PUMA
Annual Report 2021

Plain-text annual report

Annual Report 2021 Annual Report 2021 ↗ Table of Contents TABLE OF CONTENTS 04 05 09 TO OUR SHAREHOLDERS CEO Letter Report by the Supervisory Board 14 OUR PEOPLE 15 Only See Great 18 26 Culture Personal Journey 28 29 31 46 65 67 126 128 SUSTAINABILITY Foreword PUMA’s Forever Better sustainability strategy Social Aspects Health and Safety Environment Summary and Outlook Index for separate Combined Non-Financial Report and GRI Content 142 Deloitte Assurance Statement 2 Annual Report 2021 ↗ Table of Contents 145 COMBINED MANAGEMENT REPORT 215 CONSOLIDATED FINANCIAL FOR THE FINANCIAL YEAR 2021 146 Overview 2021 150 150 150 154 156 158 PUMA Group Essential Information Commercial Activities and Organizational Structure Targets and Strategy Product Development and Design Sourcing Employees 162 Management System 163 Information regarding the Non-Financial Report 164 Economic Report STATEMENTS Consolidated Statement of Financial Position Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Cash Flows Statement of Changes in Equity 216 218 219 220 222 224 Notes to the Consolidated Financial Statements 247 Notes to the Consolidated Balance Sheet 279 Notes to the Consolidated Income Statement 286 Additional Information 304 Declaration by the Legal Representatives General Economic Conditions 305 Independent Auditor’s Report 164 165 167 170 Sales Regional Development Results of Operations 174 Dividends 175 Net Assets and Financial Position 179 182 Cash Flow Statement regarding the Business Development and the Overall Situation of the Group 183 Comments on the Financial Statements of PUMA SE in accordance with the German Commercial Code (HGB) 187 190 Information concerning takeovers Corporate Governance Statement in accordance with Section 289f and Section 315d HGB 200 Risk and Opportunity Report 213 Outlook Report 314 ADDITIONAL INFORMATION 315 The PUMA Share 317 319 322 PUMA Year-on-Year Comparison PUMA Group Development Imprint 3 Annual Report 2021 ↗ To our Shareholders TO OUR SHAREHOLDERS 05 09 CEO Letter Report by the Supervisory Board 4 Annual Report 2021 ↗ To our Shareholders CEO-LETTER ↗ BJØRN GULDEN CHIEF EXECUTIVE OFFICER PUMA DEAR SHAREHOLDERS, I hope this letter finds you well despite the current challenges around the world. After more than two years, the COVID-19 pandemic still has a negative impact on our daily lives and business and now we’re also facing a conflict in the heart of Europe that is causing terrible human suffering. We’re in constant dialogue with all our stakeholders in Ukraine and we do our utmost to support our local employees and their families as well as all our partners, ambassadors, and athletes wherever we can. Ensuring the health and safety of our people continues to be our number one priority, as we have already demonstrated throughout the COVID-19 pandemic. We have set up a safe house in Ukraine, we are delivering food, water, and other necessities directly to our people and we are helping women and children who want to leave the country. We currently have 40 women and children in accommodation in Poland and about 120 here in Germany. Many of the adults have already started working and most of the children are already attending schools and kindergarten. Their positive attitude and mindset, as well as their willingness to work and integrate, is remarkable. They are strong and positive people. I sincerely hope that this conflict will be solved diplomatically as soon as possible, that further bloodshed can be avoided and that peace will be restored. While we are most concerned about the lives and livelihoods of the people who are directly affected in Ukraine and by the COVID-19 pandemic, the conflict as well as the pandemic also have a significant business impact on our sector and on PUMA. In addition to the impact on our operations in Russia and Ukraine, we continue to face some of the challenges that we already saw during the course of 2021: COVID-19 related lockdowns and restrictions in different parts of the world, a weak consumer sentiment in some key markets, significant challenges in our supply chain, strong inflationary pressures, and geopolitical tensions. 5 Annual Report 2021 ↗ To our Shareholders Despite all these challenges, 2021 was a very successful year for us. To be specific, it was the best year in PUMA’s history. Due to our continued brand momentum combined with high operational flexibility and a fantastic effort from our employees, our sales grew by 32% to EUR 6,805m and EBIT grew by 166% to EUR 557m. Compared to the pre-pandemic level of 2019, our sales increased by 30%, resulting in a two-year CAGR of around 15% during these challenging times. Our strategy of working closely together with all our suppliers and retail partners to manage short-term issues without hindering our mid-term momentum continued to pay off. Our external partners supported us in an extraordinary way and the dedication and commitment of all our employees during such a challenging year was truly exceptional. A lot of our employees went far beyond what a company can expect from them and in the name of the entire PUMA Board, I would like to thank everyone for their contribution towards making these results possible. People make the difference and our PUMA family is our biggest strength and asset. Throughout 2021, we continued to focus on the three main areas that we defined in early 2020 in reaction to the COVID-19 pandemic: Deal with COVID, continue to drive the business and continue to do the right thing in areas such as social responsibility and environmental sustainability. Dealing with COVID first and foremost meant ensuring the health and safety of our people and everyone in our value chain. We continued to adopt and comply with very strict health and safety measures across our operations and rolled out vaccination programs for our employees in countries where this was possible. This helped us achieve a vaccination rate of more than 90% at our headquarters in Herzogenaurach by mid-July. At the end of the year, we followed up with booster vaccinations. I would once again like to thank our People & Organization teams (formerly known as Human Resources) around the world for successfully managing a second year of COVID-19 and supporting our employees in the best way possible. Until around the first quarter 2021, the COVID-19 pandemic mainly impacted the store operations of our own retail organization and of our retail partners due to mandatory store closures and other restrictions. This was followed by significant disruptions in our supply chain due to lockdowns and factory closures in key sourcing countries such as Bangladesh, Cambodia, China and Vietnam. Especially, the lockdown in the third quarter in 2021 in the south of Vietnam, one of our most important sourcing destinations, had a very negative impact on our supply chain. Due to strict local lockdown measures, the production at our footwear, apparel and accessories suppliers in the south of Vietnam was suspended for about ten weeks, affecting approximately 15% of our global sourcing volumes. We tried to minimize delays as much as possible and shifted part of the volumes to other sourcing locations where possible. Thanks to the quick rollout of the vaccination program in the south of Vietnam, the factories gradually reopened during October and ramped up to full production by the end of year. After our suppliers resumed normal operations, we saw fewer and very localized factory closures in some parts of Asia, which did not significantly impact our product supply. We’re very thankful to our suppliers for being a part of the PUMA family. The strong collaboration, long-term partnership and all their incredible support ensured the continued supply of products under very difficult circumstances. The COVID-19 pandemic also had a major impact on other parts of our supply chain, and we had to deal with capacity constraints, container shortages and harbor congestion in ocean freight, but also significant challenges in air freight and land-based transportation. All these constraints led to a strong increase in freight costs, which further fueled inflationary pressures, in addition to rising costs for energy, raw materials and labor. As manifested in our strong sales growth, we also continued to drive the business in 2021. After the end of the COVID-19 related lockdowns, we witnessed a certain “normalization” of buying patterns, with more consumers shopping offline again instead of online. In our Direct-to- Consumer business, we therefore saw a higher growth rate in our brick & mortar stores compared to our eCommerce sites. However, both channels grew by double-digits last year, and we continued to invest in the optimization of our store portfolio, the consumer experience on our existing sites as well as the launch of new eCommerce sites. During a time of limited supply, we 6 Annual Report 2021 ↗ To our Shareholders continued to prioritize our retail partners in terms of product allocation. We strongly believe in a multi-brand retail environment and will therefore strengthen the relationship with all our retail partners around the world and do everything we can to service them in the best way possible. After a year without any major sporting events in 2020, we were also excited to see sports leagues, tournaments and other competitions resume in the course of 2021, for the most part including live spectators. The summer of 2021 was exceptional for our teams and athletes, who delivered world class performances on track and on the pitch. We underlined our credibility and high ambitions in football with the victory of the PUMA-sponsored national team Italy at UEFA Euro 2020, several league and cup titles of our PUMA-sponsored club teams and great on-pitch visibility of our products. At the Tokyo Olympics and Paralympics, our athletes won more than 70 medals, demonstrating the performance credentials of our products on the world stage, including our new NITRO running shoes that I personally am exceptionally proud of. We also continued our successful re-entry into basketball, especially for the North American market and launched our first signature shoe with LaMelo Ball at the end of the year. The strengthening of our performance credibility has always been important to us and I’m very happy about the great progress that we’ve seen across football, running, fitness, golf, motorsport, basketball and other locally relevant sports. In Sportstyle, we also continued to build brand heat through exciting new products and collaborations and by offering a comprehensive collection across all relevant price points, including a strong focus on comfort. We are very happy to see that our classics business is growing strongly. Our PUMA Archive is full of footwear and apparel from the 70s, 80s and 90s, for which there is currently a lot of demand in youth culture. We’re also very satisfied to see the continued momentum in our women’s business, following the launch of our “She Moves Us” brand platform, and we will keep capitalizing on our truly inclusive product offering across genders, age groups etc.! We also continued to focus on what we call “Doing the right thing”. We want to be a good corporate citizen and embed our social responsibility and our environmental sustainability into all our business practices. With regards to social responsibility, we continued with multiple initiatives under our #REFORM platform to promote universal equality. We strongly believe that people should be treated equally irrespective of their gender, age, skin color, religious believes, sexual orientation or any other factor. Together with our brand ambassadors and partner organizations, we want to do our part to promote universal equality and fight any form of discrimination in sports and society as a whole. As part of our ambitious 10FOR25 sustainability targets, we implemented more sustainable business practices in all our business operations from sourcing to retail and further increased the usage of more sustainable materials and the overall share of more sustainable products in our collections. We also increased our focus on circularity, with several pilot projects and strengthened our consumer-facing sustainability communication through our FOREVER BETTER brand platform. I, together with my team, attended the COP26 climate conference in Glasgow to emphasize our commitment in the fight against climate change and to work towards limiting the global temperature rise to 1.5 degrees Celsius above pre-industrial levels. We have all these initiatives because we really believe in them, as part of PUMA’s core values, and we will continue to do the right thing. Given our strong performance in 2021 and good momentum in the first months of 2022, we’re also optimistic for the future of our industry in general and for PUMA in particular, despite the external challenges. The underlying dynamics in our sector remain very strong given the increasing participation in sports, the ongoing sneaker trend and the continued casualization among consumers all around the world. We also see PUMA’s brand momentum continuing and we will ensure operational flexibility in an increasingly volatile and unpredictable marketplace. As we have already done during the past years, we will continue to work very closely with all our retail partners to further increase our shelf space and support the sell-through of our products in their stores. We have focused on building strong partnerships with all our key stakeholders such as suppliers, retailers, ambassadors and athletes, helping them as well as us through the ongoing challenges. We will continue to foster these partnerships in the future. We therefore 7 Annual Report 2021 ↗ To our Shareholders expect 2022 to be another record year for PUMA, with a net sales growth of at least 10%, with upside potential, and an EBIT of EUR 600 – 700 million. The objective is not to maximize short- term EBIT, but to continue to have healthy long-term growth in both sales