.r.l.

STICHD ITALY SRL

PUMA Sport Israel Ltd.

PUMA Malta Ltd.

PUMA Racing Ltd.

PUMA Benelux B.V.

PUMA Teamwear Benelux B.V.

PUMA International Sports Marketing B.V.

stichd group B.V.

stichd international B.V.

stichd sportmerchandising B.V.

stichd B.V.

stichd logistics B.V.

stichd licensing B.V.

PUMA Norway AS

PUMA Polska Sp. z o.o.

PUMA Sports Romania Srl

PUMA-RUS o.o.o.

PUMA Slovakia s.r.o. v likvidácii

PUMA Sports Distributors (Pty) Ltd.

PUMA Sports South Africa (Pty) Ltd.

PUMA Iberia S.L.U

STICHDIBERIA S.L.

Nrotert AB

PUMA Nordic AB

Nrotert Sweden AB

stichd nordic AB

Mount PUMA AG (Schweiz)

PUMA Retail AG

Italy

Israel

Malta

Netherlands

Assago

Hertzeliya

St.Julians

Leusden

Netherlands

's-Hertogenbosch

indirect

direkt

indirect

direct

Netherlands

's-Hertogenbosch

indirect

Netherlands

's-Hertogenbosch

indirect

Netherlands

's-Hertogenbosch

indirect

Netherlands

's-Hertogenbosch

indirect

Netherlands

's-Hertogenbosch

indirect

Norway

Poland

Romania

Russia

Slovakia

Oslo

Warsaw

Bucharest

Moscow

Bratislava

South Africa

Cape Town

South Africa

Cape Town

Spain

Sweden

Switzerland

Madrid

Barcelona

Helsingborg

Oensingen

indirect

direct

indirect

direct

indirect

direct

indirect

100%

199

DECEMBER 31, 2019Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS
No.

51.

52.

53.

54.

55.

56.

57.

58.

59.

60.

61.

62.

63.

64.

65.

66.

67.

68.

69.

70.

71.

72.

73.

74.

75.

76.

Companies/Legal Entities

stichd switzerland ag

PUMA Spor Giyim Sanayi ve Ticaret A.S.

PUMA Ukraine TOV

PUMA Middle East FZ LLC

PUMA UAE LLC

Americas

PUMA Sports Argentina S.A.

PUMA Sports Ltda.

PUMA Canada, Inc.

PUMA United Canada ULC

PUMA CHILE SPA

PUMA SERVICIOS SPA

PUMA México Sport, S.A. de C.V.

Servicios Profesionales RDS, S.A. de C.V.

Importaciones RDS, S.A. de C.V.

GLOBAL LICENSE STICHD GROUP MEXICO S.A. de C.V.

Importationes Brand Plus Licensing S.A. de C.V.

Distribuidora Deportiva PUMA S.A.C.

Distribuidora Deportiva PUMA Tacna S.A.C.

PUMA Retail Peru S.A.C.

PUMA Sports LA S.A.

PUMA Suede Holding, Inc.

PUMA North America, Inc.

Cobra Golf Incorporated

PUMA United Canada Holding, Inc.

PUMA United North America LLC

Janed Canada, LLC

Country

Region/City

Shareholder

Share in Capital

Switzerland

Egerkingen

Turkey

Ukraine

Istanbul

Kiev

United Arab Emirates Dubai

Argentina

Buenos Aires

Brazil

Canada

Chile

Mexico

Peru

Sao Paulo

Toronto

Vancouver

Santiago

Mexico City

Lima

Tacna

Lima

Uruguay

Montevideo

USA

Westford

Carlsbad

Wilmington

New York

indirect

direct

indirect

direct

indirect

direct

indirect

direct

indirect

100%

100%*

100%

51%

100%

51%

* subsidiaries which are assigned to be economically 100% PUMA Group

200

DECEMBER 31, 2019Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS
No.

No.

77.

78.
77.
79.
78.
80.
79.
81.
80.
82.
81.
83.
82.
84.
83.
85.
84.
86.
85.
87.
86.
88.
87.
89.
88.
90.
89.
91.
90.
92.
91.
93.
92.
94.
93.
95.
94.
96.
95.
97.
96.
98.
97.
99.
98.
100.
99.
101.
100.
102.
101.

102.

Companies/Legal Entities

Asia/Pacific
Companies/Legal Entities

PUMA Australia Pty. Ltd.
Asia/Pacific
White Diamond Australia Pty. Ltd.
PUMA Australia Pty. Ltd.
White Diamond Properties Pty. Ltd.
White Diamond Australia Pty. Ltd.
PUMA China Ltd.
White Diamond Properties Pty. Ltd.
stichd china ltd (斯梯起特贸易（上海）有限公司)
PUMA China Ltd.
Guangzhou World Cat Information Consulting Services Company Ltd.
stichd china ltd (斯梯起特贸易（上海）有限公司)
World Cat Ltd.
Guangzhou World Cat Information Consulting Services Company Ltd.
Development Services Ltd.
World Cat Ltd.
PUMA International Trading Services Ltd.
Development Services Ltd.
PUMA Asia Pacific Ltd.
PUMA International Trading Services Ltd.
PUMA Hong Kong Ltd.
PUMA Asia Pacific Ltd.
stichd Limited
PUMA Hong Kong Ltd.
PUMA Sports India Private Ltd.
stichd Limited
PUMA India Corporate Services Private Ltd.
PUMA Sports India Private Ltd.
World Cat Sourcing India Private Ltd.
PUMA India Corporate Services Private Ltd.
PT PUMA Cat Indonesia Ltd.
World Cat Sourcing India Private Ltd.
PUMA JAPAN K.K.
PT PUMA Cat Indonesia Ltd.
PUMA Korea Ltd. (푸마코리아 유한회사)
PUMA JAPAN K.K.
Stichd Korea Ltd
PUMA Korea Ltd. (푸마코리아 유한회사)
PUMA Sports Goods Sdn. Bhd.
Stichd Korea Ltd
PUMA New Zealand Ltd.
PUMA Sports Goods Sdn. Bhd.
PUMANILA IT Services Inc.
PUMA New Zealand Ltd.
PUMA Sports SEA Trading Pte. Ltd.
PUMANILA IT Services Inc.
PUMA SEA Holding Pte. Ltd.
PUMA Sports SEA Trading Pte. Ltd.
PUMA Taiwan Sports Ltd.
PUMA SEA Holding Pte. Ltd.
World Cat Vietnam Sourcing & Development Services Co. Ltd.
PUMA Taiwan Sports Ltd.

Country

Australia

Australia
Australia
Australia
Australia
China
Australia
China
China
China
China
China
China
China
China
China
China
China
China
China
China
China
China
India
China
India
India
India
India
Indonesia
India
Japan
Indonesia
Korea (South)
Japan
Korea (South)
Korea (South)
Malaysia
Korea (South)
New Zealand
Malaysia
Philippines
New Zealand
Singapore
Philippines
Singapore
Singapore
China
Singapore
Vietnam
China

Region/City

Shareholder

Share in Capital

Region/City

Shareholder

Share in Capital

Melbourne

Melbourne
Melbourne
Melbourne
Melbourne
Shanghai
Melbourne
Shanghai
Shanghai
Guangzhou
Shanghai
Hongkong
Guangzhou
Hongkong
Hongkong
Hongkong
Hongkong
Hongkong
Hongkong
Hongkong
Hongkong
Hongkong
Hongkong
Bengaluru
Hongkong
Bengaluru
Bengaluru
Bengaluru
Bengaluru
Jakarta
Bengaluru
Tokyo
Jakarta
Seoul
Tokyo
Incheon
Seoul
Kuala Lumpur
Incheon
Auckland
Kuala Lumpur
Manila
Auckland

Manila

Taiwan

Ho Chi Minh City
Taiwan

indirect

indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
direct
indirect
direct
direct
indirect
direct
direct
indirect
indirect
direct
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
direct
indirect
indirect
direct
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect
indirect

indirect

100%

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

100%

201

World Cat Vietnam Sourcing & Development Services Co. Ltd.

Vietnam

Ho Chi Minh City

DECEMBER 31, 2019Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2019
PUMA Mostro GmbH, PUMA Sprint GmbH, PUMA International Trading GmbH,
PUMA Europe GmbH and PUMA Logistik-Verwaltungs GmbH have made use of
the exemption provision under Section 264 (3) of the German Commercial Code
(HGB).

➔

T.15

2019

2018

CURRENCY CONVERSION

In general, monetary items in foreign currencies are converted in the individual
financial statements of the Group companies at the exchange rate valid on the
balance sheet date. Any resulting currency gains and losses are immediately re-
cognized in the income statement. Non-monetary items are converted at histori-
cal acquisition and manufacturing costs.

The assets and liabilities of foreign subsidiaries, the functional currency of which
is not the euro, have been converted to euros at the average exchange rates valid
on the balance sheet date. Expenses and income have been converted at the an-
nual average exchange rates. Any differences resulting from the currency con-
version of net assets relative to exchange rates that had changed in comparison
with the previous year were adjusted against equity.

The significant conversion rates per euro are as follows:

Currency

Reporting date
exchange rate

Average
exchange
rate

Reporting date
exchange rate

Average
exchange rate

USD

CNY

JPY

GBP

1.1234

7.8205

1.1195

7.7355

1.1450

7.8751

1.1810

7.8081

121.9400

122.0058

125.8500

130.3959

0.8508

0.8778

0.8945

0.8847

The currency area Argentina has been in a hyperinflationary environment since
2018. The effects on the consolidated financial statements were analyzed in ac-
cordance with IAS 29 and IAS 21.42. The application of the aforementioned stan-
dards would have resulted in an increase in assets as of December 31, 2019 of €
8.1 million (mainly property, plant and equipment, intangible assets and invento-
ries) and an adjustment of equity of € 8.1 million. Furthermore, the operating re-
sult (EBIT) would have decreased by € 2.9 million. The effects were considered
insignificant and did not lead to an adjustment in the context of the group
accounting.

202

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSACCOUNTING AND VALUATION PRINCIPLES

FINANCIAL INSTRUMENTS

Financial instruments are classified and recognized in accordance with IFRS 9.
Under IFRS 9, the subsequent measurement of financial instruments is carried
out according to the classification at “amortised cost” (AC), at “fair value through
profit or loss” (FVPL) or at “fair value through other comprehensive income”
(FVOCI). The classification is based on two criteria: the Group’s business model
for asset management and the question of whether the contractual cash flows of
the financial instruments represent “exclusively payments of principal and inte-
rest” toward the outstanding principal amount.

PUMA has no financial instruments to be assigned to the business model “Sell”
and valued under IFRS 9 at “fair value through profit or loss” (FVPL).

For long-term interests (equity instruments), IFRS 9 under certain conditions al-
lows a measurement at fair value through other comprehensive income (FVOCI).
If these interests, however, are disposed of or written off due to impairment, the
gains and losses from these interests which were not realized up to this point are
reclassified to retained earnings in accordance with IFRS 9.

transaction are documented at the beginning of and continuously after the hedge
accounting.

Changes in the market value of derivatives that are intended and suitable for
cash flow hedges and that prove to be effective are adjusted against equity, taking
into account deferred taxes. If there is no complete effectiveness, the ineffective
part is recognized in the income statement. The amounts recognized in equity
are recognized in the income statement during the same period in which the
hedged planned transaction affects the income statement. If, however, a hedged
future transaction results in the recognition of a non-financial asset or a liability,
gains or losses previously recorded in equity are included in the initial measure-
ment of the acquisition costs of the respective asset or liability.

Changes in the fair value of derivatives that qualify for and are designated as fair
value hedges are recognized directly in the consolidated income statement, toge-
ther with changes in the fair value of the underlying transaction attributable to
the hedged risk. The changes in the fair value of the derivatives and the change
in the underlying transaction attributable to the hedged risk are reported in the
consolidated income statement under the item relating to the underlying
transaction.

DERIVATIVE FINANCIAL INSTRUMENTS/HEDGE ACCOUNTING

In relation to the accounting of hedge relationships, PUMA made use of the elec-
tive right to continue applying the rules of IAS 39 for hedge accounting.

The fair values of the derivative instruments used to hedge planned transactions
and to hedge the fair value of a recognized asset or liability are shown under
other current financial asserts or other current financial liabilities.

Derivative financial instruments are recognized at fair value at the time a
contract is entered into and thereafter. At the time a hedging instrument is con-
cluded, PUMA classifies the derivatives either as hedges of a planned transaction
(cash flow hedge) or as hedges of the fair value of a recognized asset or liability
(fair value hedge).

At the time when the transaction is concluded, the hedging relationship between
the hedging instrument and the underlying transaction as well as the purpose of
risk management and the underlying strategy are documented. In addition, as-
sessments as to whether the derivatives used in the hedge accounting compen-
sate effectively for a change in the fair value or the cash flow of the underlying

LEASES

PUMA has concluded leases exclusively as lessee.
The leases are respectively identified on an individual contract level. PUMA reco-
gnizes for all leases a right-of-use asset and a respective lease liability, with the
exception of short-term leases (defined as leases with a term of no more than 12
months) and low-value lease agreements (with a value of less than € 5,000 at
contract conclusion). In the case of a short-term lease or low-value lease agree-
ment, the Group depreciates the lease payments on a straight-line basis over the
term of the lease agreement as other operating expense. In addition, right-of-
use assets are not recognized for intangible assets. PUMA has made use of the
elective right and decided not to apply IFRS 16 with regard to leases for intangib-
le assets.

203

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe lease liability at initial recognition is measured at the present value of the
not yet paid lease payments at the beginning of the lease agreement. The pre-
sent value is calculated using the incremental borrowing rate, as the interest
rate underlying the lease contract is usually not known.

The following lease payments are included in the measurement of the lease
liability:

Fixed lease payments (including in-substance fixed payments), less any
incentive payments to be received;

Variable lease payments based on an index or rate, initially measured
based on the index or rate at the start of the lease agreement; as a re-
sult, future adjustments after changes in the index or rate remain
unrecognized;

Exercise price of purchase options, if PUMA is sufficiently certain that it
will exercise them;

Expected payments from residual value guarantees; and

Penalties for the early termination of lease agreements, if PUMA is suf-
ficiently certain that it will exercise this termination option and if this
was taken respectively into account when determining the term of the
lease agreement.

A number of lease agreements, particularly for real estate properties, contain
extension and termination options. When determining agreement terms, all facts
and circumstances are taken into account that offer an economic incentive to ex-
ercise the extension option or not exercise the termination option. The changes
in the term of a lease due to the exercise or non-exercise of such options are only
taken into account for the agreement term if they are sufficiently certain.

The lease liability is recognized as a separate line item on the consolidated ba-
lance sheet.

The subsequent measurement of the lease liability is done by increasing the car-
rying amount by adding the accrued interest of the lease liability (using the effec-

tive interest method) and by reducing the carrying amount of the lease liability by
the lease payments made.

If the term of a lease has changed or if a material event has led to a change in
the assessment relating to the exercise of a purchase option, PUMA will remea-
sure the lease liability by discounting the adjusted lease payments using an up-
dated interest rate and will adjust the corresponding right-of-use asset
accordingly.

If lease payments have changed due to index or interest rate changes or due to a
change in the expected payments to be made due to a residual value guarantee,
PUMA will remeasure the lease liability by discounting the adjusted lease pay-
ments using an unchanged discount rate. The corresponding right-of-use asset
is adjusted accordingly.

If a lease is changed and the change in the lease is not recognized as a separate
lease, PUMA will remeasure the lease liability based on the lease term. As part
of this, the changed lease payments are discounted using the updated interest
rate at the time the change becomes effective.

The right-of-use assets comprise the respective lease liability as part of initial
measurement. Lease installments that are paid before or at the beginning of the
lease must be added. Lease incentives received from the lessor must be deduc-
ted and initial direct costs must be included. If dismantling obligations exist with
regard to the leased assets, they are included in the measurement of the right-
of-use assets. The subsequent measurement of the right-of-use assets is at ac-
quisition cost less accumulated depreciation and impairment losses.

The right-of-use assets are generally depreciated over the term of the lease. If
the useful life of the asset underlying the lease is shorter, this limits the depre-
ciation period accordingly. Depreciation starts with the commencement of the
lease.

204

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe right-of-use assets are recognized as a separate line item in the consolida-
ted balance sheet.

The right-of-use assets are subject to impairment of assets in accordance with
IAS 36. This approach is described in the following section "Impairment of
Assets".

Variable lease payments that are not dependent on an index or interest rate are
not included in the valuation of the lease liabilities. These payments are recogni-
zed in the income statement as other expenses as soon as PUMA has received
the underlying benefit. This applies primarily to turnover-based rents for retail
stores.

As part of the practical expedient, IFRS 16 permits omitting to separate between
non-leasing components and leasing components. With regard to land and buil-
dings, PUMA generally does not apply the practical expedient so that the right-
of-use assets relating to land and buildings only contain leasing components.
With regard to other right-of-use assets (comprising technical equipment & ma-
chines and motor vehicles), the practical expedient is generally applied, as a re-
sult of which the leasing components and non-leasing components are both
recognized.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and bank balances. To the extent that
bank deposits are not immediately required to finance current assets, they are
invested as risk-free fixed-term deposits, presently for a term of up to three
months. The total amount of cash and cash equivalents is consistent with the
cash and cash equivalents stated in the cash flow statement.

Cash and cash equivalents are measured at amortised cost. They are subject to
the impairment requirements in accordance with IFRS 9 "Financial Instruments".
PUMA monitors the credit risk of these financial instruments taking into account
the economic situation, external credit rating and/or premiums for credit default
swaps (CDS) of other financial institutions. The credit risk from cash and cash
equivalents is classified as immaterial, due to the relatively short terms and the
investment-grade credit rating of the counterparty, which signals a relative low
probability of default.

INVENTORIES

Inventories are measured at acquisition or manufacturing costs or at the lower
net realizable values derived from the selling price on the balance sheet date.
The acquisition cost of merchandise is determined using an averaging method.
Value adjustments are adequately recorded, depending on age, seasonality and
realizable market prices, in a manner that is standard throughout the Group.

TRADE RECEIVABLES

Trade Receivables are initially measured at the transaction price and subse-
quently at amortised cost with deduction of value adjustments. The transaction
price according to IFRS 15 “Revenue from Contracts with Customers” is the
amount of the consideration expected by the company for the delivery of goods or
the provision of services to customers, not taking into account the amounts
collected on behalf of third parties.

For determining the value adjustments to trade receivables, PUMA uniformly ap-
plies the simplified method in order to determine the expected credit losses over
the remaining lifetime of the trade receivables (called "lifetime expected credit
losses") in accordance with the provisions of IFRS 9 “Financial Instruments”. For
this, trade receivables are classified by geographic region to suitable groups with
shared credit risk characteristics. The expected credit losses are calculated
using a matrix that presents the age structure of the receivables and depicts a
likelihood of loss for the individual maturity bands of the receivables on the basis
of historic credit loss events and future-based factors. The percentage rates for
the loss likelihoods are checked regularly to ensure they are up to date. If objec-
tive indications of a credit impairment are found regarding the trade receivables
of a certain customer, a detailed analysis of this customer’s specific credit risk is
conducted and an individual value adjustment is recognized for the trade receiva-
bles with respect to this customer. If a credit insurance is in place, it is taken into
account in the amount of the value adjustment.

205

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSOTHER ASSETS

PROPERTY, PLANT AND EQUIPMENT

Other assets are initially measured at fair value, taking into account transaction
costs, and subsequently measured at amortised costs after deduction of value
adjustments.

Other financial assets are classified based on the business model for control and
the cash flows of the financial assets. In the Group, financial assets are held ex-
clusively under a business model that provides for “holding” the asset until ma-
turity, in order to collect the contractual cash flows. The subsequent measure-
ment of the Other financial assets is therefore always carried out at amortised
cost. The business model “trading” and the category “measured at fair value
through profit or loss” (FVPL) are not used.

The non-current assets contain loans and other assets. Non-interest-bearing
non-current assets are discounted to present value if the resulting effect is
significant.

NON-CURRENT INVESTMENTS

The investments recognized under non-current financial assets belong to the ca-
tegory “measured at fair value through other comprehensive income” (FVOCI),
since these investments are held over the long term for strategic reasons.

All purchases and disposals of non-current investments are recorded on the tra-
de date. Non-current investments are initially recognized at fair value plus tran-
saction costs. They are also recognized at fair value in subsequent periods if this
can be reliably determined. Unrealized gains and losses are recognized in the
Other Comprehensive Income, taking into account deferred taxes. The gain or
loss on disposal of non-current investments is transferred to retained earnings.

The category “measured at fair value through profit or loss” (FVPL) is not used in
the Group.

Property, plant and equipment are measured at acquisition costs, net of accumu-
lated depreciation. The depreciation period depends on the expected useful life of
the respective item. The straight-line method of depreciation is applied. The use-
ful life depends on the type of the assets involved. Buildings are subject to a use-
ful life of between ten and fifty years, and a useful life of between three to ten ye-
ars is assumed for movable assets. The acquisition costs of property, plant and
equipment also include interest on borrowings in accordance with IAS 23, insofar
as these accrue and the effect is significant.

Repair and maintenance costs are recorded as an expense as of the date on
which they were incurred. Substantial improvements and upgrades are capitali-
zed to the extent that the criteria for capitalization of an asset item apply.

GOODWILL

Goodwill resulting from a business combination is calculated based on the diffe-
rence between the transferred consideration and the Group's share in the fair va-
lue of the acquired assets and liabilities.

Goodwill amounts are allocated to the Group’s cash-generating units that are ex-
pected to benefit from the synergy effects resulting from the business
combination.

An impairment test of goodwill per group of cash-generating units (usually the
smallest company level at which goodwill is monitored) is performed once a year
and whenever there are indicators of impairment and can result in an impair-
ment loss. There is no reversal of an impairment loss for goodwill. See chapter
11 for further details, in particular regarding the assumptions used for the
calculation.

OTHER INTANGIBLE ASSETS

Acquired intangible assets largely consist of concessions, intellectual property
rights and similar rights. These are measured at acquisition costs, net of accu-
mulated amortization. The useful life of intangible assets is between three and
ten years. Depreciation is done on a straight-line basis.

206

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSIf the capitalization requirements of IAS 38.57 "Intangible Assets" are met cumu-
latively, expenses in the development phase for internally generated intangible
assets are capitalized at the time they arise. In subsequent periods, internally
generated intangible assets and acquired intangible assets are measured at cost
less accumulated amortization and impairment losses. In the Group, own work
capitalized is generally depreciated on a straight-line basis over a useful life of 3
years.

The item also includes acquired trademark rights, which are assumed to have an
indefinite useful life in light of the history of the brands and due to the fact that
the brands are continued by PUMA.

IMPAIRMENT OF ASSETS

Intangible assets with an indefinite useful life are not amortised according to
schedule but are subjected to an annual impairment test. Property, plant and
equipment, right-of-use assets, and other intangible assets with finite useful li-
ves are tested for impairment if there is any indication of impairment in the value
of the asset concerned. In order to determine whether there is a requirement to
record the impairment of an asset, the recoverable amount of the respective as-
set (the higher amount of the fair value less costs to sell and value in use) is
compared with the carrying amount of the asset. If the recoverable amount is lo-
wer than the carrying amount, the difference is recorded as an impairment loss.
The test for impairment is performed, if possible, at the level of the respective
individual asset, otherwise at the level of the cash-generating unit. Goodwill, on
the other hand, is tested for impairment only at the level of a group of cash-ge-
nerating units. If it is determined within the scope of the impairment test that an
asset needs to be written down, then the goodwill, if any, of the group of cash-
generating units is written down initially and, in a second step, the remaining
amount is distributed proportionately over the remaining assets within the appli-
cation scope of IAS 36. If the reason for the recorded impairment no longer app-
lies, a reversal of impairment loss is recorded to the maximum amount of the
amortised costs. There is no reversal of an impairment loss for goodwill.

Impairment tests are performed using the discounted cash flow method. For de-
termining the fair value less costs to sell and value in use, the expected cash
flows are based on corporate planning data. Expected cash flows are discounted
using an interest rate in line with market conditions. As part of the fair value de-

termination less cost to sell, no special synergies of cash-generating units are
taken into account, and corporate planning data is adjusted to the assumptions of
market participants, if required. Moreover, there is a difference between the fair
value less costs to sell and the value in use because the costs to sell are also ta-
ken into account.

Trademarks with an indefinite useful life are subjected to an impairment test ba-
sed on the relief-from-royalty method during the financial year or when the oc-
casion arises. Should indications of a value impairment of a self-used trademark
arise, the recoverability of the trademark is not only measured individually using
the relief-from-royalty method, but the recoverable amount of the group of cash-
generating units to which the trademark is to be allocated is also determined.

The inclusion of the right-of-use assets due to the initial application of IFRS 16
resulted in an increase of the carrying amounts to be tested. This has an effect
on the impairment tests in 2019. In contrast, the initial application of IFRS 16 also
resulted in an increase of the recoverable amount because lease payments were
eliminated from Free cash flow. In addition, due to the recognition of the lease
liabilities of peer group companies on the balance sheet, their debt ratio has in-
creased and consequently the weighted average capital costs (WACC) have
decreased.

Overall, the adjustments did not have any effect on the result of the impairment
tests.

See chapter 11 for further details, in particular regarding the assumptions used
for the calculation.

FINANCIAL DEBT, OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

In general, these items are recognized at their acquisition cost, taking into ac-
count transaction costs and subsequently recognized at amortised cost. Non-in-
terest or low-interest-bearing liabilities with a term of at least one year are reco-
gnized at present value, taking into account an interest rate in line with market
conditions, and are compounded until their maturity at their repayment amount.
Liabilities from finance lease agreements are recorded as of the beginning of the
lease transaction at the amount of the present value of the minimum lease

207

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSamount, or at the lower fair value, and are adjusted by the repayment amount of
the lease installments.

The category “measured at fair value through profit or loss” (FVPL) is not used in
the Group with regard to financial liabilities.

As a general rule, current financial liabilities also include those long-term loans
that have a maximum residual term of up to one year.

PROVISIONS FOR PENSIONS AND SIMILAR OBLIGATIONS

In addition to defined benefit plans, some companies apply defined contribution
plans, which do not result in any additional pension commitment other than the
current contributions. The pension provision under defined benefit plans is gene-
rally calculated using the projected unit credit method. This method takes into
account not only known pension benefits and pension rights accrued as of the re-
porting date, but also expected future salary and pension increases. The defined
benefit obligation (DBO) is calculated by discounting expected future cash out-
flows at the rate of return on senior, fixed-rate corporate bonds. The currencies
and maturity periods of the underlying corporate bonds are consistent with the
currencies and maturity periods of the obligations to be satisfied. In some of the
plans, the obligation is accompanied by a plan asset. In that case, the pension
provision shown is reduced by the plan asset.

Revaluations, consisting of actuarial profits and losses, changes resulting from
use of the asset ceiling and return on plan assets (without interest on the net
debt) are immediately recorded under Other Comprehensive Income. The reva-
luations recorded in Other Comprehensive Income are part of the retained
earnings and are no longer reclassified into the income statement. Past service
costs are recorded as an expense if changes are made to the plan.

OTHER PROVISIONS

Provisions are recognized if the Group, as a result of a past event, has a current
obligation and this obligation is likely to result in an outflow of resources with
economic benefits, the amount of which can be reliably estimated. The provisions
are recognized at their settlement value as determined on the basis of the best
possible estimate and are not offset by income. Non-current provisions are
discounted.

Provisions for the expected expenses from warranty obligations pursuant to the
respective national sales contract laws are recognized at the time of sale of the
relevant products, according to the best estimate in relation to the expenditure
needed in order to fulfill the Group’s obligation.

Provisions are also recognized to account for onerous contracts. An onerous
contract is assumed to exist where the unavoidable costs for fulfilling the
contract exceed the economic benefit arising from this contract.

Provisions for restructuring measures are also recorded if a detailed, formal re-
structuring plan has been prepared, which has created a justified expectation
that the restructuring measures will be carried out by those concerned due to its
implementation starting or its major components being announced.

TREASURY SHARES

Treasury stock is deducted from equity at its market price as of the date of acqui-
sition, plus incidental acquisition costs. Pursuant to the authorization of the An-
nual General Meeting, treasury stock can be repurchased for any authorized pur-
pose, including the flexible management of the Company's capital requirements.

MANAGEMENT INCENTIVE PROGRAMS

Details regarding the assumed life expectancy and the mortality tables used are
shown in chapter 15.

PUMA uses cash-settled share-based payments and key performance indicator-
based long-term incentive programs.

For share-based remunerations with cash compensation, a liability is recorded
for the services received and measured with its fair value upon recognition. Until
the debt is cleared, its fair value is recalculated on every balance sheet date and

208

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSon the settlement date and all changes to the fair value are recognized in the in-
come statement.

During the three-year term of the respective programs, the medium-term tar-
gets of the PUMA Group with regard to operating result (EBIT), cash flow and
gross profit margin are determined for key figure-based compensation processes
and recognized in the income statement as Other Provisions with their respective
degree of target achievement.

RECOGNITION OF SALES REVENUES

The Group recognizes sales revenues from the sale of sporting goods. The sales
revenues are measured at fair value of the consideration to which the Group ex-
pects to be entitled from the contract with the customer, taking into account re-
turns, discounts and rebates. Amounts collected on behalf of third parties are not
included in the sales revenues. The Group records sales revenues at the time
when PUMA fulfills its performance obligation to the customer and has transfer-
red the right of disposal over the product to the customer.

The Group sells footwear, apparel and accessories both to wholesalers and di-
rectly to customers through its own retail stores. Meanwhile, the sales-related
warranty services cannot be purchased separately and do not lead to services
that go beyond the assurance of the specifications at the time of the transfer of
risk. Accordingly, the Group records warranties in the balance sheet in conformi-
ty with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

In the case of sales of products to wholesalers, the sales revenue is recorded at
the date on which the right of disposal over the products is transferred to the
customer, in other words, when the products have been shipped to the specific
location of the wholesaler (delivery). After delivery, the wholesaler bears the in-
ventory risk and has full right of disposal over the manner and means of distri-
bution and the selling price of the products. In the case of sales to end custom-
ers in the Group’s own retail stores, the sales revenues are recorded at the date
when the right of disposal over the products is transferred to the end customer,
in other words, the date on which the end customer buys the products in the re-
tail shop. The payment of the purchase price is due as soon as the customer
purchases the products.

Under certain conditions and according to the contractual stipulations, the custo-
mer has the option to exchange products or return them for a credit. The amount
of the expected returns is estimated on the basis of past experience and is de-
ducted from sales revenues by a provision for returns. The asset value of the
right arising from the product return claim is recorded under Inventories and
leads to a corresponding reduction of Cost of Sales.

ROYALTY AND COMMISSION INCOME

The Group records royalty and commission income from the licensing of trade-
mark rights to third parties. Income from royalties is recognized in the income
statement in accordance with the invoices to be submitted by the licensees. In
certain cases, values must be estimated in order to permit accounting on an ac-
crual basis. Commission income is invoiced if the underlying purchase transac-
tion is classified as realized.

ADVERTISING AND PROMOTIONAL EXPENSES

Advertising expenses are recognized in the income statement as of the date of
their accrual. In general, promotional expenses stretching over several years are
recognized as an expense over the contractual term on an accrual basis. Any ex-
penditure surplus resulting from this allocation of expenses after the balance
sheet date are recognized in the form of an impairment of assets or a provision
for anticipated losses in the financial statements.

PRODUCT DEVELOPMENT

PUMA continuously develops new products in order to meet market require-
ments and market changes. Research costs are expensed in full at the time they
are incurred. Development costs are also recognized as an expense when they do
not meet the recognition criteria of IAS 38 "Intangible Assets".

FINANCIAL RESULT

The financial result includes the results from associated companies and interest
income from financial investments as well as interest expenses from loans and
in connection with financial instruments. Financial results also include interest
expenses from lease liabilities, discounted, non-current liabilities and from pen-

209

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSsion provisions that are associated with business combinations or arise from the
measurement of pension commitments.

Exchange rate effects that can be directly allocated to an underlying transaction
are shown in the respective income statement item.

INCOME TAXES

Current income taxes are determined in accordance with the tax regulations of
the respective countries where the Company conducts its operations.

DEFERRED TAXES

Deferred taxes resulting from temporary valuation differences between the IFRS
and tax balance sheets of individual Group companies and from consolidation
procedures, which are levied by the same taxation authority and can be netted,
are charged to each taxable entity and recognized either as deferred tax assets
or deferred tax liabilities.

With regard to the leases that were capitalized, tax deduction potential is alloca-
ted to the respective right-of-use asset. If temporary differences arise during
subsequent valuation from a netting perspective of right-of-use asset and lease
liability, deferred tax items will be created, provided the requirements under IAS
12 are met.

Deferred tax assets may also include claims for tax reductions that result from
the expected utilization of existing losses carried forward to subsequent years
and which is sufficiently certain to materialize. Deferred tax assets or liabilities
may also result from accounting treatments that do not affect the income state-
ment. Deferred taxes are calculated on the basis of the tax rates that apply to the
reversal in the individual countries and that are in force or adopted as of the ba-
lance sheet date.

Deferred tax assets are shown only to the extent that the respective tax advanta-
ge is likely to materialize. Value adjustments are recognized on the basis of the
past earnings situation and the business expectations for the foreseeable future,
if this criterion is not fulfilled.

ASSUMPTIONS AND ESTIMATES

The preparation of the consolidated financial statements requires some assump-
tions and estimates that have an impact on the measurement and presentation of
the recognized assets and liabilities, income and expenses, as well as contingent
liabilities. The assumptions and estimates are based on premises, which in turn
are based on currently available information. In individual cases, the actual va-
lues may deviate from the assumptions and estimates made. Consequently, fu-
ture periods involve a risk of adjustment to the carrying amount of the assets and
liabilities concerned. If the actual development differs from the expectation, the
premises and, if necessary, the carrying amounts of the relevant assets and
debts are adjusted with an effect on profit or loss.

All assumptions and estimates are continuously reassessed. They are based on
historical experiences and other factors, including expectations regarding future
global and industry-related trends that appear reasonable under the current cir-
cumstances. Assumptions and estimates are made in particular with regard to
evaluating the control of companies with non-controlling interests, the measure-
ment of goodwill and brands, pension obligations, derivative financial instru-
ments and taxes. The most significant forward-looking assumptions and sources
of estimation and uncertainty as of the reporting date concerning the above-
mentioned items are discussed below.

Goodwill and Brands

A review of the impairment of goodwill is based on the calculation of the value in
use as a leading valuation concept. In order to calculate the value in use, the
Group must estimate the future cash flows from those cash-generating units to
which the goodwill is allocated. To this end, the data used were from the three-
year plan, which is based on forecasts of the overall economic development and
the resulting industry-specific consumer behavior. Another key assumption con-
cerns the determination of an appropriate interest rate for discounting the cash
flow to present value (discounted cash flow method). The “relief from royalty me-
thod” is used to value brands. See chapter 11 for further details, in particular re-
garding the assumptions used for the calculation.

210

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSPension Obligations

Pension obligations are determined using an actuarial calculation. This calculati-
on is contingent on a large number of factors that are based on assumptions and
estimates regarding the discount rate, the expected return on plan assets, future
wage and salary increases, mortality and future pension increases. Due to the
long-term nature of the commitments made, the assumptions are subject to si-
gnificant uncertainties. Any change in these assumptions has an impact on the
carrying amount of the pension obligations. The Group determines at the end of
each year the discount rate applied to determine the present value of future pay-
ments. This discount rate is based on the interest rates of corporate bonds with
the highest credit rating that are denominated in the currency in which the bene-
fits are paid and the maturity of which corresponds to that of the pension obliga-
tions. See chapter 15 for further details, in particular regarding the parameters
used for the calculation.

Taxes

Tax items are determined taking into account the various prevailing local tax laws
and the relevant administrative opinions and, due to their complexity, may be
subject to different interpretations by persons subject to tax on the one hand and
the tax authorities on the other hand. Differing interpretations of tax laws may
result in subsequent tax payments for past years; depending on the manage-
ment’s assessment, these differing opinions may be taken into account using the
most probable amount for the respective case.

The recognition of deferred taxes, in particular with respect to tax losses carried
forward, requires that estimates and assumptions be made concerning future tax
planning strategies as well as expected dates of occurrence and the amount of
future taxable income. The taxable income from the relevant corporate planning

is derived for this judgment. This takes into account the past financial position
and the business development expected in the future. Deferred tax assets on los-
ses carried forward are recorded in the event of companies incurring a loss only
if it is highly probable that future positive income will be achieved that can be off-
set against these tax losses carried forward in the next 5 years. Please see chap-
ter 8 for further information and detailed assumptions.

Derivative Financial Instruments

The assumptions used for estimating derivative financial instruments are based
on the prevailing market conditions as of the balance sheet date and thus reflect
the fair value. See chapter 25 for further information..

Leases

The measurement of the lease liabilities is based on assumptions for the dis-
count rates used, the term of the lease agreements and the deferral of fixed lea-
se payments. To determine the present value of future minimum lease payments,
PUMA uses country- and currency-specific interest rates on borrowings with
compatible terms. In addition to the basic lease period, the Group includes ex-
tension options in the determination of the agreement term if management is
sufficiently certain that such an option will be exercised after taking into account
all facts and circumstances. The fixed lease payments also include firmly agreed
upon minimum amounts for agreements with a predominantly variable lease
amount.

211

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE BALANCE SHEET

3. CASH AND CASH EQUIVALENTS

As of December 31, 2019, the Group has € 518.1 million (previous year: € 463.7
million) in cash and cash equivalents. The average effective interest rate of finan-
cial investments was 0.9% (previous year: 0.8%). There are no restrictions on
disposition.

The table shows the carrying amounts of the inventories net of value adjust-
ments. Of the value adjustments in the amount of € 76.3 million (previous year:
€ 64.4 million), approx. 66.7% (previous year approx. 68.1%) were recognized as
an expense under cost of sales in the financial year 2019.

The amount of inventories recorded as an expense during the period mainly in-
cludes the cost of sales shown in the consolidated income statement.

The right to return goods represents the merchandise value of the products whe-
re a return is expected.

4. INVENTORIES

Inventories are allocated to the following main groups:

➔

T.16

(€ million)

5. TRADE RECEIVABLES

This item consists of:

2019

2018

Raw materials, consumables and supplies

18.5

18.0

➔

T.17

(€ million)

Finished goods and merchandise/inventory

Footwear

Apparel

Accessories/Other

Goods in transit

Inventory adjustments related to returns

Total

364.0

294.4

127.2

267.0

39.0

1,110.2

313.2

213.6

109.0

228.0

33.5

915.1

Trade receivables, gross

Less value adjustments

Trade receivables, net

2019

2018

648.5

-36.8

611.7

591.3

-37.7

553.7

212

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe value adjustments to trade receivables relate to receivables in connection
with sales revenues from contracts with customers and developed as follows:

The age structure of the trade receivables is as follows:

➔

T.18

(€ million)

➔

T.19

(€ million)

2019

2018

2019

Total

Not
due

0–30
days

31–90
days

91–180
days

Status of value adjustments as of January 1

Changes in scope

Exchange rate differences

Additions

Utilization

Reversals

Status of value adjustments as of December 31

37.7

0.0

0.1

4.9

-2.3

-3.6

36.8

37.8

0.0

-0.2

9.9

-8.0

-1.7

37.7

Gross carrying amount -
Trade receivables

Value adjustment

Net carrying amount -
Trade receivables

Expected loss rate

Over
180
days

27.8

24.2

3.6

9.4

3.1

6.3

648.5

533.0

36.8

3.9

54.9

2.1

23.4

3.5

611.7

529.1

0.7%

52.8

19.9

3.8%

14.9%

33.4%

86.9%

Receivables due for more than 90 days are allocated to Level 3 as "objectively im-
paired", the remaining receivables are allocated to Level 2.

213

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

T.20

(€ million)

6. OTHER CURRENT FINANCIAL ASSETS

2018

Total

Not
due

0–30
days

31–90
days

91–180
days

Gross carrying amount-
Trade receivables

Value adjustment

Net carrying amount -
Trade receivables

Expected loss quote

591.3

478.9

37.7

5.7

53.8

0.7

22.2

3.6

553.7

473.3

1.2%

53.0

18.6

1.4%

16.1%

40.1%

86.4%

Total

Over
180
days

28.3

24.5

3.8

This item consists of:

➔

T.21

(€ million)

Fair value of derivative financial instruments

Other financial assets

8.1

3.3

4.9

2019

45.2

31.4

76.6

2018

72.6

38.6

111.2

With respect to the net carrying amount of trade receivables, PUMA assumes
that the debtors will satisfy their payment obligations. There are no significant
risk concentrations as the customer base is very broad and there are no
correlations.

The amount shown is due within one year. The fair value corresponds to the car-
rying amount.

The decrease in derivative financial instruments is mainly due to the lower US
dollar exchange rate.

7. OTHER CURRENT ASSETS

This item consists of:

➔

T.22

(€ million)

2019

2018

Prepaid expense relating to the subsequent
period

Other receivables

Total

63.1

67.4

130.5

49.7

65.5

115.2

214

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe amount shown is due within one year. The fair value corresponds to the car-
rying amount.
The amount shown is due within one year. The fair value corresponds to the car-
rying amount.
Other receivables mainly include VAT receivables amounting to € 30.1 million
(previous year: € 41.9 million).
Other receivables mainly include VAT receivables amounting to € 30.1 million
(previous year: € 41.9 million).

8. DEFERRED TAXES

Deferred taxes relate to the items shown below:
8. DEFERRED TAXES

Deferred taxes relate to the items shown below:

➔

T.23

(€ million)

Tax loss carryforwards

Non-current assets
Tax loss carryforwards
Current assets
Non-current assets
Provisions and other liabilities
Current assets
Deferred tax assets (before netting)
Provisions and other liabilities
Non-current assets
Deferred tax assets (before netting)
Current assets
Non-current assets
Provisions and other liabilities
Current assets
Deferred tax liabilities (before netting)
Provisions and other liabilities
Deferred tax assets, net
Deferred tax liabilities (before netting)

Deferred tax assets, net

2019

2019
89.5

39.6
89.5
48.7
39.6
79.7
48.7
257.5
79.7
61.2
257.5
7.9
61.2
3.7
7.9
72.7
3.7
184.8
72.7

184.8

2018

2018
76.2

41.6
76.2
46.8
41.6
63.5
46.8
228.0
63.5
53.5
228.0
8.6
53.5
6.1
8.6
68.2
6.1
159.9
68.2

159.9

Of the deferred tax assets € 117.1 million (previous year: € 105.5 million) are
current, and of the deferred tax liabilities € 8.9 million (previous year: € 11.8 mil-
Of the deferred tax assets € 117.1 million (previous year: € 105.5 million) are
lion) are current.
current, and of the deferred tax liabilities € 8.9 million (previous year: € 11.8 mil-
lion) are current.