and EBIT. We will also keep on putting our people first and take care of all our partners. Let’s stay positive and hope that peace in Ukraine will be restored as soon as possible and that the impact of the COVID-19 pandemic will continue to decrease. Thank you for being part of the PUMA family! Stay strong, healthy and optimistic! Bjørn Gulden Chief Executive Officer PUMA 8 Annual Report 2021 ↗ To our Shareholders REPORT BY THE SUPERVISORY BOARD ↗ JEAN-FRANÇOIS PALUS ↗ JEAN-FRANÇOIS PALUS CHAIRMAN OF THE CHAIRMAN OF THE SUPERVISORY BOARD SUPERVISORY BOARD DEAR SHAREHOLDERS, The 2021 financial year was again heavily impacted by the COVID 19 pandemic. Despite the associated uncertainties, supply chain bottlenecks due to container shortages, port congestion and pandemic-related factory closures in key sourcing regions, as well as political tensions in key markets, we managed to start 2021 with high growth momentum. Due to the continued decisive and consistent actions of our Management Board and the outstanding performance of our employees, we were able to maintain our market momentum and operational flexibility throughout the year. As a result, we were able to raise our outlook for 2021 during the year and end the year with the highest sales and profit in PUMA's history. At the same time, it was of utmost importance for us to protect the safety and health of our employees in the best possible way through the resolute development and implementation of hygiene and occupational safety concepts and the implementation of vaccination campaigns. We were once again a flexible and reliable business partner for our suppliers and customers. We worked as closely as possible with them to stabilize our supply chains and increase sales of our products. By appointing Hubert Hinterseher and Arne Freundt to the Management Board, we were able to further strengthen our organization and thus lay the foundations for a successful 2022. In the financial year 2021, the Supervisory Board has exercised all its duties under the law, statutes and company rules. The Supervisory Board has dealt extensively with the status and the development of PUMA, particularly continuing with a special focus on the COVID-19 pandemic, and has regularly advised and supervised the Management Board in its management of the Company. 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 corporate development and corporate planning, the Company’s economic situation, including its net assets, financial position and results of operations, the adequacy of capital resources and all key decisions for the Group. The Management Board has informed the 9 Annual Report 2021 ↗ To our Shareholders 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 2021 one extraordinary meeting of the Supervisory Board took place. Urgent matters were decided via circular resolutions using electronic means of communication. All members participated in drawing up the resolutions. Whenever necessary, representatives of the shareholders and employees held separate preliminary discussions prior to the meetings. Plenary Supervisory Board Jean-François Palus Thore Ohlsson Héloïse Temple-Boyer Fiona May Martin Köppel Bernd Illig Attendance at meetings (referring to regular and extraordinary meetings) Attendance in % 5/5 5/5 5/5 5/5 5/5 5/5 100 100 100 100 100 100 The Supervisory Board discussed in detail all of the Company’s key business transactions, based on the reports by the Management Board and the Committees, and presented its own ideas. The Management Board has provided the Supervisory Board with detailed information on any deviations of the business performance from the budgeted figures, both in writing and orally. The Supervisory Board verified these explanations using the supporting documents, which were always submitted in appropriate time before the meetings. The Supervisory Board was involved in all key decisions at an early stage. In addition, the Chair of the Supervisory Board maintained, and continues to maintain, regular verbal or written contact with the CEO and keeps himself informed of all major developments. Overall, these discussions did not give any indication that the Management Board was managing the Group in anything other than a lawful and proper manner. The Supervisory Board members took part, on their own initiative, in the educational and training measures necessary for the performance of their duties. The Company supports the Supervisory Board members in their training activities, for example by having the Legal Department regularly review changes in the legal framework for the Supervisory Board and report about them in the meetings. In 2021, the Supervisory Board received a training on the sustainability strategy of the Company and the challenges in the supply chain. The Supervisory Board dealt with the Act on Corporate Due Diligence in Supply Chains (Supply Chain Due Diligence Act) and the EU Regulation on the Establishment of a Framework to Facilitate Sustainable Investment (EU Taxonomy Regulation). MAIN ADVISORY FOCUS In the 2021 financial year, the main focus was on the following issues: review and approval of the 2020 consolidated and annual financial statements and the non-financial report, dividend proposal, resolution of the new remuneration system for the Management Board and submission to the 2021 Annual General Meeting for approval, ongoing assessment of the impact and handling of the COVID 19 pandemic, setting the agenda for the Annual General Meeting on 5 May 2021, approval of the Management Board’s decisions to hold the Annual General Meeting as a virtual Annual General Meeting without the physical presence of shareholders or their proxies, appointment of Hubert Hinterseher to the Management Board to succeed Michael Lämmermann and appointment of Arne Freundt to the Management Board, establishment of a Sustainability Committee, setting of new targets for the proportion of women to be achieved on the Supervisory Board and Management Board, self-assessment of the Supervisory Board, current business and revenue development, markets and trends, financial position of the Group, corporate and budget planning 2022 as well as medium-term planning, including investments, further improvement of the compliance management and internal control system as well as material litigation in the Group. 10 Annual Report 2021 ↗ To our Shareholders The Audit Committee submitted a recommendation to the Supervisory Board for the election of the auditor, which was prepared following a selection process within the meaning of Art. 16 (3) Regulation (EU) No. 537/2014, comprised two candidates and was substantiated. As every year, the Personnel Committee and the Supervisory Board determined the degree of achievement of the targets for the individual Management Board members with regard to 2020. The Supervisory Board decided on the targets for the variable Management Board remuneration for the 2021 financial year upon recommendation of the Personnel Committee. CONFLICTS OF INTEREST The members of the Supervisory Board are required to disclose to its Chair any conflicts of interest without undue delay. In the past year, no such disclosures were made. COMMITTEES The Supervisory Board has established four committees to perform its duties: The Personnel Committee, the Audit Committee, the Nominating Committee and the Sustainability Committee which was established in April 2021. The Personnel Committee, the Audit Committee and the Sustainability 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 statements. The Supervisory Board receives regular reports on their work. PERSONNEL COMMITTEE The Personnel Committee has the task of preparing the conclusion and amendment of employment contracts with the members of the Management Board and establishing policies for human resources and personnel development. It met to one regular meeting and to one extraordinary meeting in 2021 and mainly dealt with the compensation system for the Management Board, which has been approved by the Annual General Meeting in 2021. Furthermore, the determination of target achievement for the individual Management Board members and the setting of targets for 2021 were the focus of the discussions. Corresponding recommendations for resolutions were made to the Supervisory Board. Personnel Committee Attendance at meetings Attendance in % Jean-François Palus Fiona May Martin Köppel AUDIT COMMITTEE 2/2 2/2 2/2 100 100 100 The Audit Committee held four regular meetings in the financial year 2021. Furthermore, one extraordinary meeting of the Audit Committee took place in 2021. In particular, the Audit Committee is responsible for the review of the accounting, particularly comprising the consolidated financial statements and the group management report, group half year report, interim financial information and the single entity financial statements in accordance with the German Commercial Code (HGB). It is furthermore responsible for monitoring the accounting process, the effectiveness of the internal control system, the risk management system, the internal audit system, compliance and the statutory audit of the financial statements, with particular regard to the process of selecting an auditor. The Audit Committee is also responsible for conducting the selection process of the auditor. In addition, the Audit Committee monitors the independence of the auditor and ensures that the non-audit services of the auditor commissioned by the Management Board do not give rise to any grounds for disqualification or partiality or any threat to independence. The Audit Committee issues the audit mandate on behalf of the Supervisory Board to the 11 Annual Report 2021 ↗ To our Shareholders auditor elected by the general meeting, determines the audit areas of the audit and agrees the fee with the auditor. Heads of the corporate functions were also available for reports and questions on individual agenda items at the committee meetings. The Audit Committee meets regularly with the auditor, also without the Management Board. Audit Committee Thore Ohlsson Héloïse Temple-Boyer Bernd Illig Attendance at meetings (referring to regular and extraordinary meetings) Attendance in % 5/5 5/5 5/5 100 100 100 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 no meeting in the last financial year. SUSTAINABILITY COMMITTEE The Sustainability Committee was established in April 2021 and met once in the 2021 financial year to discuss the company's sustainability strategies. The Sustainability Committee consists of three members. CORPORATE GOVERNANCE As in previous years, the Supervisory Board addressed current developments in the financial year 2021 regarding the German Corporate Governance Code in the version dated December 16, 2019 (effective as of March 20, 2020) (GCGC). The GCGC contains essential statutory regulations and recommendations for the management and supervision of listed companies and standards for responsible corporate governance. The corporate governance standards have long been a part of the corporate routine. Pursuant to Principle 22 of the GCGC, the Supervisory Board reports on corporate governance in the Corporate Governance Statement. The Company satisfies all requirements of the GCGC, to the extent required by it. The Statement of Compliance of November 9, 2021 is available to our shareholders at any time on the Company’s website under https://about.PUMA.com/en/investor-relations/corporate- governance at STATEMENT OF COMPLIANCE. ANNUAL FINANCIAL STATEMENTS ADOPTED The annual financial statements for PUMA SE prepared by the Management Board in accordance with the 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 2021, prepared in accordance with Section 315a HGB on the basis of the International Financial Reporting Standards (IFRS) have been audited by the statutory auditors, Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Munich, who were appointed at the Annual General Meeting on May 5, 2021 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 Corporation Act (Aktiengesetz/AktG), is capable of detecting at an early stage and countering any developments that might jeopardize the continuity of the Company as a going concern. The Supervisory Board has been updated by the Management Board regularly 12 Annual Report 2021 ↗ To our Shareholders on all relevant risks in this regard, in particular its assessments of market and procurement risks, financial risks (including currency risks as well as risks due to the COVID-19 pandemic) 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 appropriation 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 22, 2022 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. The Supervisory Board reviewed in detail the annual financial statements, the combined management report for PUMA SE and the PUMA Group, the Management 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 statements for the financial year 2021. The 2021 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 € 0.72 per dividend entitled share to the shareholders for the financial year 2021. In this context, the liquidity situation of the Company, the financing and the effects on the capital market were discussed. The payout is conditional to an overall sound macroeconomic environment. A total amount of around € 107.7 million will be paid out in dividends from PUMA SE’s retained earnings. The remaining retained earnings of around € 382.4 million will be carried forward. In its meeting on February 22, 2022, the Supervisory Board was presented the state of data collection for the non-financial report in accordance with §§ 315c in conjunction with §§ 289c to 289e of the German Commercial Code (HGB). As soon as the non-financial report is finalized, it will be submitted to the Supervisory Board for approval and will be published on the website of the Company by April 30, 2022. 