As of December 31, 2019, tax losses carried forward amounted to a total of
€ 515.0 million (previous year: € 541.1 million). This results in a deferred tax as-
As of December 31, 2019, tax losses carried forward amounted to a total of
set of € 141.4 million (previous year: € 147.6 million). Deferred tax liabilities were
€ 515.0 million (previous year: € 541.1 million). This results in a deferred tax as-
recognized for these items in the amount at which the associated tax advantages
set of € 141.4 million (previous year: € 147.6 million). Deferred tax liabilities were
are likely to be realized in the form of future profits for income tax purposes. Ac-
recognized for these items in the amount at which the associated tax advantages
cordingly, deferred tax assets for tax loss carryforwards in the amount of
are likely to be realized in the form of future profits for income tax purposes. Ac-
€ 52.0 million (previous year: € 71.4 million) were not recognized; of these,
cordingly, deferred tax assets for tax loss carryforwards in the amount of
€ 51.3 million (previous year: € 71.1 million) cannot expire, but € 13.6 million
€ 52.0 million (previous year: € 71.4 million) were not recognized; of these,
(previous year: € 13.3 million) will never be usable due to the absence of future
€ 51.3 million (previous year: € 71.1 million) cannot expire, but € 13.6 million
expectations. The remaining unrecognized deferred tax receivables of € 0.7 milli-
(previous year: € 13.3 million) will never be usable due to the absence of future
on (previous year: € 0.3 million) will expire within the next six years.
expectations. The remaining unrecognized deferred tax receivables of € 0.7 milli-
on (previous year: € 0.3 million) will expire within the next six years.
In addition, no deferred taxes were recognized for deductible temporary differen-
ces amounting to € 4.4 million (previous year: € 4.8 million) because their rea-
In addition, no deferred taxes were recognized for deductible temporary differen-
lization was not expected as of the balance sheet date.
ces amounting to € 4.4 million (previous year: € 4.8 million) because their rea-
lization was not expected as of the balance sheet date.
Deferred tax liabilities for withholding taxes from possible dividends on retained
earnings of subsidiaries that serve to cover the financing needs of the respective
Deferred tax liabilities for withholding taxes from possible dividends on retained
company were not accumulated, since it is most likely that such temporary diffe-
earnings of subsidiaries that serve to cover the financing needs of the respective
rences will not be cleared in the near future.
company were not accumulated, since it is most likely that such temporary diffe-
rences will not be cleared in the near future.
Deferred tax assets and liabilities are netted if they relate to a taxable entity and
can in fact be netted. Accordingly, they are shown in the balance sheet as follows:
Deferred tax assets and liabilities are netted if they relate to a taxable entity and
can in fact be netted. Accordingly, they are shown in the balance sheet as follows:

➔

T.24

(€ million)

Deferred tax assets

Deferred tax liabilities
Deferred tax assets
Deferred tax assets, net
Deferred tax liabilities

Deferred tax assets, net

2019

2019
237.7

53.0
237.7
184.8
53.0

184.8

2018

2018
207.6

47.7
207.6
159.9
47.7

159.9

215

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe changes in deferred tax assets were as follows:

➔

T.25

(€ million)

Deferred tax assets, previous year

Recognition in the Income Statement

Adjustment against Other Comprehensive
Income

Deferred tax assets

2019

207.6

33.2

-3.0

237.7

2018

207.9

11.0

-11.4

207.6

The changes in deferred tax liabilities were as follows:

➔

T.26

(€ million)

Deferred tax liabilities, previous year

Recognition in the Income Statement

Adjustment against Other Comprehensive
Income

Deferred tax liabilities

9. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at their carrying amounts consist of:

➔

T.27

(€ million)

Land and buildings, including buildings on
third-party land

Technical equipment and machinery

Other equipment, factory and office equipment

Assets under construction

Total

2019

2018

118.0

9.8

175.3

91.7

394.8

121.4

20.8

137.3

15.2

294.6

2019

2018

The carrying amount of property, plant and equipment is derived from the acqui-
sition costs. Accumulated depreciation of property, plant and equipment amoun-
ted to € 378.1 million (previous year: € 325.4 million).

47.7

4.4

0.9

53.0

37.6

8.1

2.1

47.7

In the previous year, the item Other equipment, factory and office equipment in-
cluded leased objects (finance leasing) in the amount of € 0.2 million, and the
item Technical equipment and machines included € 8.3 million. With the adopti-
on of IFRS 16, these will now be presented under right-of-use assets.

The changes in property, plant and equipment in the financial year 2019 are
shown in “Changes in Fixed Assets” in Appendix 1 to the notes of the consolida-
ted financial statements. During the reporting year, there are no impairment ex-
penses that exceed current depreciation (previous year: € 0.6 million).

216

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS10. LEASES

The Group rents and leases offices, warehouses, facilities and fleets of vehicles
and sales rooms for its own retail business. Rental agreements for the retail
business are concluded for terms of between five and fifteen years. The remai-
ning rental and lease agreements typically have residual terms of between one
and five years. Some agreements include options to renew and price adjustment
clauses.

The carrying amounts for
relate to the following asset classes:

recognized on the balance sheet

The following

result:

➔

T.29

(€ million)

Current lease liabilities

Non-current lease liabilities

Total

2019

144.8

600.5

745.3

➔

T.28

(€ million)

Land and buildings - Retail stores

Land and buildings - Warehouses & Offices

Others (Technical equipment and machines and
motor vehicles)

Total

2019

419.6

281.7

17.7

719.0

2018

In the previous year, leased items from finance leases were recognized under
Property, Plant and Equipment (chapter 9).

The changes in right-of-use assets in the financial year 2019 are shown in
“Changes in Fixed Assets” in Appendix 1 to the notes to the consolidated financial
statements. Impairment losses in accordance with IAS 36 were not incurred in
the financial year.

The amounts recognized in the income statement are as follows:

➔

T.30

(€ million)

Depreciation of right-of-use assets (included in operating
expenses)

Profit (-)/loss (+) from disposal/revaluation of right-of-use
assets/lease liabilities (included in operating expenses)

Interest expense (included in financial expenses)

Short-term leases (included in operating expenses)

Leases of low-value assets (included in operating expenses)

Variable lease payments (included in operating expenses)

Total

2018

0.8

7.5

8.3

2019

148,0

-0.3

29.7

6.9

0.7

28.3

213.4

217

right-of-use assets lease liabilities Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSVariable lease payments are based on the sales revenue amount and are therefo-
re dependent on the overall economic development of the next years.

11. INTANGIBLE ASSETS

Total cash outflows from lease liabilities in 2019 amounted to € 170.5 million
(previous year: € 1.8 million exclusively for leases classified as finance leases).

As of December 31, 2019, PUMA has non-recognized liabilities of € 1.6 million
from short-term leases. The difference to the expenses from current leases re-
cognized in the income statement in 2019 results from the expiring leases in the
first application year of IFRS 16.

In 2019, PUMA entered into lease agreements that had not yet commenced by
year-end. As a result, no lease liabilities and corresponding right-of-use assets
had been recognized as of December 31, 2019. The future lease payments in con-
nection with these agreements amount to € 7.4 million for the next year,
€ 74.1 million for years two to five, and € 176.7 million for the subsequent period.
The lease terms for these are up to 15 years.

The maturity analysis of lease liabilities is as follows:

➔

T.31

(€ million)

Residual term of:

1 to 2 years

2 to 5 years

more than 5 years

Total (undiscounted)

Interests

Total

2019

2018

169.4

443.5

248.1

861.0

-115.7

745.3

1.7

8.3

10.0

-1.7

8.3

Intangible assets mainly include goodwill, intangible assets with indefinite useful
lives, assets associated with the Company’s own retail activities and software
licenses.

Goodwill and intangible assets with indefinite useful lives are not amortized ac-
cording to schedule. Impairment tests with regard to goodwill were performed in
the past financial year using the discounted cash flow method. The data from the
three-year plan for the respective cash-generating unit or group of cash-genera-
ting units was used as a basis for this. Planning on the level of the cash-genera-
ting units was thereby derived from the PUMA Group’s three-year plan. Group-
level planning shows an overall average annual sales growth of around 10% on a
currency-adjusted basis and forecasts an EBIT margin of around 10% by
2021/2022. In addition to the sales growth, the improved EBIT margin in the plan-
ning period also resulted from the slight increase in the gross profit margin and
the slightly weaker percentage increase of other operating income and expenses
compared to sales. The planning of investments and working capital is primarily
based on past experience. The future tax payments are based on current tax ra-
tes. Cash flows beyond the three-year period as a rule are forecast with a steady
growth rate of 2.0% (previous years: 2.0%).
The recoverable amount for the respective cash-generating unit or group of
cash-generating units was determined on the basis of the value in use. This did
not result in an impairment loss.

In connection with the Golf business unit (CPG - Cobra PUMA Golf), the Cobra
brand exists as an intangible asset with an indefinite useful life amounting to
€ 126.6 million (previous year: € 124.2 million). The carrying amount of the Cobra
brand is significant in comparison to the overall carrying amount of the intangib-
le assets with an indefinite useful life. It was assigned to the North America busi-
ness segment, where the headquarters of Cobra PUMA Golf is located. The reco-
verable amount of the Cobra brand (level 3) was determined using the relief-
from-royalty method. A discount rate of 5.9% p.a. (previous year: 6.1% p.a.), a
royalty rate of 8% (previous year: 8%) and a 2% growth rate (previous year: 2%)
were applied.
If indications of a value impairment of a self-used trademark should arise, the
trademark is not only valued individually using the relief-from-royalty method,

218

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSbut the recoverable amount of the group of cash-generating units to which the
trademark is to be allocated is also determined. In 2019, there were no indicati-
ons of an impairment.

➔

T.32

(€ million)

In the financial year, development costs in connection with Cobra brand golf
clubs amounting to € 1.8 million (previous year: € 1.7 million) were capitalized.
Development costs are allocated to the item Other Intangible Assets in “Changes
in Fixed Assets”. Current amortization of development costs amounted to
€ 1.8 million in the financial year (previous year: € 1.1 million).

The changes in intangible assets in the financial year are shown in “Changes in
Fixed Assets” of Appendix 1 to the notes to the consolidated financial statements.
The item Other intangible assets includes advance payments in the amount of
€ 9.9 million (previous year: € 21.3 million).

The current amortization of intangible assets in the amount of € 23.5 million
(previous year: € 17.2 million) is included in the other operating expenses. Of
this, € 4.6 million relate to sales and distribution expenses (previous year:
€ 3.5 million), € 0.1 million to expenses for product management/ merchandi-
sing (previous year: € 1.2 million), € 1.8 million to development expenses (pre-
vious year: € 0.0 million), and € 17.0 million to administrative and general expen-
ses (previous year: € 12.5 million). As in the previous year, there were no impair-
ment expenses that exceed current depreciation.

PUMA UK

Genesis

Subtotal Europe

PUMA South Africa

Subtotal EEMEA

PUMA Canada

PUMA United (former Janed)

Subtotal North America

PUMA Argentina

PUMA Chile

PUMA Mexico

Subtotal Latin America

PUMA China

PUMA Taiwan

Subtotal Greater China

PUMA Japan

Goodwill is allocated to the Group’s identifiable group of cash-generating units
(CGUs) according to the countries where the activities are carried out. Summari-
zed by regions, goodwill is allocated as follows:

Subtotal Asia/Pacific (without Greater China)

stichd

Total

2019

2018

1.7

7.2

8.8

2.3

9.8

2.0

11.7

15.5

0.5

10.7

26.8

2.5

13.3

15.8

44.9

1.6

6.8

8.4

2.2

9.1

1.9

11.1

15.2

0.5

10.1

25.9

2.5

12.8

15.3

43.5

139.4

249.7

139.4

245.7

219

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSAssumptions used in conducting the impairment tests in 2019:

Assumptions used in conducting the impairment tests in 2019:

➔

T.33

➔

T.33

Tax rate
(range)

WACC before tax
(range)

WACC after tax
(range)

WACC before tax
(range)

WACC after tax
(range)

Tax rate
(range)

Europe

EEMEA*

North America*

Latin America

Greater China

19.0%

28.0%

19.0%

28.0%

26.7%

7.4%-7.5%

14.4%

7.6%

6.4%

10.8%

6.4%

10.8%

6.1%

26.7%

27.0%-30.0%

7.6%

9.9%-31.2%

6.1%

7.7%-56.6%

27.0%-30.0%

20.0%-25.0%

9.9%-31.2%

6.8%-7.8%

7.7%-56.6%

5.8%-6.3%

termined by a value-in-use calculation with a discount rate of 5.9% p.a. (previous
year: 6.3% p.a.) and a growth rate of 2% (previous year: 2%).

Sensitivity analyses with regard to the impairment tests carried out as of the ba-
lance sheet date show that neither an increase in discount rates by one percen-
tage point, respectively, nor a reduction in growth rates by one percentage point,
respectively, results in any indication of impairment. The sensitivity analysis with
a one percentage point increase in the discount rate and the sensitivity analysis
with a one percentage point reduction of the growth rate likewise do not show
any indication of impairment.

The following table contains the assumptions for the performance of the impair-
ment test in the previous year:

Greater China

Asia/Pacific
(without Greater China)*

Asia/Pacific
(without Greater China)*
stichd*

stichd*

20.0%-25.0%

6.8%-7.8%

5.8%-6.3%

31.8%

25.0%

31.8%

25.0%

8.1%

7.2%

8.1%

7.2%

5.9%

➔

T.34

➔

T.34

* The information for EEMEA, North America, Asia/Pacific (without Greater China) and stichd relates
in each case to only one cash-generating unit (CGU)

Europe

EEMEA*

The tax rates used for the impairment test correspond to the actual tax rates in
the respective countries. The cost of capital (WACC) was derived from a weighted
average capital cost calculation taking into account a market-weighted five-year
average debt/equity structure and financing costs, respectively taking into ac-
count the main competitors of the respective group of cash-generating units.

In addition, a growth rate of 2% (previous year: 2%) is generally assumed. A
growth rate of less than 2% (previous year: less than 2%) was only used in justi-
fied exceptional cases.

stichd*

EEMEA*

North America*

Latin America

Greater China

Asia/Pacific
(without Greater China)*

Asia/Pacific
(without Greater China)*
stichd*

Tax rate (range)

WACC before tax
(range)

WACC after tax
(range)

WACC before tax
(range)

WACC after tax
(range)

17.0%-19.0%

7.6%-7.9%

17.0%-19.0%

28.0%

26.4%

7.6%-7.9%

15.3%

8.2%

6.7%

11.4%

6.7%

11.4%

6.5%

26.4%

27.0%-30.0%

8.2%

10.3%-39.5%

6.5%

8.0%-52.6%

27.0%-30.0%

17.0%-25.0%

10.3%-39.5%

7.0%-9.0%

8.0%-52.6%

6.1%-7.2%

17.0%-25.0%

7.0%-9.0%

6.1%-7.2%

30.0%

25.0%

30.0%

25.0%

8.3%

7.8%

8.3%

7.8%

6.1%

6.3%

6.1%

6.3%

* The information for EEMEA, North America, Asia/Pacific (without Greater China) and stichd relates
in each case to only one cash-generating unit (CGU)

The cash-generating unit stichd (formerly ‘Dobotex’) includes goodwill of
€ 139.4 million (previous year: € 139.4 million), which is significant in compari-
son to the overall carrying amount of goodwill. The recoverable amount was de-

A growth rate of 2% was generally assumed, and a growth rate of under 2% has
only been used in exceptional cases where this is justified.

220

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS12. OTHER NON-CURRENT ASSETS

Other non-current financial and non-financial assets consist of:

➔

T.35

(€ million)

Non-current investments

Fair value of derivative financial instruments

Other financial assets

Total of other non-current financial assets

Other non-current non-financial assets

Other non-current assets, total

2019

2018

40.0

1.3

30.1

71.5

19.3

90.8

36.6

3.1

25.6

65.4

9.4

74.8

The non-current investments relate to the 5.0% shareholding in Borussia Dort-
mund GmbH & Co. Kommanditgesellschaft auf Aktien (BVB) with registered of-
fice in Dortmund, Germany.

The other financial assets mainly include rental deposits of € 26.8 million (pre-
vious year: € 22.5 million). The other non-current non-financial assets mainly in-
clude deferrals in connection with promotional and advertising agreements.

In the financial year 2019, there were no indicators of impairment of other non-
current assets.

221

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS13. LIABILITIES

The residual terms of liabilities are as follows:

➔

T.36

(€ million)

Financial liabilities

Trade payables

Liabilities from acquisitions

Other liabilities*

Liabilities from other taxes

Liabilities relating to social security

Payables to employees

Refund liabilities

Liabilities from market valuation of forward exchange transactions

Other liabilities

Total

* The maturity analysis for the lease liabilities is shown in chapter 10.

2019

2018

Residual term of

Total

up to 1
year

1 to 5
years

over
5 years

Total

up to 1
year

1 to 5
years

over
5 years

173.5

843.7

39.5

7.2

114.0

208.3

38.2

38.1

10.2

163.3

843.7

39.5

7.2

114.0

208.3

34.1

38.0

4.0

0.8

1,462.5

1,295.1

168.2

190.9

705.3

3.3

41.8

6.5

94.9

20.5

170.4

705.3

3.3

41.8

6.5

94.9

154.9

22.8

45.5

20.7

42.2

2.1

2.2

1,265.9

1,086.9

178.0

0.1

1.4

222

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSPUMA has confirmed credit facilities amounting to a total of € 687.6 million (pre-
vious year: € 691.9 million). Under financial liabilities, € 0.0 million (previous
year: € 1.5 million) was utilized from credit lines granted only until further notice.
Unutilized credit lines totaled € 514.1 million as of December 31, 2019, compared
to € 501.0 million the previous year.

The liabilities from refund obligations result from contracts with customers and
include obligations from customer return rights as well as obligations connected
with customer bonuses.

The table below shows the cash flows of the non-derivative financial liabilities
and of the derivative financial instruments with a positive and negative fair value:

The effective interest rate of the financial liabilities ranged between 0.1% and
8.5% (previous year: 0.1% to 8.4%).

The current financial liabilities can be repaid at any time.

➔

T.37 CASH FLOWS FROM NON-DERIVATIVE AND DERIVATIVE FINANCIAL LIABILITIES

(€ million)

Non-derivative financial liabilities

Financial liabilities

Trade payables

Liabilities from acquisitions

Other liabilities

Derivative financial liabilities and assets

Cash-Inflow from forward exchange transactions

Cash-Outlow from forward exchange transactions

Carrying amount
2019

Cash flow

2020

Cash flow
2021

Cash flow
2022 et seq.

Interest

Repayment

Interest

Repayment

Interest

Repayment

0.7

173.5

843.7

26.9

10.2

843.7

26.9

2,847.9

2,831.1

0.6

103.3

0.7

60.0

0.0

506.3

505.1

223

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe following values were determined in the previous year:

➔

T.38 CASH FLOWS FROM NON-DERIVATIVE AND DERIVATIVE FINANCIAL LIABILITIES

(€ million)

Carrying amount
2018

Cash flow
2019

Cash flow
2020

Cash flow
2021 et seq.

Interest

Repayment

Interest

Repayment

Interest

Repayment

Non-derivative financial liabilities

Financial liabilities

Trade payables

Liabilities from acquisitions

Other liabilities

Derivative financial liabilities and assets

Cash-Inflow from forward exchange transactions

Cash-Outlow from forward exchange transactions

0.8

190.9

705.3

3.3

36.4

20.5

705.3

36.4

2,461.2

2,402.0

The future cash flows from lease liabilities are shown in chapter 10.

0.7

7.1

1.4

163.3

3.3

366.5

363.0

0.0

224

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS14. ADDITIONAL DISCLOSURES ON FINANCIAL INSTRUMENTS

➔

T.39

(€ million)

Assets

Cash and cash equivalents

Trade receivables

Other current financial assets

Derivatives with hedging relationship (fair value) (current and non-current)

Derivatives without hedging relationship (fair value)

Other non-current financial assets

Non-current investments

Liabilities

Financial liabilities (current and non-current)

Trade payables

Liabilities from acquisitions

Lease liabilities (current and non-current)

Other financial liabilities

Derivatives with hedging relationship (fair value) (current and non-current)

Derivatives without hedging relationship (fair value)

Total financial assets at amortised cost

Total financial liabilities at amortised cost

Total financial assets at FVOCI

AC = at amortised cost

2)
3)

FVPL = Fair Value through Profit & Loss

FVOCI = Fair Value through Other Comprehensive Income

Measurement
categories
under IFRS 9

Carrying amount
2019

Fair value
2019

Carrying amount
2018

Fair value
2018

n.a.

FVPL

FVOCI

n.a.

FVPL

518.1

611.7

31.4

45.5

1.1

30.1

40.0

173.5

843.7

0.0

745.3

26.9

36.6

1.6

518.1

611.7

31.4

45.5

1.1

30.1

40.0

173.5

843.7

0.0

745.3

26.9

36.6

1.6

463.7

553.7

38.6

75.7

0.0

25.6

36.6

190.9

705.3

3.3

8.3

36.4

22.5

0.3

463.7

553.7

38.6

75.7

0.0

25.6

36.6

190.9

705.3

3.3

8.3

36.4

22.5

0.3

1,191.3

1,044.1

40.0

1,191.3

1,044.1

40.0

1,081.6

935.9

36.6

935.9

36.6

225

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSPursuant to the contracts entered into, purchase price liabilities associated with
acquisitions of business enterprises lead to payments. The resulting nominal
amounts were discounted at a reasonable market interest rate, depending on the
expected date of payment. There are no liabilities from acquisitions as of Decem-
ber 31, 2019. As of December 31, 2018, there was one liability from acquisitions
which only affected one company and was discounted with a market interest rate
of 0.7%.

The remaining financial liabilities have short residual maturities; the recognized
amounts therefore approximate fair value.

The fair values of derivatives with a hedging relationship at the balance sheet
date are determined on the basis of current market parameters, i.e. reference
prices observable on the market, taking into account forward premiums and dis-
counts. The discounted result of the comparison of the forward price on the re-
porting date with the forward price on the valuation date is included in the mea-
surement. The fair values are also checked for the counterparty’s non-perfor-
mance risk. In doing this, PUMA calculates credit value adjustments (CVA) or
debt value adjustments (DVA) on the basis of an up/down method, taking current
market information into account. No material deviations were found, so that no
adjustments were made to the fair value determined.

Financial instruments that are measured at fair value in the balance sheet were
determined using the following hierarchy:

Use of prices quoted on active markets for identical assets or liabilities.
Use of input factors that do not involve the quoted prices stated under
Level 1, but can be observed for the asset or liability either directly (i.e., as price)
or indirectly (i.e., derivation of prices).