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 2021. Herzogenaurach, February 22, 2022 On behalf of the Supervisory Board Jean-François Palus Chairman 13 Annual Report 2021 ↗ Our People OUR PEOPLE 15 18 26 Only See Great Culture Personal Journey 14 Annual Report 2021 ↗ Our People ONLY SEE GREAT Effective communication and prioritizing the health and wellbeing of our employees were the main pillars of our People & Organization strategy in 2021, as we moved into the second year of the COVID-19 pandemic. We monitored the global development of the COVID-19 pandemic, communicated transparently, and took the right actions to keep our employees safe and healthy, minimizing the financial impact, while ensuring our business continued to operate effectively. At the same time, we lived up to the values of our brand campaign “Only See Great” by preparing our company for future growth. To achieve this, we need dedicated and creative employees, and to endorse our diverse and inclusive work environment. This fosters agile thinking, creativity and interaction. By putting our employees at the center of everything we do, we are committed to promoting their professional and personal development and helping them maintain a good work-life balance. COMPENSATION & BENEFITS The attractive performance-based compensation system at PUMA includes a fixed base salary, the PUMA bonus system, profit-sharing programs and various social benefits and intangible benefits. We also offer long-term incentive programs for the senior management level that honors the sustainable development and performance of the business. The bonus system is transparent and globally standardized. Incentives are exclusively linked to company goals. Our goal is to ensure a transparent and fair compensation structure. Therefore, we have been implementing a more specific, unified salary banding structure around the world and have reassessed our roles. In addition, we also started a cooperation with the Fair Wage Network. It means we can access benchmarks for all our subsidiaries and analyze them in terms of living wages as defined by the Fair Wage Network. For 2021 we can confirm with regards to the Living Wage Adjusted Mean benchmark as defined by the Fair Wage Network that all our employees are earning a living wage or above. DIGITALIZATION In 2021 the focus was again on simplifying, accelerating, and harmonizing business processes worldwide and on further digitalization. Since 2017 we have been using the “Workday” software solution for a lot of our HR processes. This provides employees and managers with the necessary processes and tools to carry out day-to-day HR management. In addition, user-friendly dashboards also provide managers with the information and data-driven insights they need for planning and controlling. The analysis of our centralized global data provides a sound basis for strategic decisions and measurable results. Digital signatures and chatbots contributed to further digitalization and optimization of key processes worldwide. COMMUNITY ENGAGEMENT Thanks to our employees around the world, we were able to continue our engagement with local communities. Due to local regulations resulting in the reduction of social contacts as well as social distancing, they often had to find new ways of engaging, but despite this they were still able to conduct a wide range of projects. Here are some examples: PUMA´s North America Headquarter partnered with The Wonderfund, a nonprofit organization dedicated to supporting children engaged with the Massachusetts Department of Children and Families (DCF), to 15 Annual Report 2021 ↗ Our People refurbish family visiting rooms at DCF’s Metro North location. Our employees put furniture together, hung artwork and assembled toys in six meeting rooms and three conference rooms. For the Cultiva Reforestation project, our employees in Chile worked with the Cultiva Foundation to help reforest Cerro Renca and planted 316 trees to give something back to the environment. PUMA Vietnam successfully organized the delivery of Christmas gifts for orphans hit by Covid at Tan Binh’s Children House. PUMA’s China team spent a week of community engagement at the Nanling Primary School in Lancang County, Yunnan Province. PUMA employees brought the children PUMA products, uniforms, writing utensils, and most importantly, the spirit of sport. Our PUMA China management team attended along with other volunteers. Our goal for community engagement was to reach a total number of hours that multiplies by 1.5 our average FTE (Full Time Equivalent) per year. On an online platform, we encouraged all our employees around the world to participate in projects and employee engagement. In total, initiatives led by our subsidiaries on five continents contributed a total of 39,320 hours (2,582 for PUMA SE) of community engagement. Projects ranged from protecting the environment, promoting health and fitness and fighting discrimination, to supporting education for children in need. Often these projects were done in collaboration with local non-profit organizations. Considering that the number of FTEs in 2021 was 14,846 (1,083 for PUMA SE), we far exceeded our target. ↗ G.01 COMMUNITY ENGAGEMENT 2021 CHARITY CAT Charity Cat e.V., founded by PUMA employees in 2004, continued to support various projects in Germany and across the globe. Unfortunately, the global COVID-19 pandemic had the worst impact on those who already have very little. Generous donations from PUMA and individual supporters allowed our non-profit organization Charity Cat to support those in need, both financially and with the donations. An example: Charity Cat partners, among others with “von Herz zu Herz e.V.”, which is active in remote areas of the island of Samar in the Philippines. These reported on the devastating impact that the COVID-19 pandemic had on the small village of Lucerdoni. With Charity Cat’s continued financial support, “von Herz zu Herz e.V.” was able to supply food for poor villagers, begin to build new houses for two families and work on bringing internet access to the community by supplying three computers. On the other side of the world, in the rural mountainous area of Bambamarca in Peru, “Asociación José Dammert Bellido” was able to complete an operating theatre at a local clinic thanks to Charity Cat’s financial support. Previously locals had to drive for five hours to the next city, which often meant help came 16 Annual Report 2021 ↗ Our People too late in the case of an emergency. The project in Peru is supported by Charity Cat’s partner, “Förderkreis Cajamarca e.V”. In Germany Charity Cat donated to “Lauf gegen Krebs” in Erlangen, an initiative raising funds for cancer research and treatment. The group also supported a sports fundraiser for the “Elterninitiative krebskranker Kinder” that helps families of children with cancer. In Berlin Charity Cat continued to help finance a youth center and the “Straßenkinder e.V.” organization, which makes sure that children living on the streets – and those in danger of landing on the streets – have a place to turn to, stay healthy and keep up with their education. Learn more about Charity Cat e.V., get to know its members and its many projects and initiatives at www.charity-cat.de. 17 Annual Report 2021 ↗ Our People CULTURE The work culture at PUMA is unique and driven by our employees. Especially during the COVID-19 pandemic, our culture clearly helped us to make fast decisions, be agile, and have the resilience and trust in one another to find new solutions and ways of working. A key factor is the diversity of our teams and the ongoing effort to ensure that communication with all our employees is transparent and swift. DIVERSITY, EQUALITY & INCLUSION As a global sports company, PUMA creates products that are on trend and relevant for consumers around the world. Our employees have many different nationalities and backgrounds, and we recognize that this is one of our key strengths. Diverse teams with different skillsets and backgrounds are a crucial resource when it comes to creative thinking, decision-making and driving innovation forward. Worldwide we employ people from 134 countries, which represents 2/3 of nationalities. At our homebase in Germany we have people with more than 76 different passports. In 2021 we evaluated our diversity policies and provided our global directors with diversity training. We introduced new training courses for our staff to help them recognize and deal with microaggressions, intercultural communication, diversity, inclusion and belonging. To raise further awareness for these issues, we also held talks with internal and external speakers and posted articles on our internal communication platforms. During our Stronger Together Days, a week of virtual and in-person events for our employees, we took the opportunity to offer many different activities to highlight the issue of diversity and inclusion. One of PUMA’s employer values is “BE YOU”. It means that you do not have to bring an office personality to work, we simply want you to BE YOU. We provide a fair work environment and equal opportunities for all our employees, regardless of their gender, nationality, ethnicity, religion, disability, age or sexual orientation. These commitments are also a part of our PUMA Code of Ethics (2005) and our Diversity Charter (2010). We highlighted our commitment to diversity and inclusion during Pride Month in June, by supporting Christopher Street Day in Nuremberg with events and a live DJ Set, which was streamed from our headquarters. As part of our LGBTQ+ celebrations, we also welcomed a rainbow-colored shipping container in front of our headquarters in Herzogenaurach from our logistics partner Maersk. Once again we illuminated our Brand Center with the colors of the rainbow. In our global opinion survey in 2021, a positive response rate of 85% confirmed that we are on the right track as an employer when it comes to diversity and inclusion. 91% of our staff believe that “people are treated with respect here”, 92% agreed with the statement that PUMA provides a work environment free of discrimination, and we reached a positive response rate of 88% for, “I can be myself at PUMA without worrying about how I will be accepted”. We also received external awards for our efforts, such as Europe’s Leader in Diversity for the second year in a row by The Financial Times. This mirrors our efforts to create a diverse, equal and inclusive company culture. We constantly strive to be an attractive place to work for people of all genders. The male-to-female ratio of our employees was 49/51 in 2021. Of all our employees who work in STEM (Science, Technology, Engineering and Mathematics) roles, 46% are women. It is part of our strategy to ensure that this gender balance is also reflected in management positions. We encourage our female employees to take on leadership positions at PUMA. That is why we also used our SHE MOVES US platform for internal communications. We published several interviews in our employee magazine “CATch Up” to highlight the careers of successful women at PUMA and to inspire other colleagues. We joined Catalyst, a global nonprofit organization, to continue our journey and accelerate our progress in building an even more attractive diverse work environment at PUMA. 18 Annual Report 2021 ↗ Our People In 2021, 44% of management positions across the group were held by women. ↗ T.01 PERCENTAGE OF WOMEN IN MANAGEMENT POSITIONS (in %) Region Europe EEMEA North America Latin America Asia/Pacific Total 2016 2017 2018 2019 2020 2021 30 40 45 34 43 38 31 38 46 35 41 38 31 43 48 38 44 40 35 42 50 38 43 41 34 44 48 40 48 43 37 42 48 45 49 44 For 2021 we reached our target of at least 30% female representation on the Supervisory Board and 20% on the Management Board. With 40% women at the second management level, we also achieved our goal for the PUMA Group to have 40% female representation at the second management level below the Management Board. Unfortunately, with 20% female representation at the first management level below the Management Board we did not reach our ambitious target of 30% on PUMA Group level. This is due to the fact that our management team at the first management level below the Management Board has remained stable in recent years and no significant new positions have been created at this level. However, because of the strong development at the second management level below the Management Board, the Management Board of PUMA SE is very confident that the new target for the first management level will be achieved naturally as part of internal succession promotions. Our new targets to be reached by 2026 are to have at least two women (33%) female representation on the Supervisory Board and for the Management Board to have at least one woman (25%). If the Management Board is composed of four or five members, at least one woman (20%) on the Management Board, and at least two women (33%) on the Management Board if it is composed of six members. At PUMA Group level the target for the share of women for the first management level below the Management Board remains at 30% and for second management level at 40%. The average age of our employees worldwide is 31. Our employees represent all working age groups. 