Use of factors for the valuation of the asset or liability that are based on

non-observable market data.

The fair value of the non-current investments held for strategic reasons only re-
fers to equity instruments of the category “fair value through OCI” (FVOCI) and is
determined on the basis of level 1. The market values of derivative assets or lia-
bilities were determined on the basis of level 2.

Cash and cash equivalents, trade receivables and other receivables have short
maturities. Accordingly, as of the reporting date, the carrying amount approxima-
tes fair value. Receivables are stated at nominal value, taking into account de-
ductions for default risk.

The fair values of other financial assets correspond to their carrying amount as
the interest calculation occurs at the prevailing market interest rates on the ba-
lance sheet date. Other (current and non-current) financial assets include
€ 34.6 million (previous year: € 30.4 million) that were pledged as rental deposits
at usual market rates.

The current liabilities to banks can be repaid at any time. Accordingly, as of the
reporting date, the carrying amount approximates fair value. The non-current
bank liabilities consist of fixed-interest loans. The carrying amount represents a
reasonable approximation of their fair value as the interest rate differential is not
significant at the reporting date.

Trade payables have short residual maturities; their carrying amounts therefore
approximate fair value.

226

Level 1:Level 2:Level 3:Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSNet result by measurement categories:

➔

T.40

(€ million)

Financial assets at amortised cost (AC)

Financial liabilities at amortised cost (AC)

Derivatives without hedging relationship

Financial assets measured at fair value through
other comprehensive income (FVOCI)

Total

2019

2018

4.7

-6.5

-2.1

3.4

-0.5

-1.0

-22.0

-0.4

9.1

-14.3

The net result was determined by taking into account interest rates, currency ex-
change effects, value adjustments as well as gains and losses from sales.

General administrative expenses include write-downs of receivables.

15. PENSION PROVISIONS

Pension provisions result from employees’ claims for benefits, which are based
on the statutory or contractual regulations applicable in the respective country,
in the event of invalidity, death or when a certain retirement age has been re-
ached. Pension commitments in the PUMA Group include both benefit- and cont-
ribution-based pension commitments and include both obligations from current
pensions and rights to pensions payable in the future. The pension entitlements
are financed by both provisions and funds.

The risks associated with the pension commitments mainly concern the usual
risks of benefit-based pension plans in relation to possible changes in the dis-
count rate and, to a minor degree, inflation trends and recipient longevity. In or-
der to limit the risks of changed capital market conditions and demographic de-

velopments, plans with the maximum obligations were agreed or insured a few
years ago in Germany and the UK for new hires. The specific risk of obligations
based on salary is low within the PUMA Group. The introduction of an annual cap
for pensionable salary in the UK plan in 2016 covers this risk for the highest obli-
gations. The UK plan is therefore classified as a non-salary obligation.

➔

T.41

(€ million)

Present Value of Pension
Claims 12/31/2019

Salary-based obligations

Annuity

One-off payment

Non-salary-based
obligations

Annuity

One-off payment

Total

Germany

Other
Companies

PUMA-
Group

0.0

28.0

7.3

35.3

0.0

44.8

0.0

44.8

9.4

9.2

0.0

18.6

9.4

9.2

72.8

7.3

98.7

227

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe following values were determined in the previous year:

➔

T.42

(€ million)

Present Value of Pension
Claims 12/31/2018

Salary-based obligations

Annuity

One-off payment

Non-salary-based
obligations

Annuity

One-off payment

Total

Germany

Other
Companies

PUMA-
Group

0.0

25.7

7.1

32.8

0.0

37.6

0.0

37.6

7.3

8.1

0.0

15.4

7.3

8.1

63.3

7.1

85.8

The main pension arrangements are described below:

The general pension scheme of PUMA SE generally provides for pension pay-
ments to a maximum amount of €127.82 per month and per eligible employee. It
was closed for new members beginning in 1996. In addition, PUMA SE provides
individual commitments (fixed sums in different amounts) as well as contributi-
on-based individual commitments (in part from salary conversion). The contribu-
tion-based commitments are insured plans. There are no statutory minimum
funding requirements. The scope of obligation for domestic pension claims
amounts to € 35.3 million at the end of 2019 (previous year: € 32.7 million) and
thus comprises 35.8% of the total obligation. The fair value of the plan assets re-
lative to domestic obligations amounts to € 24.1 million. The corresponding pen-
sion provision amounts to € 11.2 million.

The defined benefit plan in the United Kingdom has not been available to new hi-
res since 2006. This defined benefit plan includes salary and length of service-
based commitments to provide old age, invalidity and surviving dependents’ reti-
rement benefits. In 2016, a growth cap of 1% p.a. was introduced on the pen-
sionable salary. Partial capitalization of the old-age pension is permitted. There
are statutory minimum funding requirements. The obligations regarding pension
claims under the defined benefit plan in the UK amount to € 44.8 million at the
end of 2019 (previous year: € 37.6 million) and thus accounts for 45.4% of the to-
tal obligation. The obligation is covered by assets amounting to € 35.9 million.
The provision amounts to € 8.9 million.

The changes in the present value of pension claims are as follows:

➔

T.43

(€ million)

Present Value of Pension Claims January 1

Cost of the pension claims earned in the
reporting year

Past service costs

(Profits) and losses from settlements

Interest expense on pension claims

Employee contributions

Benefits paid

Effects from transfers

Actuarial gains (-) and losses

Currency exchange effects

Present Value of Pension Claims December 31

2019

85.8

2.3

0.0

2.0

1.0

-2.2

-0.4

8.0

2.2

98.7

2018

81.3

7.2

-0.1

0.0

1.8

0.2

-1.7

-0.1

-2.4

-0.4

85.8

228

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe changes in the plan assets are as follows:

➔

T.44

(€ million)

Plan Assets January 1

Interest income on plan assets

Actuarial gains and losses (-)

Employer contributions

Employee contributions

Benefits paid

Effects from transfers

Currency exchange effects

Plan Assets December 31

2019

2018

56.9

1.3

2.8

1.8

1.0

-1.0

0.0

1.8

64.6

51.6

1.2

-1.8

6.8

0.2

-0.9

0.0

-0.2

56.9

In 2019, benefits paid amounted to € 2.2 million (previous year: € 1.7 million).
Contributions in 2020 are expected to amount to € 3.1 million. Of this, € 1.9 milli-
on is expected to be paid directly by the employer. Contributions to external plan
assets amounted to € 1.8 million in 2019 (previous year: € 6.8 million). Contribu-
tions in 2020 are expected to amount to € 2.1 million.

The changes in pension provisions are as follows:

➔

T.46

(€ million)

Pension Provision January 1

Pension expense

Actuarial gains (-) and losses recorded in Other
Comprehensive Income

Employer contributions

Direct pension payments made by the employer

The pension provision for the Group is derived as follows:

Transfer values

Currency exchange differences

Pension Provision December 31

of which assets

of which liabilities

➔

T.45

(€ million)

Present value of pension claims from benefit
plans

Fair value of plan assets

Financing Status

Amounts not recorded due to the maximum
limit applicable to assets

Pension Provision December 31

2019

2018

98.7

-64.6

34.1

0.0

34.1

85.8

-56.9

28.9

0.0

28.9

2019

2018

28.9

3.0

5.2

-1.8

-1.2

-0.4

0.4

34.1

0.0

34.1

29.7

7.7

-0.6

-6.8

-0.8

-0.1

-0.2

28.9

0.0

28.9

229

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe expenses in the 2019 financial year are structured as follows:

Actuarial gains and losses recorded in Other Comprehensive Income:

➔

T.47

(€ million)

➔

T.48

(€ million)

2019

2018

2019

2018

Cost of the pension claims earned in the
reporting year

Past service costs

Income (-) and expenses from plan settlements

Interest expense on pension claims

Interest income on plan assets

Administration costs

Expenses for Defined Benefit Plans

of which personnel costs

of which financial costs

2.3

0.0

2.0

-1.3

0.0

3.0

2.3

0.7

7.2

-0.1

0.0

1.8

-1.2

0.0

7.7

7.1

0.6

Revaluation of Pension Commitments

Actuarial gains (-) and losses resulting from
changes in demographic assumptions

Actuarial gains (-) and losses resulting from
changes in financial assumptions

Actuarial gains (-) and losses due to
adjustments based on experience

Revaluation of Plan Assets

Amounts not recorded due to the maximum
limit applicable to assets

Adjustment of administration costs

Total Revaluation Amounts recorded directly
in Other Comprehensive Income

8.0

-0.8

8.1

0.7

-2.8

0.0

5.2

In addition to the defined benefit pension plans, PUMA also makes contributions
to defined contribution plans. Payments for the financial year 2019 amounted to
€ 14.0 million (previous year: € 12.5 million).

-2.4

0.8

-2.5

-0.7

1.8

0.0

-0.6

230

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSPlan assets investment classes:

➔

T.49

(€ million)

Cash and cash equivalents

Equity instruments

Bonds

Investment funds

Derivatives

Real estate

Insurance

Others

Total Plan Assets

Of which investment classes with a quoted market price:

➔

T.50

(€ million)

Cash and cash equivalents

Equity instruments

Bonds

Investment funds

Derivatives

Real estate

Insurance

Others

Plan Assets with a quoted Market Price

Plan assets still do not include the Group’s own financial instruments or real es-
tate used by Group companies.

The plan assets are used exclusively to fulfill defined pension commitments. Le-
gal requirements exist in some countries for the type and amount of financial re-
sources that can be chosen; in other countries (for example Germany) they can
be chosen freely. In the UK, a board of trustees made up of company representa-
tives and employees is in charge of asset management. Its investment strategy is
aimed at long-term profits and low volatility. It was revised in 2017 and 2018 and
the risk profile was reduced.

The following assumptions were used to determine pension obligations and pen-
sion expenses:

➔

T.51

Discount rate

Future pension increases

Future salary increases

2019

1.64%

2.16%

1.66%

2018

2.41%

2.31%

1.70%

2019

2018

2.6

0.6

0.9

20.1

6.1

4.1

24.1

6.1

64.6

1.4

0.0

17.3

5.6

3.1

24.6

4.9

56.9

2019

2018

2.6

0.6

0.9

20.1

6.1

3.5

0.0

5.8

39.6

1.4

0.0

17.3

5.6

3.1

0.0

4.9

32.3

The indicated values are weighted average values. A standard interest rate of
1.00% was applied for the eurozone (previous year: 1.75%).

The 2018 G guideline tables were used as mortality tables for Germany. For the
UK, the mortality was assumed based on basic table series S2 taking into ac-
count life expectancy projections in accordance with CMI2018 with a long-term
trend of 1%.

The following overview shows how the present value of pension claims from be-
nefit plans would have been affected by changes to significant actuarial
assumptions.

231

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

T.52

(€ million)

Effect on present value of pension claims if

the discount rate were 50 basis points higher

the discount rate were 50 basis points lower

16. OTHER PROVISIONS

➔

T.53

(€ million)

Provisions for:

Warranties

Purchasing risks

Litigation risks

Personnel

Other

Total

2019

2018

Salary and pension trends have only a negligible effect on the present value of
pension claims due to the structure of the benefit plans.

-8.0

6.2

-6.7

4.9

The weighted average duration of pension commitments is 18 years (previous
year: 17 years).

2018

1.9

9.8

25.9

10.9

17.5

65.9

Currency

adjustments, retransfers

Addition

Utilization

Reversal

0.0

-0.3

-0.2

0.5

0.1

1.3

8.3

6.8

13.3

8.1

37.8

-1.6

-7.9

-4.4

-1.6

-4.2

-19.7

-0.2

-0.7

-4.3

0.0

-0.8

-6.1

2019

1.4

9.4

23.7

22.4

21.0

77.9

232

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe warranty provision is determined on the basis of the historical value of sales
generated during the past six months. It is expected that the majority of these
expenses will fall due within the first six months of the next financial year.
Purchasing risks relate primarily to materials and molds that are required for
the manufacturing of shoes.

Provisions for warranties and purchasing risks do not contain any non-current
provisions (previous year: € 0.0 million).

Litigation risks contain non-current provisions of € 10.0 million (previous year:
€ 7.8 million). Provisions for personnel are exclusively non-current provisions.
Other provisions comprise in particular provisions in relation with dismantling
obligations and other risks. Other provisions include € 10.7 million (previous
year: € 7.5 million) in non-current provisions.

Current provisions are expected to be paid out in the following year, non-current
provisions are expected to be paid out in a period of up to ten years. There are no
significant compounding effects. The recognition and measurement of provisions
is based on past experience from similar transactions. All events until the prepa-
ration of the consolidated financial statements are taken into account here.

17. LIABILITIES FROM ACQUISITIONS

➔

T.54

(€ million)

Due within one year

Due in more than one year

Total

18. EQUITY

SUBSCRIBED CAPITAL

2019

2018

0.0

3.3

The subscribed capital corresponds to the subscribed capital of PUMA SE.

With resolution of the Annual General Meeting of April 18, 2019, the Company
was authorized to carry out a capital increase from Company funds and subse-
quently perform a stock split at a ratio of 1 to 10. In connection with this, the
Company's subscribed capital of previously € 38.6 million (divided into 15,082,464
no-par value shares, which corresponds to a proportional amount of € 2.56 per
share) was increased by € 112.2 million to € 150.8 million from Company funds.

Pursuant to the contracts entered into, purchase price liabilities associated with
acquisitions of business enterprises lead to payments. The resulting nominal
amounts were discounted at a reasonable market interest rate, depending on the
expected date of payment.

As of the balance sheet date, the subscribed capital in accordance with the Arti-
cles of Association corresponds to € 150,824,640.00 and is, after the stock split
took effect on June 10, 2019, divided into 150,824,640 no-par value voting shares.
This corresponds to a proportional amount of € 1.00 per share.

The conditional liability from acquisitions as of December 31, 2018 related to the
acquisition of Genesis Group International Ltd. There were no further liabilities
relating to acquisitions of business enterprises with the early exercise of the
purchase option in 2019.

233

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSChanges in the circulating shares:

TREASURY STOCK

➔

T.55

(in € Mio.)

2019

2018

Circulating shares as of January 1, share

14,951,470

14,946,356

Conversion from Management Incentive
Program

Share buy-back

Issue of new shares as part of the stock split on
June 10, 2019

Issue of Treasury Stock

134,563,230

33,101

5,114

Circulating shares as of December 31, share

149,547,801

14,951,470

CAPITAL RESERVE

The capital reserve includes the premium from issuing shares, as well as
amounts from the grant, conversion and expiration of share options.

RETAINED EARNINGS AND RESULTS CARRIED FORWARD

Retained earnings include the net income of the financial year as well as the in-
come of the companies included in the consolidated financial statements achie-
ved in the past to the extent that it was not distributed.

RESERVE FROM CURRENCY CONVERSION

The equity item for currency conversion serves to record the differences from the
conversion of the financial statements of subsidiaries with non-euro accounting
compared to the date of first consolidation of the subsidiaries.

CASH FLOW HEDGES

The “cash flow hedges” item includes the market valuation of derivative financial
instruments. The item amounting to € -8.8 million (previous year: € 34.1 million)
is offset by deferred taxes of € -0.1 million (previous year: € -1.4 million).

The resolution adopted by the Annual General Meeting on May 6, 2015 authorized
the Company to purchase treasury shares up to a value of 10% of the share capi-
tal until May 5, 2020. If purchased through the stock exchange, the purchase pri-
ce per share may not exceed or fall below 10% of the closing price for the Com-
pany’s shares with the same attributes in the XETRA trading system (or a compa-
rable successor system) during the last three trading days prior to the date of
purchase.

The Company did not make use of the authorization to purchase treasury stock
during the reporting period.

As of the balance sheet date, the Company holds a total of 1,276,839 PUMA sha-
res in its own portfolio, which corresponds to 0.86% of the subscribed capital.

AUTHORIZED CAPITAL

As of December 31, 2019, the Company’s Articles of Association provide for aut-
horized capital totaling € 15,000,000:

Pursuant to Section 4.2. of the Articles of Association, the Management Board is
authorized with the consent of the Supervisory Board to increase the Company’s
share capital by April 11, 2022 by up to € 15,000,000 (Authorized Capital 2017) by
issuing new no-par value bearer shares against cash and/or non-cash contributi-
ons on one or more occasions. In case of capital increases against contributions
in cash, the new shares may be acquired by one or several banks, designated by
the Management Board, subject to the obligation to offer them to the sharehol-
ders for subscription (indirect pre-emption right). The shareholders shall gene-
rally be entitled to pre-emption rights. However, the Management Board is aut-
horized with the consent of the Supervisory Board to exclude shareholders’ sub-
scription rights in whole or in part in the cases specified in Section 4.2. of the Ar-
ticles of Association.

The Management Board of PUMA SE did not make use of the existing authorized
capital in the current reporting period.

234

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSCONDITIONAL CAPITAL
CONDITIONAL CAPITAL
By resolution of the Annual General Meeting of April 12, 2018, the Management
By resolution of the Annual General Meeting of April 12, 2018, the Management
Board was authorized until April 11, 2023, with the consent of the Supervisory
Board was authorized until April 11, 2023, with the consent of the Supervisory
Board, through one or more issues, altogether or in parts and in various tran-
Board, through one or more issues, altogether or in parts and in various tran-
ches at the same time, to issue bearer or registered options and/or convertible
ches at the same time, to issue bearer or registered options and/or convertible
bonds, profit-sharing rights or participation bonds or a combination of these in-
bonds, profit-sharing rights or participation bonds or a combination of these in-
struments with or without a term limitation in a total nominal amount of up to
struments with or without a term limitation in a total nominal amount of up to
€ 1,000,000,000.00 (Conditional Capital 2018).
€ 1,000,000,000.00 (Conditional Capital 2018).

In this connection, the share capital was increased conditionally by up to €
In this connection, the share capital was increased conditionally by up to €
30,164,920.00 by the issue of up to 30,164,920 new units of registered stock. The
30,164,920.00 by the issue of up to 30,164,920 new units of registered stock. The
conditional capital increase will be performed only insofar as use is made of opti-
conditional capital increase will be performed only insofar as use is made of opti-
ons or conversion rights or a conversion or option obligation is fulfilled or insofar
ons or conversion rights or a conversion or option obligation is fulfilled or insofar
as deliveries are made and if other forms of fulfillment are not used for
as deliveries are made and if other forms of fulfillment are not used for
servicing.
servicing.

No use has been made of the authorization to date.
No use has been made of the authorization to date.

DIVIDENDS
DIVIDENDS
The amounts eligible for distribution relate to the retained earnings of PUMA SE,
The amounts eligible for distribution relate to the retained earnings of PUMA SE,
which is determined in accordance with German Commercial Law.
which is determined in accordance with German Commercial Law.

The Management Board and the Supervisory Board will propose to the Annual
The Management Board and the Supervisory Board will propose to the Annual
General Meeting that a dividend of € 0.50 per circulating share, or a total of
General Meeting that a dividend of € 0.50 per circulating share, or a total of
€ 74.8 million (with respect to the circulating shares as of December 31, 2019),
€ 74.8 million (with respect to the circulating shares as of December 31, 2019),
be distributed to the shareholders from the retained earnings of PUMA SE for the
be distributed to the shareholders from the retained earnings of PUMA SE for the
financial year 2019.
financial year 2019.

Proposed appropriation of the retained earnings of PUMA SE:
Proposed appropriation of the retained earnings of PUMA SE:

➔
➔

T.56
T.56

Retained earnings of PUMA SE as of
Retained earnings of PUMA SE as of
December 31, € million
December 31, € million
Retained earnings available for distribution,
Retained earnings available for distribution,
€ million
€ million
Dividend per share, €
Dividend per share, €
Number of circulating shares*
Number of circulating shares*
Total dividend*, € million
Total dividend*, € million
Carried forward to the new accounting
Carried forward to the new accounting
period*, € million
period*, € million

2019
2019

160.7
160.7

160.7
160.7
0.50
0.50
149,547,801
149,547,801
74.8
74.8

85.9
85.9

2018
2018

144.5
144.5

144.5
144.5
3.50
3.50
14,951,470
14,951,470
52.3
52.3

92.2
92.2

* Previous year's values adjusted to the outcome of the Annual General Meeting
* Previous year's values adjusted to the outcome of the Annual General Meeting

NON-CONTROLLING INTERESTS
NON-CONTROLLING INTERESTS
This item comprises the remaining shares of non-controlling interests. The com-
This item comprises the remaining shares of non-controlling interests. The com-
position is shown in chapter 30.
position is shown in chapter 30.

CAPITAL MANAGEMENT
CAPITAL MANAGEMENT
The Group’s objective is to retain a strong equity base in order to maintain both
The Group’s objective is to retain a strong equity base in order to maintain both
investor and market confidence and to strengthen future business performance.
investor and market confidence and to strengthen future business performance.

Capital management relates to the consolidated equity of PUMA. This is shown in
Capital management relates to the consolidated equity of PUMA. This is shown in
the consolidated balance sheet as well as the reconciliation statement con-
the consolidated balance sheet as well as the reconciliation statement con-
cerning “Changes in Equity.”
cerning “Changes in Equity.”

235

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS19. MANAGEMENT INCENTIVE PROGRAMS

In order to bind the management to the Company by a long-term incentive, virtu-
al shares with cash settlement and other long-term incentive programs are used
at PUMA.

The current programs are described below:

EXPLANATION OF “VIRTUAL SHARES”, TERMED “MONETARY UNITS”

Monetary units were granted on an annual basis beginning in 2013 as part of a
management incentive program. Monetary units are based on the PUMA share
performance. Each of these monetary units entitles the holder to a cash payment
at the end of the term. The entitled cash payment compares the performance

using the average virtual appreciation rights of the last thirty trading days before
the start of the year of issue with the virtual appreciation rights of the last thirty
trading days before the exercise date. Monetary units are subject to a vesting pe-
riod of three years. After that, there is an exercise period of two years (starting
with each quarterly publication date for a period of 30 days) which can be freely
used by participants for the purposes of execution. The fundamental exercise
condition after the vesting period is the existence of an active employment relati-
onship with PUMA until the end of the vesting period.

In the financial year 2019, an expense of € 12.6 million was recorded for this pur-
pose on the basis of the employment contract commitments to the Management
Board members.

➔

T.57 VIRTUAL SHARES (MONETARY UNITS)

Issue date

Term

Vesting period

Base price PUMA share at issue

Reference value PUMA-share at the end of the financial year

Reference value PUMA-share at the conversion date

Participants in year of issue

Participants at the end of the financial year

Number of monetary units as of 1/1/2019

Number of monetary units exercised in the FY

Final number of monetary units as of 12/31/2019

Total monetary units

1/1/2014

1/1/2015

1/1/2016

1/1/2017

1/1/2018

1/1/2019

23.20

N/A

17.40

N/A

20.00

N/A

69.77

113,930

-25,310

88,620

24.00

67.69

N/A

37.10

45.13

N/A

Years

44.40

EUR/share

22.56

EUR/share

N/A

EUR/share

107,360

117,440

97,320

107,360

117,440

107,360

117,440

97,320

Persons

236

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSIn the financial year 2019, a stock split was performed with a ratio of 1:10. As a
result of this, all past share values were divided by a factor of 10 and all moneta-
ry units were multiplied by a factor of 10.

This commitment consisting of share-based remuneration transactions with
cash compensation is recorded as personnel provisions and remeasured at fair
value on every balance sheet date, provided it has not been exercised yet. The ex-
penses are recorded over the vesting period. Based on the prorated average sha-
re price of the last thirty trading days in 2019 and taking into account the intra-
year exercise date in 2019, the provisions for this program amounted to
€ 20.9 million at the end of the financial year.

EXPLANATION OF THE "GAME CHANGER 2019" PROGRAM

In addition, in 2016, an additional Long-Term Incentive Program, the global
“Game Changer 2019” program, was launched. Participants in this program con-
sist mainly of top executives reporting to the Management Board and individual
key positions in the PUMA Group. The aim of this program is to bind this group of
employees to the Company on a long-term basis and to allow them to share in
the medium-term success of the Company.

The term of the program is 3 years and is based on the medium-term objectives
of the PUMA Group in terms of EBIT (70%), cash flow (15%) and gross profit mar-
gin (15%). For this purpose, a corresponding provision is set up each year when
the respective currency-adjusted targets are met. The resulting balance of
€ 3.2 million were paid out to the participants in March 2019. The payment was
subject to the condition that the individual participant was in an unterminated
employment relationship with a company of the PUMA Group as of 12/31/2018.
No further expenses were incurred for this program in the year under review.

EXPLANATION OF THE "GAME CHANGER 2020" PROGRAM

In 2017, the global “Game Changer 2020” program was launched, which is sub-
ject to the same parameters as the “Game Changer 2019” program (employment
relationship until 12/31/2019 and payout March 2020). In the reporting year, pro-
visions of € 1.1 million were set aside for this program.

EXPLANATION OF THE “MOMENTUM” 2020 PROGRAM

In addition, a global program called “Momentum” was launched in 2017, which is
subject to the same parameters (employment until December 31, 2019 and pay-
out in March 2020) as the Game Changer programs. The difference to the Game
Changer programs lies in the different participants. While the participants in the
Game Changer programs consist of top executives, the “Momentum” program
includes employees who are not part of this group. In the reporting year, provisi-
ons of € 0.7 million were set aside for this program.

EXPLANATION OF THE “GAME CHANGER 2.0 - 2021” PROGRAM

In 2018, the Long-Term Incentive Program (LTIP) "Game Changer 2.0" was laun-
ched. Participants in this program consist mainly of top executives reporting to
the Management Board and individual key positions in the PUMA Group. The ob-
jective of this program is to retain these employees in the Company on a long-
term basis and to allow them to share in the medium-term success of the
Company.

The LTIP “Game Changer 2.0” consists of two plan parts, a Performance Cash
Plan and a Performance Share Plan, each with a 50% share. The Performance
Cash Plan gives a reward for PUMA’s financial performance, while the Perfor-
mance Share Plan gives a reward for its performance in the capital market.

The performance period of the Performance Cash Plan is three years and is ba-
sed on the average medium-term targets of the PUMA Group for EBIT (70%),
cash flow (15%) and net sales (15%). Payment is made in cash and is limited to a
maximum of 200% of the granted proportionate target amount (cap).

The Performance Share Plan uses virtual shares to manage the incentive. The
term is up to five years, divided into a three-year performance period and a sub-
sequent, two-year exercise period, in which the virtual shares are paid out in
cash. A payout is only possible at the three exercise times (6, 12 or 18 months af-
ter the end of the performance period). The average share price of the last 30
trading days before the exercise date determines the value of a virtual share. The
payout is limited to a maximum of 200% of the granted prorated target amount
(cap) and is only performed if an exercise hurdle of +10% share-price appreciati-
on was exceeded once during the performance period.

237

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe program is subject to the condition that the individual participant is in an un-
terminated employment relationship with a company of the PUMA Group as of
12/31/2020. A prorated share of € 1.9 million was set aside as a provision for the
"Game Changer 2.0 – 2021" program during the reporting period.

➔

T.58 GAME CHANGER 2.0 (PERFORMANCE SHARE PLAN)

Program addendum

2021

2022

EXPLANATION OF THE “GAME CHANGER 2.0 - 2022” PROGRAM

In 2019, the global “Game Changer 2.0 - 2022” program was launched, which is
subject to the same parameters as the “Game Changer 2.0 - 2021” program (em-
ployment relationship until 12/31/2021 and payout March 2022). In the reporting
year, a prorated amount of € 1.7 million was set aside as a provision for this
program.

Issue date

Term

Vesting period

Base price at program start

Reference value at the end of the financial year

Participants in year of issue

Participants at the end of the financial year

01/01/2018

01/01/2019

37.10

45.36

Years

44.40 EUR/share

22.68 EUR/share

Persons

Number of “virtual shares” as of 1/1/2019

46,660

44,407

Number of “virtual shares” expired in the FY

Number of “virtual shares” exercised in the FY

-3,660

Final number of “virtual shares” as of 12/31/2019

43,000

44,407

In the financial year 2019, a stock split was performed with a ratio of 1:10. As a
result of this, all past share values were divided by a factor of 10 and all virtual
shares were multiplied by a factor of 10.

238

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE INCOME STATEMENT

20. NET SALES

The net sales of the Group are broken down by product divisions and distribution
channels as follows:

T.59 BREAKDOWN BY DISTRIBUTION CHANNELS

(€ million)

Wholesale

Retail

Total

2019

2018

4,106.9

1,395.3

5,502.2

3,520.8

1,127.5

4,648.3

➔

21. OTHER OPERATING INCOME AND EXPENSES

According to the respective functions, other operating income and expenses in-
clude personnel, advertising, sales and distribution expenses as well as rental
and leasing expenditure, travel costs, legal and consulting expenses and other
general expenses. Typical operating income that is associated with operating ex-
penses was offset. Rental and lease expenses associated with the Group’s own
retail stores include turnover-based rental components.

Other operating income and expenses are allocated based on functional areas as
follows:

➔

T.61

(€ million)

Sales and distribution expenses

1,821.2

1,523.6

2019

2018

T.60 BREAKDOWN BY PRODUCT DIVISIONS

(€ million)

Footwear

Apparel

Accessories

Total

2019

2018

2,552.5

2,068.7

881.1

5,502.2

2,184.7

1,687.5

776.1

4,648.3

Product management/merchandising

Research and development

Administrative and general expenses

Other operating expenses

Other operating income

Total

Of which scheduled depreciation

Of which impairment expenses

52.6

61.7

340.0

2,275.5

4.2

2,271.3

246.4

0.0

43.8

54.0

328.1

1,949.5

21.1

1,928.4

81.5

0.6

239

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSWithin the sales and distribution expenses, marketing/retail expenses account
for a large proportion of the operating expenses. In addition to advertising and
promotional expenses, they also include expenses associated with the Group’s
own retail activities. Other sales and distribution expenses include logistic ex-
penses and other variable sales and distribution expenses.

In the consolidated financial statements of PUMA SE, fees of € 0.9 million (pre-
vious year: € 0.9 million) are recorded as operating expenses for the auditor of
the consolidated financial statements. The fees break down into costs for audit
services of € 0.8 million (previous year: € 0.8 million), other assurance services
amounting to € 0.1 million (previous year: € 0.1 million), in particular for EMIR
audits and the review of the combined non-financial report as well as for tax con-
sultancy services of less than € 0.0 million (previous year: € 0.0 million).

Other operating income, which in the previous year mainly included income from
the release of provisions in the amount of € 12.1 million, in the current year com-
prises income from the reduction of liabilities from acquisitions in the amount of
€ 2.1 million and income from the sale of fixed assets of € 2.0 million (previous
year: € 0.3 million).

Overall, other operating expenses include personnel costs, which consist of:

➔

T.62

(€ million)

Wages and salaries

Social security contributions

Expenses from share-based remuneration with
cash compensation

Expenses for retirement pension and other
personnel expenses

Total

2019

490.2

66.8

12.6

64.2

633.7

2018

437.0

56.8

5.8

54.1

553.8

In addition, cost of sales includes personnel costs in the amount of € 6.8 million
(previous year: € 8.2 million).

The average number of employees for the year was as follows:

➔

T.63 EMPLOYEES

Marketing/ retail/ sales

Research & development/ product
management

Administrative and general units

Total annual average

2019

9,883

986

2,479

13,348

2018

8,851

909

2,432

12,192

As of the end of the year, a total of 14,332 individuals were employed (previous
year: 12,894).

240

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS22. FINANCIAL RESULT

The financial result consists of:

➔

T.64

(€ million)

Result from associated companies

Interest income

Income from currency-conversion differences,
net

Others

Financial income

Interest expense

Interest expense - Lease liability

Interest accrued on liabilities from acquisitions

Valuation of pension plans

Expenses from currency-conversion
differences, net

Others

Financial expenses

Financial result

2019

2018

–

7.2

10.2

8.5

25.8

-13.9

-29.7

-0.1

-0.7

0.0

-4.1

-48.4

-22.6

-1.5

4.0

0.0

7.6

11.6

-14.6

-0.5

0.0

-0.6

-14.4

-3.9

-34.1

-24.0

Due to the first-time application of IFRS 16, a higher interest expense of € 29.7
million is incurred with regard to lease liabilities (previous year: € 0.5 million)
which were included in interest expenses in the previous year. The item Others in
financial expenses includes interest components (SWAP points) of € 4.1 million
(previous year: € 3.9 million) from financial instruments in connection with cur-
rency derivatives.

In addition, income from currency translation differences of € 10.2 million (pre-
vious year: expenses of € -14.4 million) are included, which are to be assigned to
the financing area.

23. INCOME TAXES

➔

T.65

(€ million)

Current income taxes

Germany

Other countries

Total current income taxes

Deferred taxes

Total

2019

2018

12.8

124.6

137.5

-28.8

108.6

16.8

69.7

86.5

-2.9

83.6

The result from associated companies comprises the result from the sharehol-
ding in Wilderness Holdings Ltd. which was deconsolidated in 2018.

The item Others in financial income includes interest components (SWAP points)
of € 8.2 million (previous year: € 7.3 million) from financial instruments in con-
nection with currency derivatives, and dividend income of € 0.3 million (previous
year: € 0.3 million) from the investment in Borussia Dortmund GmbH & Co. KGaA
(BVB).

In general, PUMA SE and its German subsidiaries are subject to corporate inco-
me tax, plus a solidarity surcharge and trade tax. Thus, a weighted mixed tax rate
of 27.22% continued to apply for the financial year.

241

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSReconciliation of the theoretical tax expense with the effective tax expense:

The calculation is shown in the table below:

➔

T.66

(€ million)

Earnings before income tax

Theoretical tax expense

Tax rate of the SE = 27.22% (previous year:
27.22%)

Tax rate difference with respect to other
countries

Other tax effects:

Income tax for previous years

Losses and temporary differences for which
no tax claims were recognized

Changes in tax rates

Non-deductible expenses for tax purposes and
non-taxable income and other effects

Effective tax expense

Effective tax rate

2019

417.6

113.7

-12.8

-4.5

1.0

2.0

9.3

108.6

26.0%

2018

313.4

85.3

-7.1

0.5

16.5

0.6

-12.3

83.5

26.7%

The tax effect resulting from items that are directly credited or debited to equity
is shown directly in the statement of comprehensive income.

Other effects include withholding tax expenses in the amount of € 11.7 million
(previous year: € 7.5 million).

24. EARNINGS PER SHARE

The earnings per share are determined in accordance with IAS 33 by dividing the
consolidated annual surplus (consolidated net earnings) attributable to the
shareholders of the parent company by the average number of circulating
shares.

➔

T.67

Net earnings € million

2019

262.4

2018*

187.4

Average number of circulating shares

149,521,683

149,473,228

Average number of circulating shares, diluted

149,521,683

149,473,228

Earnings per share in €

Earnings per share, diluted in €

1.76

1.25

* Earnings per share and the number of outstanding shares for the prior period were adjusted
retroactively to the 1:10 stock split carried out in the second quarter of 2019

25. MANAGEMENT OF THE CURRENCY RISK

In the 2019 financial year, PUMA designated “forward purchase USD” currency
derivatives as cash flow hedges in order to hedge the amount payable of purcha-
ses denominated in USD, which is converted to euros.

The nominal amounts of open exchange rate-hedging transactions, which relate
mainly to cash flow hedges, refer to currency forward transactions in a total
amount of € 2,842.6 million (previous year: € 2,401.8 million). These underlying
transactions are expected to generate cash flows in 2020 and 2021. For further
information, please refer to the explanations in chapter 13.

242

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe market values of open exchange rate-hedging transactions on the balance
sheet date consist of:

➔

T.68

(€ million)

Currency forward contracts, assets (see
chapters 6 and 12)

Currency forward contracts, liabilities (see
chapters 13 and 14)

Net

2019

2018

46.5

-38.2

8.3

75.7

-22.8

52.9

Currency forward contracts used to hedge against payment fluctuations caused
by exchange rates are part of an effective cash-flow hedging relationship pur-
suant to IAS 39. Changes in the exchange rate of the currencies underlying these
contracts have an effect on the hedge reserve in equity and the fair value of these
hedging contracts.

If, as of December 31, 2019, the USD had appreciated (devalued) against all other
currencies by 10%, the hedge reserve in equity and the fair value of the hedging
contracts would have been € 150.6 million higher (lower) (December 31, 2018: €
126.2 million higher (lower)).

Currency risks and other risk and opportunity categories are discussed in grea-
ter detail in the Combined Management Report in the Risk and Opportunity Ma-
nagement section as well as in chapters 2 and 13 of the Notes to the consolida-
ted financial statements.

The changes in effective cash flow hedges are shown in the schedule of changes
in shareholders’ equity and the statement of comprehensive income.

Currency risks as defined by IFRS 7 arise on account of financial instruments
being denominated in a currency that is not the functional currency and is mone-
tary in nature. Differences resulting from the conversion of the individual financi-
al statements to the Group currency are not taken into account. All non-functio-
nal currencies in which PUMA employs financial instruments are generally con-
sidered to be relevant risk variables.

Currency sensitivity analyses are based on the following assumptions:
Material non-derivative monetary financial instruments (cash and cash equival-
ents, receivables, interest-bearing debt, lease liabilities, non-interest-bearing
liabilities) are either denominated directly in the functional currency or transfer-
red into the functional currency through the use of currency forward contracts.

26. SEGMENT REPORTING

Segment reporting is based on geographical regions in accordance with our in-
ternal reporting structure, with the exception of stichd. The geographical region
forms the business segment. Sales revenue, the operating result (EBIT) and
other segment information are allocated to the corresponding geographical regi-
ons according to the registered office of the respective Group company.

The internal management reporting includes the following reporting segments:
Europe, EEMEA (Eastern Europe, Middle East and Africa), North America, Latin
America, Greater China, Rest of Asia/Pacific (excluding Greater China) and stichd
(formerly Dobotex). These are reported as reportable business segments in ac-
cordance with the criteria of IFRS 8.

The reconciliation includes information on assets, liabilities, expenses and inco-
me in connection with centralized functions that do not meet the definition of
business segments in IFRS 8. Central expenses and income include in particular
central sourcing, central treasury, central marketing and other global functions
of the Company headquarters.

243

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSThe Company’s main decision-maker is defined as the entire Management Board
of PUMA SE.

With the exception of stichd's (formerly Dobotex) sales of products amounting to
€ 32.7 million (previous year: € 26.9 million), there are no significant internal sa-
les between the business segments, which are therefore not included in the
presentation.

The operating result (EBIT) of the business segments is defined as gross profit
less the attributable other operating expenses plus royalty and commission inco-
me and other operating income, but not taking into account the costs of the cen-
tral departments and the central marketing expenses.

The external sales, operating result (EBIT), inventories and trade receivables of
the business segments are regularly reported to the main decision-maker. In-
vestments, depreciation and non-current assets at the level of the business seg-
ments are not reported to the chief operating decision- maker. Intangible assets

are allocated to the business segments in the manner described under chapter
11. Segment liabilities, the financial result and income taxes are not allocated to
the business segments and are therefore not reported to the chief operating de-
cision-maker at the business segment level.

Non-current assets and depreciation comprise the carrying amounts and depre-
ciation of property, plant and equipment, right-of-use assets and intangible as-
sets during the past financial year. The investments comprise additions to pro-
perty, plant and equipment and intangible assets. In addition, total impairment
expenses in the amount of € 0.0 million (previous year: € 0.6 million, relating to
the Europe segment) were recognized.

Since PUMA is active in only one business area, the sports equipment industry,
products are additionally allocated according to the footwear, apparel and ac-
cessories product segments in accordance with the internal reporting structure.

244

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSSEGMENT REPORTING 1-12/ 2019

➔

T.69 REGIONS

(€ million)

External Sales

EBIT

Investments

1-12/2019

1-12/2018

1-12/2019

1-12/2018

1-12/2019

1-12/2018

Europe

EEMEA

North America

Latin America

Greater China

Asia/ Pacific (without Greater China)

stichd

Total business segments

1,267.6

657.1

1,408.7

516.6

755.7

600.2

296.3

5,502.2

1,171.2

523.2

1,163.1

431.7

534.0

553.0

272.0

4,648.3

177.0

109.2

220.2

94.7

249.9

70.4

102.4

1,023.9

164.1

81.5

180.0

61.1

153.4

83.5

91.4

814.9

76.2

20.4

20.7

8.4

29.4

12.8

4.1

172.0

15.0

12.2

13.9

11.1

21.7

9.2

3.4

86.5

Depreciation*

Inventories

Trade Receivables (3rd)

1-12/2019

1-12/2018

1-12/2019

1-12/2018

1-12/2019

1-12/2018

Europe

EEMEA

North America

Latin America

Greater China

Asia/ Pacific (without Greater China)

stichd

Total business segments

39.6

33.6

49.8

15.2

33.8

32.5

6.7

211.2

7.6

7.7

11.6

6.9

15.4

7.3

2.8

59.4

309.6

171.3

323.6

93.1

118.3

117.8

50.8

1,184.5

262.5

130.7

258.9

93.5

87.0

98.4

48.3

979.3

140.5

68.5

130.7

99.0

50.1

68.1

42.7

599.6

*2019 includes the depreciation and the carrying amount of the right-of-use assets from Leases (IFRS 16)

131.3

67.9

109.0

96.2

36.0

71.0

37.8

549.2

245

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

➔

T.69 CONTINUATION T.69 REGIONS

(€ million)

Europe

EEMEA

North America

Latin America

Greater China

Asia/ Pacific (without Greater China)

stichd

Total business segments

*2019 includes the depreciation and the carrying amount of the right-of-use assets from Leases (IFRS 16)

T.70 PRODUCT External Sales (€ million) Gross Profit Margin (in %)

Long-term Assets*

1-12/2019

1-12/2018

284.8

130.6

445.1

80.9

93.9

163.0

162.2

1,360.5

44.7

29.5

187.9

47.4

32.1

73.0

143.9

558.5

External Sales

Gross Profit Margin

1-12/2019

1-12/2018

1-12/2019

1-12/2018

Footwear

Apparel

Accessories

Total business segments

2,552.5

2,068.7

881.1

5,502.2

2,184.7

1,687.5

776.1

4,648.3

46.4%

51.1%

50.5%

48.8%

45.8%

50.9%

50.3%

48.4%

246

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSRECONCILITATIONS

➔

T.71 RECONCILITATIONS

(€ million)

Total business segments

Central areas

Central expenses marketing

Consolidation

EBIT

Financial result

EBT

Total business segments

Central areas

Consolidation

Total

*2019 includes the depreciation and the carrying amount of the right-of-use assets from Leases (IFRS 16)

EBIT

1-12/2019

1-12/2018

1,023.9

-251.1

-332.5

0.0

440.2

-22.6

417.6

814.9

-199.4

-278.2

0.0

337.4

-24.0

313.4

Investments

Depreciation*

1-12/2019

1-12/2018

1-12/2019

1-12/2018

172.0

47.7

0.0

219.6

86.5

51.8

0.0

138.2

211.2

35.2

0.0

246.4

59.4

22.8

0.0

82.1

247

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

T.71 CONTINUATION T.71 RECONCILIATIONS

(€ million)

Inventories

Trade Receivables (3rd)

Long-term Assets*

1-12/2019

1-12/2018

1-12/2019

1-12/2018

1-12/2019

1-12/2018

Total business segments

Not allocated to the business
segments

Total

1,184.5

-74.3

1,110.2

979.3

-64.2

915.1

599.6

12.1

611.7

549.2

4.5

553.7

1,360.5

208.0

1,568.5

558.5

173.6

732.1

*2019 includes the depreciation and the carrying amount of the right-of-use assets from Leases (IFRS 16)

248

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSADDITIONAL INFORMATION

27. NOTES TO THE CASH FLOW STATEMENT

The cash flow statement was prepared in accordance with IAS 7 and is structured
based on cash flows from operating, investment and financing activities. The in-
direct method is used to determine the cash outflow/inflow from ongoing opera-
ting activities. The gross cash flow, derived from earnings before income tax and
adjusted for non-cash income and expense items, is determined within the cash
flow from ongoing operating activities. Cash outflow/inflow from operating activi-
ties, reduced by investments in property, plant and equipment as well as intangi-
ble assets is referred to as free cash flow.