19 ↗ G.02 AGE GROUP Annual Report 2021 ↗ Our People It is very important to us to provide an inclusive work environment where employees with disabilities can fulfill their roles while also developing their potential. Therefore, we adapt workplaces to meet their special needs and offer suitable training. In Germany the interests of employees with disabilities are represented by an elected member of the works council. Depending on the different legal situations in our entities, in some countries it is not permitted to track disability status, as well as the various definitions of a severely disabled employee. Around 1% of our employees informed us about being severely disabled, while the actual number is probably higher. WELLBEING At PUMA fostering the wellbeing of our people is a top priority. Therefore, we are dedicated to constantly improving the health and wellbeing of our employees by offering a wide range of services and benefits. While the Wellbeing concept started at our headquarters in Herzogenaurach, it has now been embraced by all our PUMA subsidiaries around the world, adapted to local needs and regulations. Our wellbeing approach focuses on four aspects: Flex, Social, Finance and Athlete. As a sports brand we focus on giving our employees as many opportunities as possible to enjoy their passion for sports. Therefore, we offer different courses such as yoga, jumping fitness or krav maga. Apart from our huge variety of courses, we provide free gym access, sports courts for football, basketball and tennis, as well as beach volleyball. As the COVID-19 pandemic developed at a different pace in different regions of the world, we had to adapt our wellbeing offer when needed, and expanded the number of online options. This included the PUMA Home Academy, which provided helpful resources about nutrition, sports and mental health. During our “Be Well Weeks”, where we promote a healthy lifestyle, we offered free health checks and nutritional advice and gave our employees the opportunity to try the latest trends in fitness and sport. FLEXIBLE WORKING CONDITIONS Being committed to our people’s wellbeing, we offer great working conditions on the fundament of a unique culture. To enable our employees to balance their professional and personal life for whatever reason, we have a multitude of models, such as flexible working hours, mobile office, part-time employment and sabbaticals they can choose from at different stages of their life. In respect of the Covid-19 pandemic, we 20 Annual Report 2021 ↗ Our People can respond with maximum flexibility regarding the time and place of our employees' work activities. To adapt to the new circumstances, we have also made our regular working time models even more flexible. In Germany employees can take advantage of free employee assistant services provided by one of our partners. Offering a parent-child office, a nursing room, daycare spots and summer camps for children during school breaks, our headquarters in Herzogenaurach was awarded the German “Audit Beruf & Familie” (audit work and family) certificate, which we hold since 2015. During the past year we also provided virtual childcare by introducing online classes for children during school holidays to support our employees working from home. Our goal is to minimize voluntary turnover and to keep the number of employees in permanent employment above 80%. In 2021, 89% of our employees worldwide had a permanent contract and the employment of over 28% of our employees was covered by a collective bargaining agreement. The turnover rate is heavily dependent on the share of the retail business in the respective markets and regions. The employee- initiated turnover rate was 26% (9% for non-retail employees and 38% for retail employees). The total turnover rate was 34% including retail employees. The percentage of employees working part-time was 22% at the end of 2021. 21 Annual Report 2021 ↗ Our People ↗ T.02 EMPLOYMENT CONTRACTS (PERMANENT/FIXED TERM) Total Total Female Male Diverse Total Female Male Diverse Permanent Fixed Term EUROPE EEMEA North America Latin America 4,200 4,098 3,440 1,751 4,011 1,622 1,688 2,389 3,159 2,388 1,290 1,094 2,501 2,501 1,024 1,477 Asia/Pacific 4,362 3,935 2,454 1,481 Total 18,320 16,275 8,141 8,129 1 0 4 0 0 5 760 87 445 55 315 32 771 393 374 0 427 0 263 2,045 1,156 0 164 885 ↗ T.03 EMPLOYMENT CONTRACTS (FULL-TIME/PART-TIME) (in %) Employment contracts Female Male Diverse Full-time Part-time 48 61 52 39 0 0 0 0 4 0 0 4 Total 100 100 OCCUPATIONAL HEALTH AND SAFETY Providing a work environment that keeps our employees healthy and safe is a key priority. The COVID-19 pandemic continued to be a challenge in 2021. We kept our strict hygiene and safety concept, which complied with all applicable health and safety regulations, i.e. distancing rules, installing hand-sanitizer dispensers and a requirement to wear masks. In addition, we are also providing protective gloves and masks, as well as rapid tests for free for all our employees. This way we keep the risk of infection to an absolute minimum. PUMA motivated and educated all employees to get themselves vaccinated and organized vaccination campaigns in our offices worldwide where possible. We consequently achieved a vaccination rate of over 85% in the majority of our entities, and in some locations even 100%. In 2021 we updated our global Occupational Health and Safety Policy to underline the importance of this issue. PUMA has a central Health & Safety Committee which operates in our headquarters in Herzogenaurach. This internal committee includes health and safety specialists who conduct frequent health and safety inspections. These are complemented by external inspections by official bodies, such as the German “Berufsgenossenschaft”, for example. In addition, dedicated local Health and Safety experts also operate in all our larger entities. Our Global Director People & Organization is part of our Executive Management Team and frequently updates our Management Board on relevant health and safety matters. During the COVID-19 pandemic our Management Board was informed daily of the latest global health status. We set ourselves the bonus-related goals of zero fatalities and consistently reducing the average injury rate year by year. In 2021 our goal was to stay below an injury rate of 0.50 according to the Occupational Safety and Health Administration (OSHA). As well as conducting safety training courses at all our sites, we also offer online training programs to prepare employees for potential emergency situations, and thus reduce the number of accidents. In 2021 we launched a new digital OHS training course for all our sites, including 22 Annual Report 2021 ↗ Our People hygiene and correct behavior during mobile office. Last year we conducted a total of 20,595 hours of safety training. Over the past year 6,355 employees were trained in fire safety and 4,852 in first aid. On a global scale, 66 occupational accidents which required work to be stopped were recorded in 2021. According to the Occupational Safety and Health Administration (OSHA), this equates to an injury rate of 0.39 compared to 0.35 in 2020. The (OSHA) injury rate for PUMA SE stood at 0.31 and was at 0.13 in the previous year. A further indicator of employee engagement and the health of our workforce is the rate of absence due to sickness, which was 1.98% in 2021. We did not record any fatal accidents and the rate of occupational diseases has been zero at PUMA in the last 10 years, including 2021. ↗ G.03 INJURY RATE ACCORDING TO OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION (OSHA rate) 23 Annual Report 2021 ↗ Our People FEEDBACK Feedback is an essential part of our PUMA culture and internal and external feedback enables us to constantly improve. Since 2009 we regularly conduct global employee opinion surveys to get feedback from our employees on a variety of topics as well as measure their level of engagement. All in all, 12,875 employees took part in our 2021 global survey and used the opportunity to tell us what they think about their workplace and their work life. This represents a participation rate of 86% (2019: 85%). Despite the difficult circumstances caused by COVID-19, we saw an increase of favorable scores in all categories compared to the last survey. We compare our survey results with various market data, including high- performance data, which we outperform in all but one category. High-performance companies are defined as those that outperform the market financially and regularly achieve excellent survey results. This positive feedback encourages us to continue and further strengthen the measures we have implemented. The survey results were communicated at global, local and departmental level and follow-up measures have been defined. During the year, pulse surveys were also conducted to quickly obtain employee feedback on current issues and thereby gain valuable insights from our employees. Through Workday, all our employees can also ask for or get 360° feedback quickly and easily. In addition, regular industry benchmarking is also carried out, and this is reflected, for example, in our Top Employer certification, our Great Place to Work award, and the “berufundfamilie” audit, as well as other awards we have received. ENGAGEMENT It is only with a high level of employee engagement that we can achieve excellent performance and reach our goals. We measure our employee´s engagement through regular global employee opinion surveys and are particularly proud of increasing our employee engagement score to 92% compared to 91% in our last survey. We appreciate the high level of commitment of our employees as well as their loyalty to the brand and aim to keep employee engagement at this high level in the years ahead. ↗ G.04 EMPLOYEE ENGAGEMENT SCORE AWARDS In 2021 we received several awards recognizing the PUMA brand as a global employer. Offering a workplace where our employees can develop, grow and take on new opportunities, is one of our top priorities. Forbes partnered up with market research company Statista to create the World's Best Employers certification. We are proud to be recognized among the Top 25 companies in 2021. Together with our global efforts, we also received several awards on a regional level. 24 Annual Report 2021 ↗ Our People Being recognized as one of Europe's Leaders in Diversity for the second year in a row by The Financial Times mirrors our efforts to create a diverse, equal and inclusive company culture. Our dedication to provide the best work environment for our employees has also been awarded with receipt of “Top Employer” in sixteen PUMA subsidiaries, including Germany, France, the United Kingdom, Spain, Italy and South Africa, as well as Europe and Asia Pacific as a whole. Our PUMA family in the United States was also listed as one of “America's Best Large Employers” by Forbes and Statista. More than 50,000 American employees working for companies with more than 1,000 employees in the United States were asked to give their vote for this. We also received the “Great Place to Work” award in Argentina for the second year in a row. 25 Annual Report 2021 ↗ Our People PERSONAL JOURNEY As a company we can only reach our goals if we attract, recruit and retain talent at PUMA. Competing for the best suitable talent on the market, our intention is to raise awareness of PUMA as an employer of choice which offers challenging roles, while providing professional talent management and unique development opportunities. RECRUITING It is crucial that we are perceived as an employer of choice and attract external candidates who want to join the unique PUMA work culture. To connect with these potential candidates, we use our career website, digital platforms and social media for our target group-specific, individual, pro-active recruiting measures. Extensive networks of qualified applicants and up-to-date candidate pools help us to quickly fill vacancies. In 2021 we put efforts into the launch of a culture pre-check, which is a voluntary pre-test for candidates to find out if our unique PUMA culture is suitable for them. TALENT MANAGEMENT We believe that our employees are the drivers of their personal career journey. With an integrated approach to talent management, we foster a feedback and results-driven culture at PUMA and a self-driven learning attitude. We regularly evaluate all our employees, set up personal development plans, and identify the right people to prepare them to shape PUMA’s future. Talent conferences are conducted globally to assess the entire PUMA workforce, including all levels of management. Employees are evaluated on criteria such as individual performance and competencies, potential, ambition and mobility. The targeted analysis of our employees’ profiles allows us to match internal talent with upcoming vacancies. This helps us to find potential successors within the company and to foresee and address our organization’s future competency needs. Internal mobility supports the career development of our employees, especially cross-border. This is why our employees can upload their personal career profile on Workday, proactively set up targeted job alerts and apply for internal job postings with just one click. The “job alert” function in Workday allows us to display vacancies to employees automatically, which supports the visibility of career opportunities within the PUMA Group. As a result, we can see a significant number of internal moves including relocation abroad. Overall, in 2021 we were again able to fill 4 out of 5 of our vacant key positions worldwide through internal promotions or horizontal transfers and filled 29% of open positions with internal candidates. We see this as confirmation of our talent and development strategy. DEVELOPMENT Our employees’ ongoing professional and personal development also ensures that our staff has the necessary competencies to guarantee internal growth and to drive the business. Strategic workforce planning as well as Workday helps us to avoid skill gaps and gain transparency about the skills of our employees. We offer a wide range of options for training and development, including courses and workshops, both online and offline, standardized or specially tailored to individual needs. Based on a lifelong learning approach fostering a self-driven learning culture, we provide a state-of-the-art learning infrastructure integrated into the Workday Human Capital Management system for internal and external training courses. With LinkedIn Learning and Good Habitz, more than 18,000 different online training courses are available for personal and professional development across a broad variety of learning categories. In 2021 we received the award for the best soft skills e-learning offer in Germany together with GoodHabitz. 26 Annual Report 2021 ↗ Our People Learning content such as mental wellbeing, resilience, mindfulness and emotional stability helped us to provide our employees worldwide with the best possible support during the COVID-19 pandemic. We continued to adapt our training to the challenges resulting from the COVID-19 pandemic and developed hybrid concepts for all our previous classroom training courses. In 2021, 18,983 employees worldwide participated in training courses and workshops over a total of 436,734 hours. Therefore, we had an average of 29 hours training per FTE and spent € 201 per FTE on training, although most of our trainings are digital. To achieve the goal of building an agile learning organization and expand the use of agile working methods even further, we offer digital agile coach programs for various target groups. LEADERSHIP TRAINING ILP/ILP2./PLE Our PUMA leaders play an important role in fulfilling our mission to become forever faster. To meet the new complex challenges in a volatile work environment, especially those presented by the COVID-19 pandemic, while still reaching our goals of delivering great performance, we highly depend on their skills and leadership expertise. To equip our staff with the necessary 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 interactive learning, roleplay simulations and best practice learning, as well as joint projects. Particular areas of focus are mindful leadership and agile working methods. This program consists of different modules providing the leaders opportunities to apply the newly acquired knowledge in between the seminars. To rethink leadership in 2021 we introduced the PUMA Leadership Expedition, a new program designed to enable leaders to lead effectively in a VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world. It is fully virtual, easily accessible and designed in a self-driven and self-tailored learning format with self- chosen Virtual Training sessions with a trainer and regular contact with other international participants in smaller work groups. Coached sessions are also included, as well as individual learning sprints with self- chosen Learning Nuggets and check ins with the trainers. Our training from employee to manager is designed to specifically prepare employees who will be taking on a management role for the first time. In addition to the training module, this program also includes individual coaching, as well as pre- and post-learnings. SPEED UP/SPEED UP2 Accelerating our employees’ progress is essential for organizational success. Driving this ambition, two selective development programs, Speed Up and Speed Up², are designed to unlock the potential of our talent. To prepare them for the next steps in their career, we provide an intense curriculum, including cross-functional projects and tasks, coaching, mentoring, job swaps and targeted training courses. Participants also benefit from exposure to top management and establish strong networks globally. In 2021 the third global group started their Speed Up/Speed Up² journey with a first virtual module. FUTURE TALENT We are constantly looking for future talent we can develop successfully and equip with the relevant skills to take over prospective challenging roles in the PUMA Group. A varied range of initiatives at universities, both locally and internationally, gives us the opportunity to approach potential employees and identify suitable candidates. We offer a lot of options within an international work environment, creating the ideal conditions for people starting their careers. In 2021, 15 dual-program students and trainees joined the PUMA Headquarters in Herzogenaurach. In total PUMA had 39 apprentices and dual-program students by the end of 2021, majoring in a range of subjects, from International Business to IT. Another way candidates can get to know PUMA is through our internship for students, in which they are given the opportunity to gain six months’ work experience. 27 Annual Report 2021 ↗ Sustainability SUSTAINABILITY 29 31 46 65 67 126 128 Foreword PUMA’s Forever Better sustainability strategy Social Aspects Health and Safety Environment Summary and Outlook Index for separate Combined Non-Financial Report and GRI Content 142 Deloitte Assurance Statement 28 Annual Report 2021 ↗ Sustainability “MAKING OUR BUSINESS FOREVER BETTER” - Foreword Anne-Laure Descours, CSO ↗ ANNE-LAURE DESCOURS CHIEF SOURCING OFFICER (CSO) In 2021 the COVID-19 pandemic was still the most prevalent and challenging topic for PUMA and our industry as a whole. The resurgence of the virus in major sourcing countries like Vietnam, China and Bangladesh disrupted freight routes and temporarily closed factories. Workers feared for their health as well as their income and the virus also threatened our PUMA colleagues in countries like India or South Africa, which were hit particularly hard. We continued our strategy of partnering with our suppliers and customers and we reacted flexibly to shift orders while avoiding cancellations. We also supported our suppliers by increasing the reach of PUMA’s Forever Better Financing program. In addition, we also made sure that the safety of all staff was prioritized by following strict hygiene standards. We ensured the health of factory workers was equally protected and that they continued to receive compensation when factories were closed. 29 Annual Report 2021 ↗ Sustainability In 2021 sustainability became increasingly important as a topic. As the world's leaders gathered for global conventions on biodiversity and climate change, they discussed important milestones for decarbonization and the protection of the environment. Despite these efforts, greenhouse gas emissions and the pace of biodiversity loss continue to increase. Many of our employees, customers, consumers and business partners are eager to be part of the solution and ask for more sustainable product initiatives and ways to decouple consumption from emissions. To respond to such concerns, we executed our 10FOR25 sustainability strategy, which is linked to the United Nations Sustainable Development Goals. Highlights of this strategy include ensuring fair working conditions in all factories that produce PUMA goods, powering all PUMA entities globally with renewable energy, switching all major materials to more sustainable alternatives as well as building up our a more sustainable product offering. Our social compliance program remains the bedrock of our sustainability efforts and has been accredited by the Fair Labor Association since 2007. We purchase 99% of our cotton and leather as well as 80% of our polyester from accredited or certified sources, such as BCI, bluesign or the Leather Working Group, To tackle the biodiversity loss, we introduced a biodiversity and forest protection policy and partnered with the NGO Canopy to ensure our sourcing of man-made cellulosic materials (such as viscose) as well as paper and carboard does not contribute to deforestation. We expanded the usage of recycled polyester to 43%, in line with our target to have 75% recycled polyester in our apparel and accessories by 2025. We are also on track to remove plastic shopping bags from our stores in 2023 at the latest. We continued to build our consumer-facing sustainability platform, “Forever Better”, and launched our Re:Gen collection, which is made from regenerated materials such as industry offcuts. We also presented the Exhale collection with Cara Delevingne, for which we offset carbon emissions from product manufacturing and transport. In our RE:Suede experiment, we will test whether we can make a biodegradable version of our most iconic sneaker, the PUMA Suede. We ended the year with our first ever virtual stakeholder dialog meeting, discussing the important topics of Circularity and Climate Action where much remains to be done by PUMA and the entire apparel and footwear industry, to move from the current linear production model to more circular business models and to further reduce CO2 emissions from our supply chain. There is only one Forever – Let’s make it Better. 30 Annual Report 2021 ↗ Sustainability PUMA’S FOREVER BETTER SUSTAINABILITY STRATEGY PUMA’s Code of Conduct and our vendor compliance program, which were introduced more than 20 years ago, are still the basis for any contractual relationship with manufacturers globally, and remain as the foundation of our responsible sourcing strategy and program. Our Forever Better sustainability strategy is based on our 10FOR25 targets, which were introduced in 2019, following an extensive materiality analysis and stakeholder dialog. As a result, we have identified 10 target areas: Human Rights, Climate Action, Circularity, Products, Water and Air, Biodiversity, Plastic and the Oceans, Chemicals, Health & Safety as well as Fair Wages to improve our sustainability performance. For each of these target areas, which reference the United Nations Sustainable Development Goals, we have defined a minimum of three concrete targets as well as key performance indicators to follow the progress we have made. With our Forever Better sustainability strategy, we continue on our path to fully integrate sustainability into all our core business functions. Sustainability targets are part of the bonus arrangements of every member of our global leadership team, from the CEO to team heads. Sustainability and the communication of our efforts have also been integrated into the strategic priorities for PUMA. AWARDS AND RECOGNITIONS Our long-term sustainability efforts continue to be externally recognized in various benchmarks and indices. In 2021 PUMA remained a member of the FTSE4Good Sustainability Index (sector lead), received a Triple A rating from MSCI ESG ratings as well as an ESG Prime rating from ISS. PUMA was also awarded Climate Leader status by the Financial Times. For the first time in our history, PUMA received Climate Leader status from the CDP (A- and A for Supplier Engagement) and was included in the Global Top 100 most sustainable company Index by Corporate Knights. PUMA was also awarded an Industry Mover Status by S&P on sustainability and a Material Change Index Leader Status from Textile Exchange. We will continue to collaborate with the most relevant industry benchmarks and aim to improve our ratings for these benchmarks further, particularly where our performance is not yet among the leaders of our industry. 31 Annual Report 2021 ↗ Sustainability STAKEHOLDER DIALOG Our first PUMA stakeholder dialog dates back to 2003. Since then we have organized 15 in-person stakeholder meetings. Last year (2021), we conducted our first ever virtual stakeholder dialog meeting. More than 100 participants including suppliers, customers, investors, sports clubs, NGOs, industry peers, sustainability experts and representatives of the younger generation met for 1.5 days to discuss the key topics of Circularity and Climate Action. All members of the PUMA Management Board, as well as selected members of PUMA’s Supervisory Board, attended the meeting. The results from these intense talks and discussions will help us shape PUMA’s future strategy and action plan for Circularity and Climate Action. As a concrete first step from the stakeholder dialog meeting, we have decided to evaluate our future products for their readiness regarding circularity and to roll out a Circular Design guideline. The meeting informed the further focus of our PUMA Circular Lab and emphasized the need for increased consumer communication on the topic of Circularity. On Climate Action we decided to calculate a product carbon footprint for each of PUMA’s top selling products. We confirmed our intention to upgrade our science-based CO2 emissions target to a 1.5 degree pathway and we want to enhance our consumer communication on climate topics. We also continued our regional responsible sourcing dialog meetings in the form of 3 regional supplier virtual meetings, which we held in all major sourcing regions, covering social, environmental and chemical topics. Our PUMA CEO Bjørn Gulden attended the UN Climate Summit in Glasgow and discussed with industry peers the increased ambition level of the Fashion Industry Charter for Climate Action and how the Fashion Industry can align to a 1.5-degree climate pathway. Our stakeholder dialog includes active participation in several sustainability initiatives. In 2021,we partnered with Canopy, a Canadian NGO which focuses on the protection of forests and biodiversity and we joined the International Safety Accord, an agreement with International Trade Union Federations following the Bangladesh Accord on Fire and Building Safety, which expired in 2021. We also became a member of econsense, a German partner of the World Business Council for Sustainable Development. This membership became effective in January 2022. 