The financial resource fund reported in the cash flow statement includes all pay-
ment methods and equivalent payment methods shown under “Cash and cash
equivalents”, i.e., cash in hand, checks and current bank balances.

The following table shows the cash and non-cash changes in financial liabilities
in accordance with IAS 7.44A:

➔

T.72 RECONCILIATION OF FINANCIAL LIABILITIES TO THE CASH INFLOW/OUTFLOW FROM FINANCING ACTIVITIES 2019

(€ million)

Notes

As of Jan. 1, 2019

Currency
changes

Others

As of Dec. 31, 2019

Non-cash changes

Cash changes

Financial liabilities

Lease liabilities*

Current financial liabilities

Non-current financial liabilities

Total

623.9

20.5

170.4

814.8

12.2

0.1

0.0

12.3

250.0

0.0

250.0

-140.8

-10.4

-7.1

-158.4

*adjusted opening values (please refer to chapter 1 first-time application IFRS 16)

745.3

10.2

163.3

918.8

249

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

T.73 RECONCILIATION OF FINANCIAL LIABILITIES TO THE CASH INFLOW/OUTFLOW FROM FINANCING ACTIVITIES 2018

(€ million)

Notes

As of Jan. 1, 2018

Currency
changes

Others

As of Dec. 31, 2018

Non-cash changes

Cash changes

Financial liabilities

Lease liabilities

Current financial liabilities

Non-current financial liabilities

Total

0.4

29.0

27.9

57.3

0.2

8.1

-2.6

5.7

9.4

0.0

9.4

-1.8

-16.6

145.2

126.9

8.3

20.5

170.4

199.2

The lease liabilities of € 745.3 million (previous year: € 8.3 million) break down
into current lease liabilities of € 144.8 million (previous year: € 0.8 million) and
non-current lease liabilities of € 600.5 million (previous year: € 7.5 million).
The non-current financial liabilities of € 163.3 million (previous year: € 170.4 mil-
lion) are part of the other non-current financial liabilities.

28. CONTINGENCIES AND CONTINGENT LIABILITIES

CONTINGENCIES

As in the previous year, there were no reportable contingencies.

CONTINGENT LIABILITIES

As in the previous year, there were no reportable contingent liabilities.

29. OTHER FINANCIAL OBLIGATIONS

OBLIGATIONS FROM OPERATING LEASE

As of January 1, 2019, the Group has recognized right-of-use assets for these
leases, not including short-term leases and low-value leases. Due to the first-
time application of IFRS 16 in the reporting year, the obligations arising from lea-
se agreements are not shown in the table below. See chapter 10 for information
regarding obligations arising from lease agreements.

250

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSIn the previous year, the following other financial obligations existed in relation
with lease agreements:

As is customary in the industry, the promotional and advertising agreements pro-
vide for additional payments on reaching pre-defined goals (e.g. medals, champi-
onships). Although these are contractually agreed upon, they naturally cannot be
exactly foreseen in terms of their timing and amount.

2019

2018

In addition, there are other financial obligations totaling € 133.9 million, of which
€ 112.4 million relate to the years from 2021. These include service agreements
of € 131.0 million as well as other obligations of € 2.9 million.

➔

T.74

(€ million)

Under rental and lease agreements:

2020 (2019)

2021 – 2024 (2020 – 2023)

from 2025 (from 2024)

Total

–

142.8

355.7

376.7

875.2

FURTHER OTHER FINANCIAL OBLIGATIONS

Furthermore, the Company has other financial obligations associated with licen-
se, promotional and advertising agreements, which give rise to the following fi-
nancial obligations as of the balance sheet date:

30. DISCLOSURES RELATED TO NON-CONTROLLING INTERESTS

The summarized financial information about subsidiaries of the Group in which
non-controlling interests exist is presented below. This financial information re-
lates to all companies with non-controlling interests in which the identical non-
controlling shareholder holds an interest. The figures represent the amounts be-
fore intercompany eliminations.

Evaluation of the control of companies with non-controlling interests:
The Group holds a 51% capital share in PUMA United North America LLC, PUMA
United Canada ULC and Janed Canada LLC (inactive company). With these com-
panies, there are profit-sharing arrangements in place which differ from the ca-
pital share for the benefit of the respective identical non-controlling shareholder.
PUMA receives higher license fees in exchange.

➔

T.75

(€ million)

Under license, promotional and advertising
agreements:

2020 (2019)

2021 – 2024 (2020 – 2023)

from 2025 (from 2024)

2019

2018

277.6

613.7

336.4

227.4

867.8

5.0

The contractual agreements with these companies respectively provide for PUMA
a majority of the voting rights at the shareholder meetings and thus the right of
disposal regarding these companies. PUMA is exposed to fluctuating returns
from the turnover-based license fees and controls the relevant activities of these
companies. The companies are accordingly included in the consolidated financial
statements as subsidiaries with full consolidation with recognition of the shares
of non-controlling interests.

Total

1,227.8

1,100.2

The share of non-controlling interests remaining on the balance sheet date rela-
tes to PUMA United North America LLC (formerly Janed, LLC) and Janed Canada,
LLC (inactive) with € 46.7 million (previous year: € 17.6 million).

251

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSIn July 2019, the following companies were merged into PUMA United North
America LLC (formerly Janed, LLC) or into Janed Canada, LLC:

➔

T.77

(€ million)

PUMA Accessories North America, LLC (previous year: € 1.3 million)

PUMA Kids Apparel North America, LLC (previous year: € 0.0 million)

PUMA North America Accessories Canada, LLC (previous year: € 0.1
million)

PUMA Kids Apparel Canada, LLC (previous year: € -0.2 million)

Sales

Net income

Profit attributable to non-controlling interests

Other comprehensive income of non-controlling
interests

Total comprehensive income of non-controlling
interests

Dividends paid to non-controlling interests

➔

T.76

(€ million)

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Equity attributable to equity holders of the
parent

Non-controlling interests

2019

2018

82.2

3.8

35.5

0.0

50.6

46.7

41.6

3.8

21.7

0.0

23.7

18.9

➔

T.78

(€ million)

Net cash from operating activities

Net cash used in investing activities

Net cash used in financing activities

Changes in cash and cash equivalents

2019

298.3

47.1

46.6

0.3

46.9

18.6

2018

265.8

42.8

42.4

1.1

43.4

55.7

2019

2018

23.8

0.0

-23.4

0.1

48.3

0.0

-56.1

-7.6

252

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS31. MANAGEMENT BOARD AND SUPERVISORY BOARD

Disclosures pursuant to Section 314 (1) No. 6 HGB

Pursuant to Sections 286 (5), 314 (3) Sentence 1 HGB, the publication of the indi-
vidual remuneration of the members of the Management Board in accordance
with Section 285 No. 9 a) Sentences 5 to 8 and Section 314 (1) No. 6 a) Sentences
5 to 8 HGB may be waived for five years if the Annual General Meeting so
resolves.

By resolution of the Annual Shareholders' Meeting on April 12, 2018, the Compa-
ny was authorized to waive the disclosure requirements pursuant to Section 285
No. 9 a) Sentences 5 to 8 and Section 314 (1) No. 6 a) Sentences 5 to 9 of the Ger-
man Commercial Code for the fiscal year beginning January 1, 2018 and for all
subsequent fiscal years ending December 31, 2022 at the latest.

The Supervisory Board is of the opinion that the shareholders' legitimate interest
in information is sufficiently taken into account by disclosing the total remunera-
tion of the members of the Management Board. In accordance with its statutory
obligations, the Supervisory Board will ensure the appropriateness of individual
remuneration.

count by making the variable compensation strongly dependent on the perfor-
mance of the PUMA SE share.
With a greater share of performance-based and therefore variable compensati-
on, the intention is to reward the contribution of our Management Board mem-
bers towards a sustainable development of our Company, while negative deviati-
ons from the set targets will result in a significant reduction of variable
compensation.

GOVERNANCE IN COMPENSATION MATTERS

COMPENSATION PHILOSOPHY

OVERVIEW OF COMPENSATION ELEMENTS

253

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

G.01 TARGET COMPENSATION STRUCTURE

* Figures in % of target compensation (total 100 %)
CEO: Chief Executive Officer / OBM: Ordinary Board Member

NON-PERFORMANCE-BASED COMPENSATION AND FRINGE BENEFITS

COMPANY PENSION

BASIC COMPENSATION

FRINGE BENEFITS

In addition, the Management Board members receive in-kind compensation,
such as use of company cars, accident insurance and D&O insurance. These are
part of the non-performance-based compensation.

PERFORMANCE-BASED COMPENSATION

In addition to the non-performance-based compensation, the members of the
Management Board receive performance-based and therefore variable compen-
sation. The amount of this compensation is based on the attainment of previously
defined financial and non-financial targets. It consists of a bonus and a compo-
nent with a long-term incentive effect. In the event of any outstanding perfor-

254

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSmance, the Supervisory Board may, at its discretion, grant the members of the
Management Board a voluntary one-off payment.

SHORT-TERM VARIABLE COMPENSATION – BONUS

255

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

G.02 STI-PLAN

➔

G.03 TARGET ATTAINMENT CURVE EBIT/FCF

256

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSTARGET ATTAINMENT SUSTAINABILITY TARGETS

LONG-TERM VARIABLE SHARE-BASED COMPENSATION – PUMA MONETARY UNITS
PLAN 2019 (LTI)

240% of the annual basic salary for the Chair of the Management Board and
110% of the basic salary for the other Management Board members. The num-
ber of the allocated Monetary Units is determined by dividing the allocation value
by the value of one PUMA Monetary Unit. The relevant value of a Monetary Unit
for the tranche of the following year is calculated once per year at the end of De-
cember as the average value of the PUMA SE share over the past 30 trading days.
The amount of the cash payment is therefore a result of the absolute develop-
ment of the PUMA SE share. At the end of the three-year vesting period, the Ma-
nagement Board members are able to exercise their Monetary Units within a pe-
riod of two years. The payment of the amount can be requested on a quarterly
basis. The value of the Monetary Units is the average value of the PUMA SE share
over the last 30 trading days before the next quarterly report. The fundamental
exercise condition after the vesting period is the existence of an active employ-
ment relationship with PUMA SE until the end of the vesting period.

➔

G.04 LTI-PLAN

* The value of one Monetary Unit is equal to the Ø share price over the last 30 trading days before the beginning of the blocking period respectively 30 trading days before next quarterly report.

257

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSRULES FOR TERMINATING MANAGEMENT BOARD ACTIVITY AND OTHER
CONTRACTUAL PROVISIONS

In the case of an early termination of the employment contract without good cau-
se within the meaning of section 626 (1) of the German Civil Code (BGB), any pay-
ments to be agreed to the Management Board member, including fringe benefits,
shall not exceed the amount of two annual compensations (severance cap) and
must not exceed the value of the compensation for the remaining duration of the
Management Board employment contract. The calculation of the severance cap
is based on the total compensation of the past financial year and also on any ex-
pected total compensation for the current financial year. In the event of an early
termination of the employment contract before the end of the relevant perfor-
mance period for the bonus and/or the three-year vesting period of the long-
term variable compensation, the contract makes no provision for an early payout
of the variable compensation components. If the member of the Management
Board becomes permanently disabled during the term of the employment
contract, the contract is terminated on the day on which the permanent disability
is determined. A permanent disability exists within the meaning of this provision,
if the member of the Management Board is no longer able, due to illness or acci-
dent, to fulfill the responsibilities assigned to him or her. In this respect, the spe-
cific duties and particular responsibility of the member of the Management
Board must be taken into account.

If the member of the Management Board dies during the term of the employment
contract, his or her widow or widower and children, provided they have not yet
reached the age of 27, are entitled as joint creditors to receive the unreduced
continued payment of the fixed compensation for the month in which the death
occurred and for the six following months, but for no longer than up to the end of
the regular term of the contract.

MANAGEMENT BOARD COMPENSATION

The following tables show the compensation paid during the financial year and
inflows during or for the reporting year and the total related pension expenses
for all Management Board members. *

➔

T.79 COMPENSATION PAID

(€ million)

Fixed compensation

Fringe Benefits

Total

Short-term variable
compensation

Long-term variable share-based
compensation

LTI 2019 (2019 to 2021)

LTI 2018 (2018 to 2020)

Total variable compensation

Pension expenses

Total compensation

2018

2019

2019
(min)

2019
(max)

2.3

0.1

2.4

2.8

4.3

7.0

0.5

9.9

2.0

0.1

2.1

2.7

3.9

6.6

0.4

9.1

2.0

0.1

2.1

0.0

0.4

2.4

2.0

0.1

2.1

3.0

11.8

14.8

0.4

17.3

* The grants and inflows shown below include the portion of the compensation of Ms. Anne-Laure Des-
cours granted to Ms. Descours for her services as a member of the Management Board of PUMA SE. In
addition, Ms. Descours receives compensation for her function as General Manager PUMA Group Sour-
cing of World Cat Ltd, Hong Kong, a subsidiary of PUMA SE.

258

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

T.80 INFLOW

(€ million)

Fixed compensation

Fringe Benefits

Total

Short-term variable compensation

Long-term variable share-based compensation

LTI 2016 (2016 bis 2018)

LTI 2015 (2015 bis 2017)

Total variable compensation

Pension expenses

Total compensation

2018

2019

2.3

0.1

2.4

2.8

8.8

11.6

0.5

14.4

2.0

0.1

2.1

2.7

1.7

4.3

0.4

6.8

Board employment contract was terminated by mutual agreement with effect
from the end of January 31, 2020. For the period from January 31, 2019 until Ja-
nuary 31, 2020, the basic salary and short-term variable compensation was paid
out assuming a target attainment of 100%. The tranche of the long-term variable
compensation was prorated for 2018-2020 and reduced by 11/36. No tranche was
granted for 2019-2021. The compensation components for Mr. Sørensen based
on his work as a Management Board member are included in section “Manage-
ment Board Compensation”.

COMPENSATION FOR FORMER MANAGEMENT BOARD MEMBERS

SUPERVISORY BOARD COMPENSATION SYSTEM

259

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSpation in committees. The Chair of the Supervisory Board and the Vice Chair re-
ceive an additional fixed annual amount of € 25,000.00 respectively € 12,500.00.
The chair of a committee additionally receives € 10,000.00, and the members of a
committee € 5,000.00, respectively. The respective committees are the Personnel
Committee, the Audit Committee and the Sustainability Committee.

In addition to the fixed compensation, each Supervisory Board member receives
annual performance-based compensation equal to € 20.00 for each € 0.01 by
which the earnings per share figure as disclosed in the consolidated financial
statements exceeds a minimum amount of € 16.00 per share. The performance-
based compensation amounts to a maximum of € 10,000.00 per year. If earnings
per share in the financial year are below the minimum amount, no performance-
related compensation is payable. The Chair of the Supervisory Board receives €
40.00 for every € 0.01 exceeding the minimum amount per share and a maximum
of € 20,000.00 per year. The Vice Chair receives € 30.00 for every € 0.01 excee-
ding the minimum amount per share and a maximum of € 15,000.00 per year.

A member of the Supervisory Board who is only active for part of a financial year
receives prorated remuneration calculated on the basis of the period of activity
determined for full months.

SUPERVISORY BOARD COMPENSATION

The compensation for the Supervisory Board for financial years 2018 and 2019
are shown in the table below.

➔

T.81 SUPERVISORY BOARD COMPENSATION

(€ million)

Fixed
compensation

Variable
compensation

Committee
compensation

Total

2018

2019

2018

2019

2018

2019 2018 2019

Total

0.2

–

0.0

0.2

32. RELATED PARTY RELATIONSHIPS

In accordance with IAS 24, relationships to related parties and persons that con-
trol or are controlled by the PUMA Group must be reported. All natural persons
and companies that can be controlled by PUMA, that can exercise relevant con-
trol over the PUMA Group or that are under the relevant control of another rela-
ted party of the PUMA Group are considered related parties or persons within the
meaning of IAS 24.

As of December 31, 2019, there was one shareholding in PUMA SE that exceeded
10% of the voting rights. This is held by the Pinault family via several companies
that the family controls (in order of proximity to the Pinault family: Financière Pi-
nault S.C.A., Artémis S.A.S. and Kering S.A.). The shareholding of Kering S.A. in
PUMA SE amounts to 15.7% of share capital according to Kering’s press release
from May 16, 2018. Together, Artémis S.A.S. and Kering S.A. hold 44.22% of the
share capital according to a voting rights announcement from May 24, 2018. Con-
sequently, all companies that are directly or indirectly controlled by Artémis
S.A.S. and are not included in the consolidated financial statements of PUMA SE
are considered related companies.

In addition, the disclosure obligation pursuant to IAS 24 extends to transactions
with associated companies as well as transactions with other related companies

260

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSand parties. These include non-controlling shareholders in particular.

➔

T.83

(€ million)

Transactions with related companies and parties largely concern the sale of
goods and services. These were concluded under normal market conditions that
are also customary with third parties.

The following overview illustrates the scope of the business relationships:

➔

T.82

(€ million)

Deliveries and services
rendered

Deliveries and services
received

2019

2018

2019

2018

Companies included in the
Artémis Group

Companies included in the
Kering Group

Other related parties and
persons

Total

0.0

2.2

0.0

2.2

0.0

2.3

0.7

2.9

0.0

0.4

18.5

18.9

0.0

2.0

19.6

21.6

Net receivables from

Liabilities to

2019

2018

2019

2018

Companies included in the
Artémis Group

Companies included in the
Kering Group

Other related parties and
persons

Total

0.0

0.8

0.0

0.8

0.0

7.9

0.0

4.7

4.8

In addition, dividend payments of € 18.6 million were made to non-controlling
shareholders in the financial year 2019 (previous year: € 55.7 million).

Receivables from related companies and parties are, with one exception, not
subject to value adjustments. Only with respect to the receivables from a non-
controlling shareholder and its group of companies were gross receivables in the
amount of € 52.2 million adjusted in value for a subsidiary of PUMA SE in Greece
as of December 31, 2019 (previous year: € 52.2 million). As in the previous year,
no expenses were recorded in this respect in the financial year 2019.

Classification of the remuneration of key management personnel in accordance
with IAS 24.17:

The members of key management personnel in accordance with IAS 24 are the
Management Board and the Supervisory Board. These are counted as related
parties.

In the financial year 2019, the expenses for key management personnel of PUMA
SE for short-term benefits amounted to € 5.9 million (previous year: € 5.4 milli-
on), for post-employment benefits € 0.5 million (previous year: € 0.4 million) and
for share-based compensation € 3.9 million (previous year: € 4.3 million). In ad-
dition, no expenses for other long-term benefits or for termination benefits were

261

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSincurred in the 2019 reporting year or in the previous year. Accordingly, total ex-
penses for the reporting year amount to € 10.3 million (previous year: € 10.1
million).

In addition, members of management in key positions at PUMA SE received com-
pensation of € 1.1 million (previous year: € 0.2 million) under other employment
contracts within the Group. The compensation report of PUMA SE contains fur-
ther details on the compensation of the Management Board and the Supervisory
Board.

33. CORPORATE GOVERNANCE

In November 2019, the Management Board and the Supervisory Board submitted
the required compliance declaration with respect to the recommendations issued
by the Government Commission German Corporate Governance Code pursuant
to Section 161 of the AktG (Aktiengesetz, German Stock Corporation Act) and pu-
blished it on the Company’s website (www.puma.com). Please also refer to the
Corporate Governance Report in the Combined Management Report.

EVENTS AFTER THE BALANCE SHEET DATE

There were no events after the balance sheet date which may have a material ef-
fect on the net assets, financial position and results of operations of PUMA
Group.

35. DATE OF RELEASE

The Management Board of PUMA SE released the consolidated financial state-
ments on January 31, 2020 for distribution to the Supervisory Board. The task of
the Supervisory Board is to review the consolidated financial statements and sta-
te whether it approves them.

Herzogenaurach, January 31, 2020

The Management Board

Gulden

Lämmermann

Descours

This is a translation of the German version. In case of doubt, the German version shall apply.