32 ↗ G.01 MATRIX OF KEY PARTNERSHIP INITIATIVES Annual Report 2021 ↗ Sustainability AFIRM: Apparel and Footwear International RSL Management, BCI: Better Cotton Initiative, CDP: Carbon Disclosure Project, FESI: Federation of the European Sporting Industry, FFC: Fair Factories Clearinghouse, FSC: Forest Stewardship Council, FLA: Fair Labor Association, GIZ: German Corporation for International Cooperation, IFC: International Finance Corporation, ILO: International Labour Organization, IPE: Institute of Public and Environmental Affairs, ITC: International Training Center, RMG: Ready Made Garments, SAC: Sustainable Apparel Coalition, SLCP: Social and Labor Convergence Program, UNFCCC: United Nations Framework Convention Climate Change, WRI: World Resource Institute, WWF: World Wide Fund for Nature, ZDHC: Zero Discharge of Hazardous Chemicals Foundation 33 Annual Report 2021 ↗ Sustainability MOST MATERIAL ASPECTS For the current 10FOR25 target period, we reviewed our most material aspects based on a detailed materiality analysis conducted in 2018/2019, including external and internal stakeholder interviews, a survey and a stakeholder dialog meeting. Coordinated by Business for Social Responsibility (BSR), the process resulted in the materiality matrix displayed in graph G.02 below. Although the Water and Air target was not specifically identified in the formal materiality analysis process, we retained this target area. Honoring our commitment to the Fashion Pact as well as the growing importance of the issue, we also included Biodiversity as a target area. Please refer to graphic G.02 for the results of our materiality matrix, and the transfer of these results into our 10FOR25 targets. ↗ G.02 MOST MATERIAL ASPECTS 34 ↗ G.03 PUMA’S 2025 SUSTAINABILITY TARGETS Annual Report 2021 ↗ Sustainability *SDG: United Nations Sustainable Development Goals 35 Annual Report 2021 ↗ Sustainability PUMA 10FOR25 SUSTAINABILITY TARGETS PERFORMANCE SUMMARY ↗ T.01 PUMA 10FOR25 SUSTAINABILITY TARGETS PERFORMANCE SUMMARY Not started In progress On track Achieved Target Area Targets for 2025 Performance 2021 Status Target 1: Train 100,000 direct and indirect staff members on women’s empowerment Pilot of train of the trainer session conducted Pilot to upload Better Work video in MicroBenefit platform 01 Human Rights 02 Health and Safety Target 2: Map subcontractors and T2 suppliers for Human Rights risks T2 mapping completed Target 3: 25,000 hours of global community engagement per year 39,000 hours Target 1: Zero fatal accidents (PUMA and suppliers) Zero fatal accidents at PUMA supplier and at PUMA Target 2: Reduce accident rate to 0.5 (PUMA and suppliers) 0.3 injury rate at PUMA suppliers 0.4 at PUMA Target 3: Building safety policy operational in all high-risk countries Signed international ACCORD Building safety assessments in Bangladesh, India and Pakistan 36 Target Area Targets for 2025 Performance 2021 Status Annual Report 2021 ↗ Sustainability Target 1: Ensure 100% of PUMA products are safe to use No product recall from the market Target 2: Maintain RSL compliance rate above 90% (Target changed since 2020) RSL compliance rate of 98.4% Target 3: Reduce organic solvent usage to under 10 gr/pair VOC index at 13.6 g/pair Target 1: 90% compliance with ZDHC Wastewater Guidelines 93.2% compliance (at parameter level) Target 2: 90% compliance with ZDHC Air Emissions Guidelines Our Core T1 and T2 suppliers follow local regulations Target 3: 15% water reduction per pair or piece based on 2020 baseline Textile: -4% Leather: -11% Apparel: -8% Footwear: -21% Target 1: Align PUMA’s Climate target with 1.5 degrees global warming scenario Committed to upgraded Fashion Industry Charter on Climate Action Scope 3 Scope 1&2 03 Chemicals 04 Water and Air 05 Climate Target 2: 100% renewable electricity for PUMA entities 100% renewable electricity used for PUMA entities (including RECs) Target 3: 25% renewable energy for core suppliers 5% for T1 (finished goods) 5% for T2 (materials) (including RECs) 37 Target Area Targets for 2025 Performance 2021 Status Annual Report 2021 ↗ Sustainability Target 1: Eliminate plastic bags from PUMA Stores 50% reduction compared to 2020 (189 tons) 06 Target 2: Support scientific research on microfibers Engaged TMC on 2030 roadmap, wastewater & biodegradable guidelines development. 17 shedding tests conducted Plastics and the Oceans Target 3: Research biodegradable plastics options for products Launch RE:Suede as a test for biodegradability Target 1: Establish takeback schemes in all major markets Pilot take back scheme, Hong Kong take back scheme on going since 2019 Target 2: Reduce production waste to landfills by at least 50% compared to 2020 -19% waste to landfill per footwear pair -9% waste to landfill per apparel piece 07 Circularity Target 3: Develop recycled material options for cotton, leather, and rubber Recycled cotton and leather used in PUMA ReGen collection Target 1: Procure 100% cotton, polyester, leather, and down from certified sources 99% cotton 80% polyester 99.9% leather 100% down Target 2: Increase recycled polyester use to 75% (apparel & accessories) 08 48% recycled polyester for Apparel and Accessories Products Target 3: 90% of apparel and accessories classified as more sustainable 90% of all footwear contains at least one more sustainable component 67% Apparel styles 30% Accessories styles 52% Footwear styles 38 Target Area Targets for 2025 Performance 2021 Status Annual Report 2021 ↗ Sustainability Target 1: Fair-wage assessments for the top 5 sourcing countries 3 out of 5 (Bangladesh, Cambodia, Indonesia) Target 2: Effective and democratically elected worker representatives at all core suppliers 35.4% Core T1 factories Target 3: Ensure bank transfer payments for all core suppliers 96.7% Core T1 & T2 use digital payment 09 Fair Income Target 1: Support setting up a biodiversity SBT Not started yet Target 2: Procure 100% cotton, leather, and viscose from certified sources 10 99% cotton 99.9% leather 38% viscose Biodiversity Target 3: Zero use of exotic skins or hides New Animal Welfare Policy published TMC: The Microfiber Consortium, REC: Renewable Energy Attribute Certificates, RSL: Restricted Substances List, SBT: Science-Based Target, T1: supplier of finished goods, T2: supplier of materials or components, etc., VOC: Volatile Organic Compound, ZDHC: Zero Discharge of Hazardous Chemicals Foundation 39 Annual Report 2021 ↗ Sustainability SUSTAINABILITY ORGANIZATION AND GOVERNANCE STRUCTURE PUMA’s sustainability organization is structured and governed in multiple ways: • At the Supervisory Board level, with a Sustainability Committee. - One of the meetings included a training of the full Supervisory Board on sustainability topics and the PUMA 10FOR25 sustainability strategy. • At the Management Board level, with the responsibility for sustainability assigned to the Chief Sourcing Officer - There were several Management Board Meetings in 2021 with dedicated sustainability updates, for example on the sustainability target achievement status and more sustainable product initiatives. - The complete PUMA Management Board participated in our global Stakeholder Dialog Meeting focusing on Circularity and Climate Action. - Our Chief Sourcing Officer has a monthly meeting with the sustainability leads for corporate and supply chain sustainability. Topics include, for example, Human Rights, Health and Safety and Chemical Programs, as well as Climate and Water projects in the supply chain. • At the Functional Heads level, with an Executive Sustainability Committee - The Executive Sustainability Committee is comprised of all Functional Heads of the company such as the Global Directors for Retail, Logistic, Legal Affairs, etc. The committee met twice in 2021, and approved, for example, the Sustainability Bonus Targets. • At the Product level, with a Cross-Functional Business Unit Call (monthly updates on PUMA’s more sustainable product strategy and execution) • At the Subsidiary level with nominated Sustainability Leads for each PUMA Subsidiary (quarterly updates on PUMA sustainability strategy and performance, best practice sharing from individual subsidiaries) • At the Sustainability Experts level, with a corporate sustainability department and a supply chain sustainability department, as well as a sustainability function in the strategy department. All PUMA leaders globally – from CEO to Team Head level – have clearly defined sustainability targets as part of their annual performance bonus. These targets are aligned with PUMAs Forever Better Sustainability Strategy and focus on our 10FOR25 target areas Human Rights, Climate Action, Plastic and the Oceans, Health & Safety. The targets cover 5% of the overall bonus. 40 ↗ G.04 PUMA SUSTAINABILITY ORGANIZATION 2021 Annual Report 2021 ↗ Sustainability SCOPE OF DATA COLLECTION In this report we cover the PUMA Group. We have provided separate reports for PUMA SE and the PUMA Group within the “Governance and our People” section only. Our materiality analysis and EP&L clearly indicate that a major aspect of our impact originates in the manufacturing of materials and components, not in the assembly of finished goods. We therefore have extended our data collection to include our core suppliers of components and materials. Our materials data so far excludes the materials used by Stichd and for Cobra Golf equipment, as those companies run their own sourcing. For social compliance data, Stichd and Cobra factories are included. DATA SOURCES To ensure a high level of transparency and promote the sharing of environmental and social data with our industry peers, we have chosen to use external databases, most of which are publicly accessible: • The Fair Factories Clearinghouse for sharing compliance-audit data with other brands • The wastewater platform from the Zero Discharge of Hazardous Chemicals Foundation (ZDHC) for sharing supplier data on wastewater testing (ClearStream reports) • The ZDHC Chemicals Gateway for the use of safe chemicals • The China-based NGO IPE for the publication of suppliers’ environmental data • IPE’s Green Supply Chain Map of environmental performance data of some of our core suppliers in China http://wwwen.ipe.org.cn/GreenSupplyChain/Main.html • The HIGG Index Platform from the Sustainable Apparel Coalition https://apparelcoalition.org/the-higg-index/ Also, we use our own sustainability data collection tool to record social and environmental performance data from PUMA-owned and operated sites and from the core suppliers that manufacture our products. 41 Annual Report 2021 ↗ Sustainability DUE DILIGENCE AND RISK ASSESSMENT PUMA conducts regular due diligence on Human Rights & Labor, Environmental and Integrity risks (listed in table) on its own activities and on its suppliers across its supply chain as per the recommendations of the UN Guiding Principles for Business and Human Rights as well as the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector | en | OECD and other relevant responsible business conduct standards. We embed responsible business conduct through our own policies, training and management system. We identify actual and potential harms in our own operations and supply chain through our monitoring programs and risk assessment. We aim to cease, prevent or mitigate harm in own operations and supply chain, keep tracking and communicating with relevant stakeholders as well as cooperating in remediation when appropriate. Human Rights & Labor Risks Environmental Risks Integrity Risks Hazardous chemicals Bribery and corruption Water consumption Water pollution Greenhouse Gas (GHG) emissions Child labor Discrimination Forced labor Occupational health and safety (e.g., worker related injury and ill health) Violations of the right of workers to establish or join a trade union and to bargain collectively Non-compliance with minimum wage laws Wages do not meet basic needs of workers and their families Due diligence is an ongoing process, in which we can identify, mitigate, prevent and account for how to address existing and potential adverse impacts (e.g., child labor, discrimination, hazardous chemicals etc.). In response to the COVID-19 pandemic, the possibility of future crises and implementing our policies, our vendors are recommended to conduct their due diligence, virtually when necessary. Our risk assessment process of potential harm to people (Human Rights & Labor and Environmental risks) includes: • External sources: NGO reports, media, countries indexes, country regulation, PUMA partnerships: FLA, • BW, Fashion Charter, ZDHC, AFIRM etc. and stakeholder dialog Internal sources: PUMA social, chemical and environmental audit findings/data analysis and grievances received per country, supply chain risk mapping, number of factories in countries with high risk, per commodity, including non-core, T3, T4 and raw material extraction We prioritize risks based on: • Severity: Scale (How grave the impact is), Scope (How many people are or will be affected) and Irremediability • Likelihood of risk occurring based on operating environment: conflict zone, weak governance; mismatch between local practices and international standards Our mitigation measures include factory monitoring program, grievance mechanism, supplier score card, business integration, goal-setting and internal and external reporting. The effectiveness of our measures is evaluated based on progress and compliance with our policies. 42 Annual Report 2021 ↗ Sustainability PUMA policies are published on our website. Our factory monitoring programs and standards are defined in Social, Environmental, Occupational Health and Safety and Chemical handbooks. PUMA® - Sustainability handbook and codes of conduct PUMA also adopted the ELEVATE intelligence or “EiQ”: a comprehensive suite of supply chain analytics, to: • Assess our supply chain risks by geography, commodity and issue • Complete a risk assessment for suppliers, factories and sites. • Manage risks that are material for each supplier, factory or site. The 10FOR25 targets are linked directly to the four main sustainability-related 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 with chemical regulations during production (T1 or T2) D. Negative effects of climate change Further details on PUMA’s overall risk management can be found in the Risk Management section. Net risks as outlined in the CSR Directive Implementation Act (§315c in relation to §289c, section 3, number 3 and 3 of the German Commercial Code (HGB), were not identified in 2021. PUMA BRAND AND RETAILER MODULE VERIFIED SCORE As part of our risk assessment and industry benchmarking, we use the Brand and Retailer Module of the Sustainable Apparel Coalition (HIGG BRM). The Higg Brand & Retail Module (Higg BRM) guides brands and retailers on their sustainability journeys and identifies hotspots and opportunities for improvement along their global value chain. From more sustainable materials sourcing to a product’s end of use, the Higg BRM assesses the following lifecycle stages for their sustainability coverage: • Management System • Product • Supply Chain • Packaging • Use & End of Use • Retail Stores • Offices • Transportation • Distribution Centers *T1 manufacturers of PUMA products; T2 manufacturers of materials and components 43 Annual Report 2021 ↗ Sustainability In 2021, for the first time, we engaged an external and accredited verification body to verify our HIGG BRM score based on our 2020 HIGG data. The results of our first verified BRM scores are displayed in graph G.05 and G.06 below. While our overall scores are clearly above the sector average, we have also identified some areas where more focus is needed, as logistics operations, for example. G.05 PUMA BRM ENVIRONMENTAL VERIFIED SCORE 2020 PUMA BRM environmental verified score: 74.3% G.06 PUMA BRM SOCIAL VERIFIED SCORE 2020 PUMA BRM social verified score: 76.4% 44 Annual Report 2021 ↗ Sustainability QUOTE BY AMINA RAZVI, EXECUTIVE DIRECTOR, SUSTAINABLE APPAREL COALITION: PUMA has been an active member of the Sustainable Apparel Coalition (SAC) for the past decade and remains committed to partnering with intent and collaboration to drive collective action and positive change. Since joining the SAC, PUMA has rolled out our Higg Index tools, integrating them into their day- to-day business, demonstrating the kind of leadership needed to tackle the climate crisis and addressing social justice across our industry. Leveraging the Higg Facility Environmental Module (FEM), the company has scaled the use of the tool across all its strategic suppliers. PUMA has also participated in the Higg Brand and Retailer module (BRM) and in 2021 was among the first companies to get its score externally verified. It is also one of the brands to have piloted an environmental product label based on the Higg Material Sustainability Index (MSI). The SAC is proud of PUMA’s achievements and leadership within the industry and looks forward to continuing to support them on their journey, as we work towards an inclusive, equitable and sustainable future for people and the planet. 45 Annual Report 2021 ↗ Sustainability SOCIAL ASPECTS Our highlights in 2021 included: • Zero fatal accidents at PUMA and its direct suppliers for the fourth year in a row • Capturing 13,557 workers’ feedback from 8 countries concerning their satisfaction with management via a mobile APP survey, worker hotline promotion activities covered 34,009 workers – PUMA hotline received 223 cases, 121% increase compared to 101 cases in 2020, 99.6% are resolved, 3rd party platforms 3,132 cases, 207% increase compared to 1021 cases in 2020 • Accelerated pace towards shared industry compliance-assessment tools; increase in the percentage of converted external compliance reports from 54% to 59%. • 508 audit reports from 477 factories despite travel restrictions and partial lockdowns • Closer engagement with suppliers through open dialog including annual COVID survey and frequent webinars • Benchmarked 46 Core T1 suppliers’ wage level through the Fair Labor Association’s Fair Compensation Dashboard, aligned on approaches to close wage gaps HUMAN RIGHTS Relates to United Nations Sustainable Development Goals 3, 5, 8 and 10 Target Description: • Train 100,000 direct and indirect staff on women’s empowerment • Map subcontractors and T2 suppliers • 25,000 hours of community engagement globally per year KPIs: • Percentage of worker complaints resolved • Number of factories with an A, B+, B-, C or D grade • Number of T2 suppliers and subcontractors included in our risk mapping • Number of zero-tolerance issues prevailing at year end • Number of employee hours spent on community engagement (KPI shared with HR) • Number of workers trained on women’s empowerment PUMA’s sustainability policies are aligned with the United Nations’ Declaration of Human Rights, the UN Guiding Principles for Business and Human Rights, the International Labour Organization’s Core Labour Conventions, and the ten principles of the United Nations Global Compact. Observing Human Rights was part of our first Code of Conduct developed in 1993 and has guided our business ethics ever since. It has been the long-standing practice of PUMA to continuously and rigorously monitor our supply chain and conduct Human Rights due diligence on all our suppliers globally, including those in major production hubs such as Vietnam, Bangladesh and China. 46 Annual Report 2021 ↗ Sustainability 2021 was still heavily impacted by the COVID-19 pandemic, although the impacts varied from country to country. We continued our focus on the following to safeguard our supplier business and workers’ employment and income. 1. Order and Production Management • Minimizing order cancellations; 0.40% of orders were canceled in 2021. • The cancelled orders were not yet in production, we compensated for raw material costs. • Agreeing on order delays with our customers during the difficult lockdown period. • Through our dialog with suppliers, we have been able to accommodate order placement to facilitate more flexibility along the supply chain, thus we did not extend our production lead time to the same extent as 2020. 2. Financing and Payments • While the absolute financed volume of our FOREVER BETTER Vendor Financing Program increased by 9.4% compared to last year to €534 million in 2021, the financed ratio (= financed volume vs. invoice volume) fell from 28% to 24% due to the increased annual invoice volume. • Payment terms for our suppliers remained stable. • Paying for all orders in full and on time. • No late-delivery penalties. 3. Guidance and Monitoring Throughout the whole lock-down period, PUMA kept in close communication with the suppliers, and provided them comprehensive guidance including legal decisions, local government and Better Work guidance, and good practices from some suppliers. From our survey, 36% of factories in Vietnam answered that their workers’ payment was impacted, followed by Turkey with 7%. We followed up with these suppliers and verified that workers have received their payment as per local legislation. In Vietnam our team provided comprehensive guidance to suppliers on re- opening and monitoring the COVID situation throughout the whole lockdown period. Globally, workers’ layoff rate decreased from 1% to 0.05% (2020 vs. 2021), all workers were paid severance payment. ↗ T.02 ORDER CANCELLATIONS DUE TO COVID-19 Cancellations (%) Full Year 2020 Full Year 2021 FTW APP ACC Total 0.43% 0.34% 0.10% 0.35% 0.84% 0.09% 0.01% 0.40% 47 Annual Report 2021 ↗ Sustainability RESPONSIBLE PURCHASING PRACTICE POLICY As a responsible business partner to our suppliers, we recognize that our own business practices, as well as our trading terms and conditions can have a significant impact on the organization at our suppliers’ factories. The aim of this PUMA Responsible Sourcing Policy is to reduce potential negative impacts. PUMA’s responsible purchasing practice was developed in 2019, to create a framework for guiding decisions and maintaining consistency through key principles: i. Only working with suppliers who have signed a Manufacturing Agreement. ii. Payments to suppliers are made on time and in full. We only deduct payments and impose penalties when it is lawful to do so. iii. Price paid for product to include reasonable labor costs, such as overtime premium payments, social insurance payments. iv. Open Production Capacity must be declared by the supplier based on standard work weeks as per the law of the relevant production country. v. Seasonal production plans are allocated considering the negotiated capacity with the supplier. vi. Sufficient production lead time must be provided. vii. Suppliers may not subcontract production without authorization from PUMA. All subcontracting units should respect our Code of Conduct. In 2021, 143 PUMA colleagues from development, sourcing, production joined Responsible Sourcing Practice training, the same topic also covered 1,145 supplier participants through virtual webinars. The training referred to the UN Guiding Principles on Business and Human Rights, to explain the link between the purchasing practices, potential impact on working conditions and risk of Human Rights violations. In 2022 we will ask strategic T1 suppliers to participate in the Better Buying survey (collecting core suppliers' feedback on the implementation status of PUMA responsible purchasing practices), further training and discussions on the results with sourcing team members will also take place. FOREVER BETTER VENDOR FINANCING PROGRAM We use our PUMA Forever Better Vendor Financing Program to incentivize suppliers, with a better scoring in our social and environmental compliance audits with lower interest rates. The program, founded in 2016, allows suppliers with a good or very compliance rating to benefit from PUMA’s high credit rating and preferred interest rates. The program runs in partnership with IFC, BNP Paribas, HSBC and Standard Chartered Bank. At the end of 2021, 62 vendors are registered users (57 at end of 2020) and the financed volumes in the full year 2021 was €534 m (+ € 46 m compared to 2020). 48 Annual Report 2021 ↗ Sustainability HUMAN RIGHTS RISK ASSESSMENT In previous years we had conducted Human Rights risk assessments at the corporate and the supply chain level and communicated the results in our 2016 and 2017 Annual Reports. In 2021 we commissioned and completed a Human Rights risk assessment focusing on forced labor management in the supply chain. The most salient risks to Human Rights are forced or bonded labor in our supply chain and, at the farm level, child labor. SUPPLY CHAIN FORCED LABOUR MANAGEMENT APPROACH REVIEW In 2021 supply chain services company ELEVATE supported PUMA by conducting an evaluation of its Human Rights risk assessment approach, with specific focus on forced labor. The evaluation framework utilized has drawn on the expectations of the UN Guiding Principles for Business and Human Rights (UNGPs) with specific focus on risks of forced labor, based on the definition of forced labor specified in the ILO Forced Labour Convention, 1930 (No. 29) as “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered themself voluntarily”. ELEVATE has also utilized ILO’s 11 indicators of forced labor in this analysis. Policy Commitment and Embedding As a result of the assessment, PUMA scores highly regarding policy commitment and internal alignment. ELEVATE recommended strengthening existing human rights-related policies to explicitly reference the ILO Forced Labor Convention, and all eleven forced labor indicators. We are in the process of developing a Human Rights policy which will include this as a specific element. We are also developing Human Rights eLearning to provide further guidance materials for internal teams on mitigating risks. In 2022 we plan to publish the policy and train our suppliers accordingly. Forced Labor Due Diligence Procedures and Processes As a response to the ELEVATE recommendation, we refreshed our risk assessment for supply chain and published it in this report. This includes both risk exposure and business leverage insights to prioritize suppliers. PUMA reviewed the severity grading of audit findings linked to the forced labor indication, which will then also increase escalation and prioritized investigation, and remediation processes. We revised our social handbook and trained our suppliers and sourcing colleagues respectively. At the end of 2021 PUMA also adopted the ELEVATE intelligence or “EiQ”: a comprehensive suite of supply chain analytics, to: • Assess our supply chain risks by geography, commodity and issue. • Complete a risk assessment for suppliers, factories and sites. • Manage risks that are material for each supplier, factory or site. In our revised handbooks, we request our vendors to conduct due diligence. We will facilitate our supplier training in due diligence through the International Training Center (ITC) platform of the International Labor Organization (ILO). To increase transparency, we now report on the most common audit findings, training, grievances and mitigation measures as outcome focused KPIs (Key Performance Indicators) to track the effectiveness of our supplier programs. While the PUMA hotline is accessible to Civil Society Organizations (CSOs) and external stakeholders, we will review our stakeholder engagement methodology, especially CSO stakeholders representing vulnerable groups: women, children & migrant workers. 49 Annual Report 2021 ↗ Sustainability Stakeholder outreach, we will translate our updated handbooks and create videos for suppliers in different languages. We will conduct regular reviews of the grievance mechanisms available to stakeholders, in line with the UN Guiding Principles (UNGP) effectiveness criteria. We also review how stakeholder groups that are likely to use the grievance mechanism are engaged in the performance of the mechanism. RUBBER MAPPING An example of our supply chain due diligence efforts at farm level is the rubber mapping project in collaboration with the Fair Labor Association. In 2019, the Fair Labor Association partnered with the International Organization for Migration and three global footwear and three major sporting goods companies including PUMA, which source shoes and sporting goods from Vietnam, on a project to map natural rubber. The project report was published in 2021: Natural Rubber Supply Chain Mapping in Vietnam | Fair Labor Association The project had two primary objectives: 1. Map the natural rubber value chain in Vietnam to understand supply chain structure, worker demographics, the process of recruiting workers, and working conditions across the tiers of the natural rubber supply chain. 