262

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSAPPENDIX 1 OF THE CONSOLIDATED FINANCIAL STATEMENTS

➔

T.87 CHANGES IN FIXED ASSETS 2018

(€ million)

263

Purchase costsAccumulated depreciationCarrying amountsBalance1/1/2018CurrencychangesandotherchangesAdditions/retransfersChangesin group ofconsol- idatedcompaniesDisposalsBalance12/31/2018Balance1/1/2018CurrencychangesandotherchangesAdditions/retransfersChangesin group ofconsol- idatedcompaniesDisposalsBalance12/31/2018Balance12/31/2018Balance12/31/2017PROPERTY, PLANT ANDEQUIPMENTLand, land rights and buildingsincluding buildings on third partyland131.834.73.7-1.2169.0-42.1-6.40.9-47.7121.489.7Technical equipment andmachines19.2-1.414.4-0.531.7-9.10.7-2.90.4-10.920.810.1Other equipment, factory andoffice equipment360.24.767.6-28.4404.1-238.2-0.3-55.627.3-266.8137.3122.0Payments on account and assetsunder construction38.3-42.520.3-1.015.20.00.015.238.3549.5-4.5106.0-31.0620.0-289.50.4-65.028.7-325.4294.6260.1INTANGIBLE ASSETSGoodwill288.23.9-1.6290.5-46.3-0.11.6-44.8245.7241.9Intangible assets with anindefinite useful life136.25.6141.8-17.7-17.7124.1118.5Other intangible assets156.00.632.2-5.3183.7-103.7-0.3-17.25.1-116.167.552.4580.410.332.2-6.9616.0-167.7-0.5-17.26.7-178.6437.4412.71) There was an impairment for fixed assets in the amount of € 0.6 million in the financial year 2018 (see chapter 9). No impairment loss was recognized for intangible assets (see chapter 10).1)Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS➔

T.88 CHANGES IN FIXED ASSETS 2019

(€ million)

264

Purchase costsAccumulated depreciationCarrying amountsBalance*1/1/2019Currencychangesand otherchangesAdditions/retransfersChangesin group ofconsol idatedcompaniesDisposalsBalance12/31/2019Balance*1/1/2019CurrencychangesandotherchangesAdditions/retransfersChangesin group ofconsol- idatedcompaniesDisposalsBalance12/31/2019Balance12/31/2019Balance12/31/2018PROPERTY, PLANT ANDEQUIPMENTLand, land rights andbuildings includingbuildings on third party land169.03.0-0.7171.3-47.7-0.1-6.20.6-53.4117.9121.4Technical equipment andmachines22.5-1.60.5-0.221.3-10.20.8-2.30.2-11.59.820.8Other equipment, factoryand office equipment404.118.693.7-27.6488.7-266.8-4.7-66.424.4-313.4175.3137.3Payments on account andassets under construction15.2-13.290.6-0.991.791.715.2610.83.8187.8-29.3773.1-324.7-4.0-74.925.2-378.3394.8294.6RIGHT-OF-USE ASSETSReal Estate - Retail stores409.68.297.7-6.5509.0-90.31.0-89.3419.6Real Estate - Warehouses &offices188.94.0143.6-4.5332.0-0.1-51.00.8-50.3281.7Others (technical equipmentand machines and vehicles)18.07.8-1.024.8-0.8-6.70.4-7.017.7616.512.3249.0-12.1865.7-0.8-0.1-148.02.2-146.7719.0INTANGIBLE ASSETSGoodwill290.54.1294.6-44.8-0.1-44.9249.7245.7Intangible assets with anindefinite useful life141.82.4144.2-17.7-17.7126.5124.2Other intangible assets183.73.031.8-2.4216.1-116.1-0.3-23.52.2-137.878.367.5616.09.531.8-2.4654.9-178.6-0.5-23.52.2-200.4454.5437.41) There was no impairment on fixed assets (in 2018: € 0,6 million, see chapter 9) or intangible assets (in 2018: € 0,0 million, see chapter 10) in the financial year. * Due to the first-time application of IFRS 16, there was a reclassification between property, plant and equipment and right-of-use assets, see in detail chapter 1.1)Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSAPPENDIX 2 OF THE CONSOLIDATED FINANCIAL STATEMENTS

MEMBERS OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD AND THEIR
MANDATES

MEMBERS OF THE MANAGEMENT BOARD AND THEIR MANDATES

Chief Executive Officer (CEO)

Membership of other supervisory boards and controlling bodies:

Tchibo GmbH, Hamburg

Borussia Dortmund GmbH & Co. KGaA, Dortmund

Salling Group A/S, Brabrand/Denmark (previously Dansk Supermarked
A/S)

Chief Sourcing Officer (CSO)

(member since 1 February 2019)

MEMBERS OF THE SUPERVISORY BOARD AND THEIR MANDATES

London, United Kingdom
Group Managing Director and member of the Board of Directors of Kering S.A.,
Paris/France, responsible for Strategy, Operations and Organization

1
Membership of other supervisory boards and controlling bodies :

Kering Americas, Inc., New York/USA

Kering Tokyo Investment Ltd., Tokyo/Japan

Sowind Group S.A., La Chaux-de-Fonds/Switzerland

Guccio Gucci SpA., Florence/Italy

Gucci America, Inc., New York/USA

Kering Eyewear S.p.A., Padua/Italy

Yugen Kaisha Gucci LLC, Tokyo/Japan

Chief Financial Officer (CFO)

Birdswan Solutions Ltd., Haywards Heath/West Sussex/United Kingdom

Paintgate Ltd., Haywards Heath/West Sussex/United Kingdom

Chief Operating Officer (COO)

(member until 31 January 2019)

Membership of other supervisory boards and controlling bodies:

Kering Asia Pacific Ltd., Hong-Kong/China

Kering South East Asia PTE Ltd., Singapore

Altuzarra LLC, New York/USA

Tomas Maier Holding LLC, New York/USA

Scandinavian Brake Systems A/S, Svendborg/Dänemark

Tomas Maier Distribution LLC, New York/USA

Hoyer Group A/S, Kopenhagen/Dänemark

Skiold A/S, Sæby/Dänemark

1
All mandates of Mr Palus are mandates within the Kering-Group. Kering S.A. is a listed company. All
other companies within the Kering-Group are not listed.

265

Status: 31 December 2019Bjørn GuldenMichael LämmermannLars Radoor SørensenAnne-Laure DescoursJean-François Palus (Chairman)Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSFalsterbo, Sweden
President of Elimexo AB, Falsterbo/Sweden

Membership of other supervisory boards and controlling bodies:

Docktricks AB, Uppsala/Sweden

Elite Hotels AB, Stockholm/Sweden

Tomas Frick AB, Vellinge/Sweden

Tjugonde AB, Malmö/Sweden

Dahlqvists Fastighetsförvaltning AB, Kristianstad/Sweden

Dofab AB, Malmö/Sweden

Orrefors Kosta Boda AB, Kosta/Sweden

(member until 18 April 2019)

Paris, France
Chief Financial Officer (CFO) of Kering S.A., Paris/France

Membership of other supervisory boards and controlling bodies:

Redcats S.A., Paris/France

E_lite S.p.A., Milan/Italy

Pomellato S.p.A., Milan/Italy

Kering Japan Ltd., Tokyo/Japan

Kering Luxembourg S.A., Luxembourg/Luxembourg

Qeelin Holding Luxembourg S.A., Luxembourg/Luxembourg

E-Kering Lux S.A., Luxembourg/Luxembourg

Kering Spain S.L. (previously named Noga Luxe S.L.), Barcelona/Spain

Kering Eyewear S.p.A., Padua/Italy

GPo Holding S.A.S., Paris/France

Design Management Srl, Florence/Italy

Design Management 2 Srl, Florence/Italy

Kering Studio S.A.S., Paris/France

Balenciaga Asia Pacific Ltd., Hong Kong/China

Kering Eyewear Japan Ltd., Tokyo/Japan

Redcats Management Services S.A.S., Paris/France

Balenciaga S.A., Paris/France

Kering Investments Europe B.V., Amsterdam/Netherlands

Altuzarra LLC, New York/USA

Pomellato Japan Co. Ltd., Tokyo/Japan

Bottega Veneta Japan Ltd., Tokyo/Japan

Richard Ginori Asia Pacific Co. Ltd., Tokyo/Japan

Kering Korea Ltd., Seoul/Republic of Korea

KTK Netherlands BV, Amsterdam/Netherlands

(member until 18 April 2019)

Paris, France
Human Resources Director, Kering S.A., Paris/France

Membership of other supervisory boards and controlling bodies:

Castera S.A.R.L., Luxembourg/Luxembourg

Augustin S.A.R.L., Paris/France

Conseil et Assistance S.N.C., Paris/France

266

Thore Ohlsson(Deputy Chairman)Jean-Marc Duplaix Béatrice Lazat Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS(member since 18 April 2019)

Paris, France
Human Resources Director, Kering S.A., Paris/France

2
Membership of other supervisory boards and controlling bodies :

Kering S.A., Paris/France

Giambattista Valli S.A.S., Paris/ France

Société d’exploitation de l’hebdomadaire le Point S.A., Paris/France

Royalement Vôtre Editions S.A.S., Paris/France

ACHP Plc, London/United Kingdom

Christie’s International Plc, London/United Kingdom

Palazzo Grassi Spa, Venice/Italy

2
All mandates are mandates within the ARTÈMIS-Group. Kering S.A. is a listed company.

(member since 18 April 2019)

Calenzano, Italy
Independent Management Consultant

Membership of other supervisory boards and controlling bodies:

R.C.S. Media Group Active Team Srl, Milano/Italy

(Employees’ Representative)

Weisendorf, Germany
Chairman of the Works Counsel of PUMA SE

(Employees’ Representative)

Bechhofen, Germany
Administrator IT Systems of PUMA SE

SUPERVISORY BOARD COMMITTEES

Jean-François Palus (Chairman)

Béatrice Lazat (until 18 April 2019)

Fiona May (since 18 April 2019)

Martin Köppel

Thore Ohlsson (Chairman)

Jean-Marc Duplaix (until 18 April 2019)

Héloïse Temple-Boyer (since 18 April 2019)

Bernd Illig

Jean-François Palus (Chairman)

Jean-Marc Duplaix (until 18 April 2019)

Béatrice Lazat (until 18 April 2019)

Héloïse Temple-Boyer (since 18 April 2019)

Fiona May (since 18 April 2019)

267

Héloïse Temple-Boyer Fiona MayMartin KoeppelBernd IlligPersonnel CommitteeAudit CommitteeNominating CommitteeAnnual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSDECLARATION BY THE LEGAL REPRESENTATIVES

We state to the best of our knowledge that the consolidated financial state-
ments give a true and fair view of the net assets, financial position and results
of operations of the Group in accordance with the applicable accounting princi-
ples, and that the Group management report, which is combined with the Ma-
nagement report of PUMA SE for the financial year 2019, provides a true and
fair view of the course of the development and performance of the business and
the position of the Group, together with a description of the principal risks and
opportunities associated with the expected performance of the Group.

Herzogenaurach, January 31, 2020

The Management Board

Gulden

Lämmermann

Descours

268

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSINDEPENDENT AUDITOR’S REPORT

To PUMA SE, Herzogenaurach

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND OF THE COMBINED MANAGEMENT REPORT

AUDIT OPINIONS

We have audited the consolidated financial statements of PUMA SE, Herzogenau-
rach, and its subsidiaries (the Group), which comprise the consolidated balance
sheet as at 31 December 2019, the consolidated income statement, the consoli-
dated statement of comprehensive income, the consolidated statement of chan-
ges in equity and the consolidated cash flow statement for the financial year from
1 January to 31 December 2019 as well as the notes to the consolidated financial
statements, including a summary of significant accounting policies. In addition,
we have audited the combined management report of PUMA SE for the financial
year from 1 January to 31 December 2019. In accordance with the German legal
requirements, we have not audited the statement on corporate governance and
the corporate governance report specified in Chapter “Corporate Governance Re-
port including the Statement on Corporate Governance pursuant to § 289f and §
315d HGB” of the combined management report.with the German legal require-
ments, we have not audited the content of those parts of the notes to the consoli-
dated financial statements and of the combined management report as specified
in the Chapter “Other information” of our independent auditor´s report.

In our opinion, on the basis of the knowledge obtained in the audit

the accompanying consolidated financial statements comply, in all ma-
terial respects, with the International Financial Reporting Standards
(IFRS) as adopted by the EU, and the additional requirements of German
commercial law pursuant to Section 315e (1) German Commercial Code
(HGB) and, in compliance with these requirements, give a true and fair

view of the assets, liabilities, and financial position of the Group as at 31
December 2019, and of its financial performance for the financial year
from 1 January to 31 December 2019, and

the accompanying combined management report as a whole provides an
appropriate view of the Group’s position. In all material respects, this
combined management report is consistent with the consolidated finan-
cial statements, complies with German legal requirements and appro-
priately presents the opportunities and risks of future development. Our
audit opinion on the combined management report does not cover the
content of the statement on corporate governance and the corporate go-
vernance report specified in Chapter “Corporate Governance Report in-
cluding the Statement on Corporate Governance pursuant to § 289f and
§ 315d HGB” of the combined management report.

Pursuant to Section 322 (3) Sentence 1 German Commercial Code (HGB), we de-
clare that our audit has not led to any reservations relating to the legal complian-
ce of the consolidated financial statements and of the combined management
report.

269

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSBASIS FOR THE AUDIT OPINIONS

Our presentation of these key audit matters has been structured as follows:

We conducted our audit of the consolidated financial statements and of the com-
bined management report in accordance with Section 317 German Commercial
Code (HGB) and the EU Audit Regulation (No. 537/2014; referred to subsequently
as “EU Audit Regulation”) and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated by the Institut der Wirt-
schaftsprüfer (IDW). Our responsibilities under those requirements and princi-
ples are further described in the “Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements and of the Combined Management Report”
section of our auditor’s report. We are independent of the group entities in accor-
dance with the requirements of European law and German commercial and pro-
fessional law, and we have fulfilled our other German professional responsibili-
ties in accordance with these requirements. In addition, in accordance with Arti-
cle 10 (2) Point (f) of the EU Audit Regulation, we declare that we have not provi-
ded non-audit services prohibited under Article 5 (1) of the EU Audit Regulation.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinions on the consolidated financial statements
and on the combined management report.

KEY AUDIT MATTERS IN THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS

Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the consolidated financial statements for the fi-
nancial year from 1 January to 31 December 2019. These matters were addres-
sed in the context of our audit of the consolidated financial statements as a who-
le and in forming our audit opinion thereon; we do not provide a separate audit
opinion on these matters.

In the following we present the key audit matters we have determined in the
course of our audit:

1. Recoverability of goodwill

2. Recoverability of the Cobra brand

3. Impacts of first-time adoption of IFRS 16 on lease accounting

(a) Description (including reference to corresponding information in the
consolidated financial statements)

(b) Auditor’s response

1. RECOVERY OF GOODWILL

a) The consolidated financial statements of PUMA SE show goodwill in the
amount of mEUR 249.7 corresponding to approximately 5.7 % of the consolidated
balance sheet total or 13.0 % of the group equity.

Each financial year or in case of respective signs of impairment, goodwill is sub-
ject to impairment tests. The impairment tests are performed by PUMA SE by ap-
plying the “discounted cash flow method”. The valuation is based on the present
values of the future cash flows. The company’s valuation model is based on fu-
ture cash flows, which are in turn based on the effective three-year plan and va-
lid at the date the impairment test. This detailed planning phase is extended with
the assumption of long-term growth rates. The discounting is performed using
the weighted average cost of capital (WACC). Here, the realizable amount is de-
termined on the basis of the value in use and a possible need for impairment is
determined by comparing the value in use with the carrying amount.

The outcome of this valuation highly depends on the legal representatives’ as-
sessment of future cash flows, the WACC rate applied and the long-term growth
rate and therefore involves uncertainties and discretion. Thus, the assessment of
the recoverability of the goodwill was classified as a key audit matter within the
scope of our audit.

Information on the goodwill, provided by the legal representatives, is disclosed in
Chapter 2 “Significant Consolidation, Accounting and Valuation Principles” and in
Chapter 11 “Intangible Assets” of the notes to the consolidated financial
statements.

b) Within the scope of our risk-oriented audit, we gained an understanding of the
systematic approach applied when performing the impairment test. We satisfied
ourselves, that the valuation model used adequately presents the requirements

270

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSof the relevant standards, whether the necessary input data are completely and
accurately determined and whether the calculations within the model are perfor-
med correctly. We satisfied ourselves of the appropriateness of the future cash
flows used for the computation by reconciling these cash flows particularly with
the effective three-year plan as well as by interviewing the legal representatives
or persons appointed by them with regard to the material assumptions underly-
ing this plan. In addition, we performed a critical assessment of the plan under
consideration of general and industry-specific market expectations.

with the Cobra brand based on the effective three-year plan, valid at the time the
impairment test is conducted. Subsequently, the projection period is extended
assuming long-term growth rates. The discounting is performed by means of the
weighted average cost of capital (WACC). The recoverable amount and the need
for impairment is determined by comparing the value in use with the carrying
amount. If there are indications of impairment of the brand used by the Group,
the recoverability of the brand is assessed by reference to the recoverable
amount of the cash-generating unit to which the brand is allocated.

Since a material portion of the value in use results from the forecasted cash
flows for the period after the three-year plan (phase of perpetuity), we in particu-
lar critically assessed the sustainable growth rate used within the perpetuity
phase by means of general and industry-specific market expectations. Since re-
latively low changes of the discounting rate may materially affect the amount of
the realizable value, we have also checked the parameters used when determi-
ning the WACC rate involving internal valuation experts from the financial adviso-
ry sector and reproduced the computation scheme.

Due to the material significance and taking into account the fact that the assess-
ment of the goodwill also depends on the economic framework conditions that
cannot be influenced by the Group, we performed in addition a critical assess-
ment of the sensitivity analyses performed by PUMA SE for the cash-generating
units (so-called CGUs) with low headroom (present values compared to the car-
rying amount) in order to be able to assess a possible impairment risk in case of
change of a material valuation assumption.

2. RECOVERABILITY OF THE COBRA BRAND

a) The consolidated financial statements of PUMA SE disclose for the Cobra
brand a brand value in the amount of mEUR 126.6 with the indefinite useful life
corresponding to approximately 2.9% of the consolidated balance sheet total or
6.6 % of the group equity.

The Cobra brand is subject to an impairment test conducted annually or in case
of a triggering event. The impairment test is conducted by PUMA SE based on the
relief from royalty method. According to this approach, the value of the brand re-
sults from future royalty that a company would have to pay for the use of the
brand if they had to license it. The approach uses forecasted revenue generated

The outcome of this valuation highly depends on the legal representatives’ as-
sumption of future revenue to be generated with the Cobra brand, the royalty rate
and the long-term growth rate as well as the WACC rate applied and therefore
involves uncertainties and discretion. Thus, the assessment of the recoverability
of the Cobra Brand was classified as key audit matter within the scope of our
audit.

Information on the Cobra brand, provided by the legal representatives, is disclo-
sed in Chapter 2 “Significant Consolidation, Accounting and Valuation Principles”
and in Chapter 11 “Intangible Assets” of the notes to the consolidated financial
statements.

b) As part of our risk-oriented audit, we first examined on the basis of the infor-
mation available to us and in discussions with the legal representatives and with
persons appointed by them, that there are no indications of impairment of the
brand and that the recoverability of the brand can be assessed by use of the reli-
ef-from-royalty method as part of the impairment test. We have followed the me-
thodological procedure for performing the impairment test using the relief-from-
royalty method. In this regard we examined, whether the valuation model ade-
quately reflects the conceptual requirements of the relevant standards, whether
the necessary input data are completely and accurately determined and whether
the calculations applied to the model are made correctly. We satisfied ourselves
of the appropriateness of the assumed future revenue underlying the computati-
on (Cobra branded sales) by reconciling these sales particularly with the effective
three-year plan as well as by interviewing the legal representatives and with per-
sons appointed by them with regard to the material assumptions underlying this
plan. In addition, we performed a critical assessment of the plan taking into ac-
count general and industry-specific market expectations.

271

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSSince a material portion of the value in use results from the forecasted revenue
for the period following the three-year plan (phase of perpetuity), we particularly
reviewed the sustainable growth rate applied to the perpetuity phase by means of
general and industry-specific market expectations. As even relatively small
changes of the expected royalty rate and the used discount rate may have a ma-
terial effect on the value in use, we also assessed the parameters involved in the
assumed royalty rate and determination of the discount rate involving internal
valuation experts from the financial advisory sector and recalculated the compu-
tation scheme. Additionally, we reviewed the applied royalty rate based on indus-
try-specific average rates.

Due to the material significance and as the measurement of the brand also de-
pends on general economic conditions that are beyond the Group’s control, we
additionally reviewed the sensitivity analyses concerning the Cobra brand origi-
nally conducted by Puma SE in order to be able to determine a potential impair-
ment risk in case a material assumption underlying the measurement changes.

3. IMPACTS OF FIRST-TIME ADOPTION OF IFRS 16 ON LEASE ACCOUNTING

a) In the consolidated financial statements of PUMA SE as at 31 December 2019,
right-of-use assets of mEUR 719,0 and lease liabilities of mEUR 745,3 are ac-
counted for, corresponding to approximately 16,4% or 17,0% of the consolidated
balance sheet total and 37,4% or 38,8% of the group equity. In the financial year
2019, the first-time adoption of the new lease accounting standard (IFRS 16) has
significant effects on the opening balance values and their rollover as at the re-
porting date, since operating leases in particular have become subject to the re-
cognition requirement. The transition to IFRS 16 was performed applying the mo-
dified retrospective approach; prior-period comparative figures were not resta-
ted. It was not reassessed whether or not a contract is a lease within the mea-
ning of IFRS 16. A central IT system has been implemented for the purpose of
lease accounting. The new IFRS 16 standard requires the executive directors to
make estimates and judgements. This is particularly the case in view of the esti-
mate as to exercising contractual renewal options, entailing implications on the
lease term, as to, where applicable, the value of the interest rate, as to the
amount of lease liability and the associated impact on the consolidated balance
sheet, the consolidated statement of comprehensive income and the consolida-
ted cash flow statement. In this light and due to the complexity of the new requi-
rements, we classified the accounting of leases in accordance with IFRS 16 as a

key audit matter within the scope of our audit.
The information provided by the executive directors on lease accounting and on
the impact of the first time adoption of IFRS 16 are included in the notes to the
consolidated financial statements in Chapter 1 “General” and in Chapter 10 “Lea-
ses” of the notes to the consolidated financial statements.

b) During our audit, we assessed, among other matters, the appropriateness and
implementation of the processes and controls established by the Company for
the complete and correct identification and recognition of leases. This also app-
lies to the implementation of the central IT system and the required adjustments
to the existing IT systems in respect of lease accounting.
Further, our audit comprised assessing the impact of the initial adoption of IFRS
16. For this purpose, we reperformed the implementation steps taken by the
Company in response to the initial adoption of IFRS 16, and evaluated the design
of the established processes and of the associated IT systems specific to lease
accounting in accordance with IFRS 16. In this regard, we inspected selected lea-
se contracts, obtained an understanding of the identification of performance obli-
gations, and assessed whether the latter were completely and correctly reco-
gnised and accounted for in the relevant IT systems. In this process, we inspec-
ted selected contracts and other adequate evidence, and conducted interviews
with employees of the Company to assess, in particular, the appropriateness of
the estimates made as to exercising contractual renewal options, entailing impli-
cations on the lease term, as to the value of the interest rate, as to the amount of
lease liability as well as the associated impact on the consolidated balance
sheet, the consolidated statement of comprehensive income and the consolida-
ted cash flow statements. Moreover, we examined whether the IT systems and
processes that were established by the Company and adjusted to IFRS 16, inclu-
ding the controls put in place, are appropriate. Furthermore, we reperformed
whether the estimates and judgements made by the executive directors are rea-
sonably documented and substantiated.

The information provided by the executive directors in the notes to the consolida-
ted financial statements concerning the impact on the consolidated financial
statements of the first time adoption of IFRS 16, and the information concerning
exercising options and the related explanations in the notes to the consolidated
financial statements constituted further areas of audit focus.

272

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSOTHER INFORMATION

The legal representatives are responsible for the other information. The other
information comprises:

the statement on corporate governance pursuant to Section 289f Ger-
man Commercial Code (HGB) specified in Chapter “Corporate Gover-
nance Report including the Statement on Corporate Governance pur-
suant to § 289f and § 315d HGB” of the combined management report,

the corporate governance report pursuant to No. 3.10 of the German
Corporate Governance Code specified in Chapter “Corporate Governan-
ce Report including the Statement on Corporate Governance pursuant to
§ 289f and § 315d HGB” of the combined management report,

the legal representatives‘ confirmation relating to the consolidated fi-
nancial statements and to the combined management report pursuant
to Section 297 (2) Sentence 4 and Section 315 (1) Sentence 5 German
Commercial Code (HGB), respectively,

the combined non-financial report which will be published after the is-
suance of this auditor´s report and

the remaining parts of the Annual Report which will be published after
the issuance of this auditor´s report, with the exception of the audited
consolidated financial statements and combined management report
and our auditor’s report.

Our audit opinions on the consolidated financial statements and on the combined
management report do not cover the other information, and consequently we do
not express an audit opinion or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the other information
and, in so doing, to consider whether the other information

RESPONSIBILITIES OF THE LEGAL REPRESENTATIVES AND THE SUPERVISORY
BOARD FOR THE CONSOLIDATED FINANCIAL STATEMENTS AND THE COMBINED
MANAGEMENT REPORT

The legal representatives are responsible for the preparation of the consolidated
financial statements that comply, in all material respects, with IFRSs as adopted
by the EU and the additional requirements of German commercial law pursuant
to Section 315e (1) German Commercial Code (HGB) and that the consolidated
financial statements, in compliance with these requirements, give a true and fair
view of the assets, liabilities, financial position, and financial performance of the
Group. In addition, the legal representatives are responsible for such internal
control as they have determined necessary to enable the preparation of consoli-
dated financial statements that are free from material misstatement, whether
due to fraud or error.

In preparing the consolidated financial statements, the legal representatives are
responsible for assessing the Group’s ability to continue as a going concern. They
also have the responsibility for disclosing, as applicable, matters related to going
concern. In addition, they are responsible for financial reporting based on the go-
ing concern basis of accounting unless there is an intention to liquidate the
Group or to cease operations, or there is no realistic alternative but to do so.

Furthermore, the legal representatives are responsible for the preparation of the
combined management report that, as a whole, provides an appropriate view of
the Group’s position and is, in all material respects, consistent with the consoli-
dated financial statements, complies with German legal requirements, and ap-
propriately presents the opportunities and risks of future development. In additi-
on, the legal representatives are responsible for such arrangements and measu-
res (systems) as they have considered necessary to enable the preparation of a
combined management report that is in accordance with the applicable German
legal requirements, and to be able to provide sufficient appropriate evidence for
the assertions in the combined management report.

is materially inconsistent with the consolidated financial statements,
with the combined management report or our knowledge obtained in
the audit, or

The Supervisory Board is responsible for overseeing the Group’s financial re-
porting process for the preparation of the consolidated financial statements and
of the combined management report.

otherwise appears to be materially misstated.

273

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSAUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND OF THE COMBINED MANAGEMENT REPORT

Our objectives are to obtain reasonable assurance about whether the consolida-
ted financial statements as a whole are free from material misstatement, whe-
ther due to fraud or error, and whether the combined management report as a
whole provides an appropriate view of the Group’s position and, in all material
respects, is consistent with the consolidated financial statements and the know-
ledge obtained in the audit, complies with the German legal requirements and
appropriately presents the opportunities and risks of future development, as well
as to issue an auditor’s report that includes our audit opinions on the consolida-
ted financial statements and on the combined management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with Section 317 German Commercial Code (HGB)
and the EU Audit Regulation and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated by the Institut der Wirt-
schaftsprüfer (IDW) will always detect a material misstatement. Misstatements
can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisi-
ons of users taken on the basis of these consolidated financial statements and
this combined management report.

We exercise professional
throughout the audit. We also:

judgment and maintain professional skepticism

Identify and assess the risks of material misstatement of the consolida-
ted financial statements and of the combined management report, whe-
ther due to fraud or error, design and perform audit procedures respon-
sive to those risks, and obtain audit evidence that is sufficient and ap-
propriate to provide a basis for our audit opinions. The risk of not detec-
ting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit of the
consolidated financial statements and of arrangements and measures
relevant to the audit of the combined management report in order to de-
sign audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an audit opinion on the effectiveness of
these systems.

Evaluate the appropriateness of accounting policies used by the legal
representatives and the reasonableness of estimates made by the legal
representatives and related disclosures.

Conclude on the appropriateness of the legal representatives’ use of the
going concern basis of accounting and, based on the audit evidence ob-
tained, whether a material uncertainty exists related to events or condi-
tions that may cast significant doubt on the Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in the auditor’s report to the related dis-
closures in the consolidated financial statements and in the combined
management report or, if such disclosures are inadequate, to modify
our respective audit opinions. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to be able to conti-
nue as a going concern.

Evaluate the overall presentation, structure and content of the consoli-
dated financial statements, including the disclosures, and whether the
consolidated financial statements present the underlying transactions
and events in a manner that the consolidated financial statements give
a true and fair view of the assets, liabilities, financial position and finan-
cial performance of the Group in compliance with IFRSs as adopted by
the EU and with the additional requirements of German commercial law
pursuant to Section 315e (1) German Commercial Code HGB).

Obtain sufficient appropriate audit evidence regarding the financial in-
formation of the entities or business activities within the Group to ex-
press audit opinions on the consolidated financial statements and on
the combined management report. We are responsible for the direction,
supervision and performance of the group audit. We remain solely res-
ponsible for our audit opinions.

Evaluate the consistency of the combined management report with the
consolidated financial statements, its conformity with German law, and
the view of the Group’s position it provides.

274

Annual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTSPerform audit procedures on the prospective information presented by
the executive directors in the combined management report. On the ba-
sis of sufficient appropriate audit evidence we evaluate, in particular,
the significant assumptions used by the executive directors as a basis
for the prospective information, and evaluate the proper derivation of
the prospective information from these assumptions. We do not express
a separate audit opinion on the prospective information and on the as-
sumptions used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective information.

We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during
our audit.

OTHER LEGAL AND REGULATORY REQUIREMENTS

FURTHER INFORMATION PURSUANT TO ARTICLE 10 OF THE EU AUDIT REGULATION

We were elected as group auditor by the annual general meeting on 18 April
2019. We were engaged by the Supervisory Board on 30 Juli 2019. We have been
the group auditor of PUMA SE, Herzogenaurach, without interruption since the
financial year 2012.

We declare that the audit opinions expressed in this auditor’s report are consis-
tent with the additional report to the audit committee pursuant to Article 11 of
the EU Audit Regulation (long form audit report).

We also provide those charged with governance with a statement that we have
complied with the relevant independence requirements, and communicate with
them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, the related safeguards.

GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE
ENGAGEMENT

The German Public Auditor responsible for the engagement is Dr. Thomas
Reitmayr.

From the matters communicated with those charged with governance, we deter-
mine those matters that were of most significance in the audit of the consolida-
ted financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regula-
tion precludes public disclosure about the matter.

Munich, 31 January 2020

Wirtschaftsprüfungsgesellschaft

Dr Thomas Reitmayr
Wirtschaftsprüfer
[German Public Auditor]

Stefan Otto
Wirtschaftsprüfer
[German Public Auditor]

275

Deloitte GmbHAnnual Report 2019 ↗ CONSOLIDATED FINANCIAL STATEMENTS
PURE
PERFORMANCE

Additional Information

277

The PUMA Share

280

PUMA Year-on-Year Comparison

282

PUMA Group Development

284

Imprint

276

Annual Report 2019 ↗ ADDITIONAL INFORMATION
THE PUMA SHARE

The PUMA share had a very positive performance in the financial year 2019. The
closing price of PUMA shares on the last trading day in the financial year 2019
(December 30) was € 68.35, which was 60.1% higher than the closing price of the
previous year. The market capitalization of the PUMA Group rose accordingly
from € 6.4 billion at the end of the financial year 2018 to € 10.2 billion at the end
of the financial year 2019. PUMA shares started into 2019 at a price of € 42.70. In
the following twelve months, the price ranged between € 43.00 (January 3, 2019 /
+0.7%) and € 72.95 (October 15, 2019 / +70.8%).

In order to make the PUMA share more attractive for retail investors and thus to
expand the shareholder base, a 1:10 stock split was carried out on June 10, 2019.
On that day, shareholders received nine additional shares for each share held.
The share price was adjusted accordingly at a ratio of 1:10. Taking the stock split
into account, the daily trading volume of PUMA shares decreased from an avera-
ge of 444 thousand shares in the previous year to an average of 387 thousand
shares in the financial year 2019.
Compared to the MDAX, which rose 30.5% in the financial year 2019, the PUMA
share performed significantly better with an increase of 60.1%.

➔

T.90 KEY DATA PAR SHARE*

2019

2018

2017

2016

2015

2014

2013

End of year price

Highest price listed

Lowest price listed

€

Daily trading volume (Ø)

amount in thousands

Earnings per share

Gross cash flow per share

Free cash flow (before acquisitions) per share

Shareholders' equity per share

Dividend per share

€

68.35

72.95

43.00

387

1.76

47.15

2.22

12.84

0.50

42.70

52.50

31.70

444

1.25

2.66

1.00

11.52

0.35

36.30

39.14

24.35

9.09

2.21

0.86

11.09

1.25**

24.97

16.82

4.17

1.22

0.38

11.53

0.08

19.87

21.29

14.19

2.48

0.90

-0.66

10.84

0.05

17.26

23.50

15.71

4.29

1.15

0.42

10.83

0.05

* Disclosures for the prior periods were adjusted retroactively to the 1:10 stock split carried out in the second quarter of 2019

** one/time special dividend

23.50

24.94

20.54

111

0.36

1.54

0.33

10.02

0.05

277

Annual Report 2019 ↗ ADDITIONAL INFORMATION➔

G.05 PUMA SHARE PERFORMANCE / TRADING VOLUME

278

Annual Report 2019 ↗ ADDITIONAL INFORMATION➔

G.06 SHARE DEVELOPMENT - REBASED

The PUMA share has been registered for the regulated market on German stock
exchanges since 1986. It is listed in the Prime Standard Segment and the Mid-
Cap Index MDAX of the German Stock (Deutsche Börse). Moreover, membership
in the FTSE4Good index was once again confirmed.

279

Annual Report 2019 ↗ ADDITIONAL INFORMATIONPUMA YEAR-ON-YEAR COMPARISON

➔

T.91 PUMA YEAR-ON-YEAR COMPARISON

(in € million)

2019*

2018

Deviation

Sales

Consolidated sales

- Footwear

- Apparel

- Accessories

Result of operations

Gross profit

EBIT

EBT

Net earnings

Profitability

Gross profit margin

EBT margin

Net earnings margin

Return on capital employed (ROCE)

Return on equity (ROE)

5,502.2

2,552.5

2,068.7

881.1

2,686.4

440.2

417.6

262.4

48.8%

7.6%

4.8%

29.6%

13.7%

4,648.3

2,184.7

1,687.5

776.1

2,249.4

337.4

313.4

187.4

48.4%

6.7%

4.0%

25.8%

10.9%

* With regards to the effects from the first-time application of IFRS 16 Leases in the financial year 2019 please refer to the notes to the consolidated financial statements as of December 31, 2019, chapter 1

** Disclosures for the prior periods were adjusted retroactively to the 1:10 stock split carried out in the second quarter of 2019

**Die Angaben für die Vorjahre wurden rückwirkend an den Aktiensplit, der im 2. Quartal 2019 durchgeführt wurde, im Verhältnis 1:10 angepasst

18.4%

16.8%

22.6%

13.5%

19.4%

30.5%

33.2%

40.0%

0.4%pt

0.8%pt

0.7%pt

3.8%pt

2.8%pt

280

Annual Report 2019 ↗ ADDITIONAL INFORMATION
Balance sheet information

Shareholders' equity

- Equity ratio

Balance sheet information
Working capital
Shareholders' equity

- in % of consolidated sales
- Equity ratio

Working capital
Cash flow and investments

- in % of consolidated sales

Gross cash flow

Free cash flow
Cash flow and investments
Investments (before acquisition)
Gross cash flow
Acquisition investments
Free cash flow

Investments (before acquisition)
Employees

Acquisition investments
Number of employees (annual average)

Sales per employee (k€)
Employees

Number of employees (annual average)
PUMA share**

Sales per employee (k€)
Share price (in €)

2019*

2018

Deviation

1,920.3

43.9%

549.4

1,920.3
10.0%

43.9%

549.4

10.0%
704.8

330.0

218.4

704.8
1.2

330.0

218.4

1.2
13,348

412.2

13,348

412.2
68.35

1,722.2

53.7%

503.9

1,722.2
10.8%

53.7%

503.9

10.8%
398.0

172.9

130.2

398.0
0.0

172.9

130.2

0.0
12,192

381.3

12,192

381.3
42.70

Average outstanding shares (in million)
PUMA share**
Number of shares outstanding as of Dec, 31 (in million)
Share price (in €)
Earnings per share (in €)
Average outstanding shares (in million)
Market capitalization
Number of shares outstanding as of Dec, 31 (in million)
Average trading volume (amount/day)
Earnings per share (in €)
* With regards to the effects from the first-time application of IFRS 16 Leases in the financial year 2019 please refer to the notes to the consolidated financial statements as of December 31, 2019, chapter 1
Market capitalization
** Disclosures for the prior periods were adjusted retroactively to the 1:10 stock split carried out in the second quarter of 2019
Average trading volume (amount/day)

149.55
386,863

149.51
443,855

149.52
10,222

149.47
6,384

386,863

443,855

68.35
1.76

42.70
1.25

149.55

149.52

10,222

149.51

149.47

6,384

1.76

1.25

** Disclosures for the prior periods were adjusted retroactively to the 1:10 stock split carried out in the second quarter of 2019

11.5%

-9.8%pt

9.0%

11.5%
-0.9%pt

-9.8%pt

9.0%

-0.9%pt
77.1%

90.9%

67.7%

77.1%
-

90.9%

67.7%

-
9.5%

8.1%

9.5%

8.1%
60.1%

0.0%

60.1%
40.4%

0.0%
60.1%

0.0%
-12.8%

40.4%

60.1%

-12.8%

281

Annual Report 2019 ↗ ADDITIONAL INFORMATION
PUMA GROUP DEVELOPMENT

➔

T.92 PUMA GROUP DEVELOPMENT

(in € million)

Sales

Consolidated sales

- Change in %

- Footwear

- Apparel

- Accessories

Result of operations

Gross profit

- Gross profit margin

Royalty and commission income

EBIT

- EBIT margin

EBT

- EBT margin

Net earnings

- Net margin

Expenses

Marketing/retail

Personnel

1) EBIT before special items

2019*

2018

2017

2016

2015

2014

2013

2012

2011

2010

5,502.2

18.4%

2,552.5

2,068.7

881.1

2,686.4

48.8%

25.1

440.2

8.0%

417.6

7.6%

262.4

4.8%

1,112.1

634.5

4,648.3

4,135.9

3,626.7

3,387.4

2,972.0

2,985.3

3,270.7

3,009.0

2,706.4

12.4%

2,184.7

1,687.5

776.1

14.0%

1,974.5

1,441.4

719.9

7.1%

1,627.0

1,333.2

666.5

14.0%

1,506.1

1,244.8

636.4

-0.4%

1,282.7

1,103.1

586.3

-8.7%

1,372.1

1,063.8

549.4

8.7%

1,595.2

1,151.9

523.6

11.2%

1,539.5

1,035.6

433.9

10.6%

1,424.8

941.3

340.3

2,249.4

1,954.3

1,656.4

1,540.2

1,385.4

1,387.5

1,579.0

1,493.4

1,344.8

48.4%

47.3%

45.7%

45.5%

46.6%

16.3

337.4

7.3%

313.4

6.7%

187.4

4.0%

931.2

553.8

15.8

244.6

5.9%

231.2

5.6%

135.8

3.3%

822.9

549.1

15.7

127.6

3.5%

118.9

3.3%

62.4

1.7%

732.3

493.1

16.5

96.3

2.8%

85.0

2.5%

37.1

1.1%

697.6

483.8

19.4

128.0

4.3%

121.8

4.1%

64.1

2.2%

599.7

425.3

46.5%

20.8

191.4

6.4%

53.7

1.8%

5.3

0.2%

48.3%

19.2

290.7

8.9%

112.3

3.4%

70.2

2.1%

49.6%

17.6

333.2

11.1%

320.4

10.6%

230.1

7.6%

49.7%

19.1

337.8

12.5%

301.5

11.1%

202.2

7.5%

544.1

415.7

609.3

438.8

550.7

393.8

501.3

354.1

*With regards to the effects from the first-time application of IFRS 16 Leases in the financial year 2019 please refer to the notes to the consolidated financial statements as of December 31, 2019, chapter 1

**Disclosures for the prior periods were adjusted retroactively to the 1:10 stock split carried out in the second quarter of 2019

282

Annual Report 2019 ↗ ADDITIONAL INFORMATION
2019*

2018

2017

2016

2015

2014

2013

2012

2011

2010

Balance sheet

Total assets

Shareholders' equity

- Equity ratio

Working capital

- thereof: inventories

Cash flow

Free cash flow

Investments (incl. acquisitions)

Profitability

Return on equity (ROE)

Return on capital employed (ROCE)

Additional information

Number of employees (year-end)

Number of employees (annual average)

PUMA share**

Share price (in €)

Earnings per share (in €)

Average outstanding shares (in million)

Number of shares outstanding as of Dec, 31 (in
million)

Market capitalization

1) EBIT before special items

4,378.2

1,902.3

43.4%

549.4

1,110.2

330.0

218.4

13.8%

29.6%

14,332

13,348

68.35

1.76

149.52

149.55

10,222

3,207.2

1,722.2

53.7%

503.9

915.1

2,853.8

1,656.7

58.1%

493.9

778.5

2,765.1

1,722.2

62.3%

536.6

718.9

172.9

130.2

128.5

122.9

49.7

91.1

10.9%

25.8%

8.2%

20.7%

3.6%

10.3%

2,620.3

1,619.3

61.8%

532.9

657.0

-98.9

79.5

2.3%

7.9%

2,549.9

1,618.3

63.5%

455.7

571.5

39.3

96.4

4.0%

11.5%

2,308.5

1,497.3

64.9%

528.4

521.3

29.2

76.3

0.4%

5.6%

2,530.3

1,597.4

63.1%

623.7

552.5

2,581.8

1,605.2

62.2%

534.0

536.8

2,366.6

1,386.4

58.6%

404.5

439.7

-8.2

172.9

16.8

115.3

17.1

163.6

4.4%

8.6%

14.3%

28.7%

14.6%

31.7%

12,894

12,192

11,787

11,389

11,495

11,128

11,351

10,988

11,267

10,830

10,982

10,750

11,290

10,935

10,836

10,043

42.70

1.25

36.30

0.91

24.97

0.42

19.87

0.25

17.26

0.43

23.50

0.04

22.49

0.47

22.50

1.54

9,697

9,313

24.80

1.35

149.47

149.43

149.40

149.67

149.81

150.31

149.51

6,384

149.46

5,426

149.40

3,730

149.40

2,968

149.40

2,578

149.40

3,511

149.39

3,359

149.35

3,360

149.81

3,715

*With regards to the effects from the first-time application of IFRS 16 Leases in the financial year 2019 please refer to the notes to the consolidated financial statements as of December 31, 2019, chapter 1

**Disclosures for the prior periods were adjusted retroactively to the 1:10 stock split carried out in the second quarter of 2019

283

Annual Report 2019 ↗ ADDITIONAL INFORMATION
IMPRINT

PUBLISHER

PUMA SE

PUMA Way 1

91074 Herzogenaurach

Germany

+49 (0)9132 81-0

www.about.puma.com

CORPORATE
COMMUNICATIONS

Kerstin Neuber

Senior Head of Communications

kerstin.neuber@puma.com

INVESTOR
RELATIONS

Johan-Philip Kuhlo

Head of Corporate Strategy &

Investor Relations

johan-philip.kuhlo@puma.com

PEOPLE &
ORGANIZATION

Dietmar Knoess

Global Director People & Organization

dietmar.knoess@puma.com

SUSTAINABILITY

Stefan Seidel

Head of Corporate Sustainability

stefan.seidel@puma.com

BRAND DESIGN

Jan Hippchen

PHOTO CREDITS

Christoph Maderer

Tom Ziora

Robert Ascroft

Benoît Peverelli

DESIGN AND
REALISATION

3st kommunikation GmbH

www.3st.de

284

Annual Report 2019 ↗ IMPRINT