2. Inform participating companies about supply chain mapping through an action-based learning approach to help companies identify gaps in the internal supply chain management systems and understand internal and external practices that can streamline mapping in the future. At the plantation and rubber farm level, the research team found a general lack of awareness of legal requirements and a lack of government labor inspections. The project highlighted the challenges to addressing labor issues in the rubber supply chain. Most industry stakeholders have not considered upstream supply chain mapping as a core operational activity. The scope of the supply chains, which often span borders, makes mapping a resource-intensive exercise that is a challenge for any single company to undertake, while collective approaches to mapping have not yet been developed. This research was a first step towards mapping Human Rights and labor risks in the supply chain of natural rubber. This exploratory exercise has highlighted issues with working conditions at rubber production level. The project developed an understanding of purchasing practices at different tiers, how the factories engaged with upstream suppliers and evaluated the worker demographic at the facility level. Moving forward, PUMA will continuously explore the opportunity to engage with stakeholders on lower tier monitoring. WORKERS SURVEY 2020 & 2021 In 2020 PUMA launched the Worker Survey Program with 17,551 workers from 20 suppliers, in China and Vietnam, through the APP-based technology Microbenefit. In 2021 the program was extended to 48 suppliers and 13,557 workers from all our major sourcing countries. Overall workers’ satisfaction increased by 6% compared to 2020 (average score in 2020: 3.93; average score in 2021: 4.17; workers score each survey question from 0-the least satisfied- to 5-the most satisfied). In China we see increased workers satisfaction on Fair Compensation, Health and Safety and Working Hours, only the rating of Stress Management declined slightly (-0.02) compared with 2020. However, in Vietnam due to the adverse impact of the COVID lockdowns, and the increased number of factories in this survey, the overall satisfaction dropped: Fair Compensation (-0.54) dropped the most. The reduction of working hours caused by the lockdown is very likely to be the main reason for this. Grievance 50 Annual Report 2021 ↗ Sustainability Mechanism (-0.38) dropped compared with 2020. We will engage with the factories to provide training to raise workers’ awareness and confidence on factories’ grievance channels. We had one-on-one communication with all participating factories to understand their challenges and agreed on key priorities to improve in the coming year. WOMEN’S EMPOWERMENT On international women’s day, Guy Rider, the Director General of the International Labour Organization said: “Humanity can only be at its best when gender equality becomes a reality for all, everywhere. We must and will make it happen.” Training women on their rights and empowering them to advance their careers further is key to achieving gender equality, where both men and women have equal power and opportunities for education, healthcare, economic participation and personal development. PUMA initiatives support suppliers in reviewing existing policies and practices or establishing new ones to realize women’s empowerment. Already today, 59% of workers producing PUMA goods are women and 54% of factory managerial positions at our Core Tier 1 suppliers are filled with women. We believe that collaboration among the industry and with NGO experts in women’s empowerment is key to avoid duplication and provide the right expertise. PUMA cooperated with International Center for Research on Women (ICRW) to run a Gender Equity Project in Indonesia, Vietnam, India and Bangladesh. In 2021 a total of 9 PUMA factories used the Gender Equity Self – Diagnostic Tool to understand the condition of gender equity. By using this tool, suppliers can determine where there are opportunities to enhance gender integration through their policies and practices and then improve gender equity within their factories. They can identify actions they can take to open and strengthen women’s pathways to leadership and operations. In 2022 we will follow up with actions taken by these 9 factories. As of now, PUMA together with ICRW and other brands are still working on the development of the tools and a scale up plan. In 2021 we conducted a pilot: The video from Better Work Course related to Sexual Harassment Prevention was uploaded to the MicroBenefit Platform from late 2021 in Vietnam. 175 employees in 6 factories finished the training online. The International Training Centre (ITC) has been at the forefront of learning and training since 1964. As part of the International Labour Organization, it is dedicated to achieving decent work while exploring the frontiers of the future of work. To strengthen PUMA’s commitment to promote responsible business conduct (RBC), fundamental principles and rights at work, and occupational safety and health (OSH) throughout our operations and network of business partners, ITC-ILO created customized online training packages for our sustainability team. After completing courses (10 RBC modules plus 18 OSH modules, topics are listed below) and successfully passing the technical exams with the ITC-ILO and learning about effective training methodologies both for online and face-to-face delivery, PUMA Social Sustainability team members were certified by ITC-ILO as Trainers on RBC and OSH in 2021. The PUMA team is training and certifying the factory management team to deliver training to workers on RBC and OSH. One of the topics is Harassment and Violence at the workplace. We conducted a pilot to train 10 factory managerial staff, who extended the training to 570 workers, counting for more than 386 hours of training, at 4 factories in China, Bangladesh, Vietnam and Indonesia. PUMA extended women’s empowerment outreach beyond factory female workers and in 2021, we signed a long-term agreement with Women Win, an organization which empowers girls and women around the world through sports. 51 Annual Report 2021 ↗ Sustainability Through the partnership with Women Win, we aim to increase the visibility of female athletes and sports role models and support initiatives that tear down obstacles to girls’ and women’s access to sports. Through projects supported directly by PUMA, Women Win will reach 5,000 girls and women. Furthermore, as a core funding partner, we will contribute towards Women Win reaching another 1 million girls and women by the end of 2023. For women and girls, sport is a powerful tool to challenge gender norms and stereotypes, to regain ownership of their bodies, to experience joy, freedom and pleasure. Giving girls and women access to sports can create opportunities for them to team up, speak out and get active – in sports and in their communities – which in turn can create more equal societies. Picture by Soccer Without Borders COMMUNITY ENGAGEMENT Our goal is to reach a total number of hours spent on community engagement equal to our annual average times 1.5 FTE (full-time equivalent). We encouraged all our employees around the world to participate and record projects and employee engagement on an online platform. Our Community Engagement Program has continued to create positive impact locally by supporting social, health and environmental causes, and we were able to donate 39,000 community hours in 2021. For more information on our community engagement program, please visit the P&O section of this report. SOCIAL COMPLIANCE Compliance with our Vendor Code of Conduct remains the foundation of our human rights' due diligence process. Since 1999 all direct PUMA suppliers have been frequently audited for compliance with ILO Core Labour Standards, internationally accepted Health and Safety provisions, and basic environmental standards. In recent years we have also included our most relevant material and component suppliers in our audit program. Our Social Monitoring Program has been accredited by the Fair Labor Association since 2007 and was re-accredited most recently in 2019. 52 Annual Report 2021 ↗ Sustainability Each year, we collect between 300 and 500 audit or assessment reports issued by PUMA’s Compliance team, the ILO Better Work Program, our industry peers, or independent experts accredited by the Social and Labour Convergence Program (SLCP). To avoid duplication and prevent auditing fatigue, in 2021, we increased the percentage of shared assessments to 59% from 54% in 2020. As part of our commitment to the Industry Summit and the Social and Labor Convergence Program (SLCP), we will further increase our adoption of SLCP-based assessments to at least 50% in 2022. We believe that SLCP is an ideal tool for building long-term relationships with suppliers. We support them to own their social and labor data. This year we have added three warehouses into the audit program. We employ a team of compliance experts spread across all our major sourcing regions. They regularly visit and audit our core manufacturing partners. We also work with external compliance auditors and with the International Labor Organization’s Better Work Program. Each PUMA supplier factory must undergo one mandatory compliance audit per year and all issues identified need to be remedied as part of a corrective- action plan. Despite travel restrictions and partial lockdowns, in 2021 we were able to collect 508 audit reports from 477 factories. 73.7% PUMA audits included a trade union representative or workers representative during audit opening and closing meeting. All workers interviews are conducted on site during the audit (no offsite interview). 4.6% of our T1 factories and 8.5% of T2 failed to meet our requirements in 2021. If the company in question was an active PUMA supplier, we worked together to improve the situation. A pass grade was awarded to 100% of companies subjected to a second audit. Six factories did not manage to sufficiently improve their performance and were consequently removed from our active supplier factory base. ↗ T.03 AUDIT RESULTS 2018-2021 2021 2020 2019 2018 Number of factories audited A (Pass) B+ (Pass) B- (Pass) C (Fail) D (Fail) Total Total number of factories Pass/Fail (%) T1 75 144 155 16 2 392 T2 Warehouse 2 1 6 23 46 7 82 T1 82 116 125 11 4 T2 5 26 35 2 T1 107 126 121 19 4 3 338 68 377 T2 10 17 10 2 0 39 T1 82 148 128 17 5 380 T2 15 29 42 7 0 93 477 406 418 473 95/5 91/9 100 96/4 97/3 94/6 95/5 94/6 91/9 Compared with 2019 and 2020, the number of A rated factories decreased in 2021 mainly because systematic excessive working hours have been addressed as a critical issue and the extensive nature of the SLCP verified data set has helped to identify additional findings for remediation. Nevertheless, the percentage of passed audits remained above 90%. 53 ↗ G.07 AUDIT RESULTS 2019-2021 Annual Report 2021 ↗ Sustainability G.08 NUMBER OF MOST FREQUENT FINDINGS (EXCLUDING CONVERTED REPORTS) 2020-2021 Some factories have non-conformity on social security benefit and legal obligations, such as missing required sub-licenses. 95% of workers are covered under social security among all our Core T1 suppliers. Systemic overtime has remained a challenge for both years and we plan to conduct working hours management training to all T1 suppliers in 2022 and conduct a root cause analysis workshop with selected Core T1 suppliers to explore opportunities for improvement and engage with sourcing team to follow up on improvement. 54 Annual Report 2021 ↗ Sustainability There were 8 records identified in 2021 about risk of Freedom of Association breach, mainly related to the election process of union or worker representation committees. 6 of these have been rectified and 2 remain open. We will continue our engagement with the factory management to close these cases. There was 1 violation identified in 2021 with the Better Work report regarding factory management’s behavior. The issue was remediated. PUMA is committed to respecting women’s rights as per the Convention on the Elimination of Discrimination Against Women and expect suppliers to commit to and respect women’s rights. In this context we carefully monitor working conditions for pregnant women. 16 audit findings related to pregnant workers, mainly about insufficient breaks, 2 of them are closed and 14 are still under follow-up at the date of reporting. Pregnant women were not found restrained to bathroom breaks from 2021 assessment. There was no violation found on forced overtime and restricted freedom of movement or retaining workers' passports or other identity/personal documents. 21 violations were identified on delayed payment, 6 of them are closed and we are still following up the 13 pending findings, for the remaining 2 open findings, the factories were inactivated. 17% of corrective actions pertaining to wages and/or overtime were implemented, and these issues were resolved within 2021. We noticed improvements in occupational health and safety, risk management and transparency. Reducing overtime and increasing social security coverage remains a focus of our efforts. Beyond auditing, we track social key performance indicators such as average payments vs. minimum wage payments, overtime hours or coverage by collective bargaining agreements. This data is discussed under the Fair Income target. SUPPLIER TRAINING Beyond auditing we increased our engagement through capacity building activities: Meeting Topics Number of factories Number of participants Sustainability updates, best practices sharing, etc. Approx. 466 per round (3 rounds) Approx. 1,083 per round (3 rounds) Supplier Virtual Meetings Code of Ethics Responsible Sourcing Policy OHS Risk Assessment Guiding Core T2 suppliers on what and how to do OHS Risk Assessment 459 492 94 1,029 143 internal sourcing 1,145 factory participants 249 GRIEVANCE CHANNELS We operate multiple worker voice channels. If workers are not satisfied with the responses offered by factories via their respective internal grievance system, we encourage the use of the PUMA Hotline to raise complaints or request consultations. Phone numbers and email addresses for this hotline are published on our Code of Conduct posters displayed at every factory globally. We also use WeChat, Zalo, Facebook and other social media to connect with workers and have established more formalized compliance and human resources apps at selected core suppliers. 55 Annual Report 2021 ↗ Sustainability The third-party platforms are accessible at 71 strategic suppliers, representing more than 60% of our sourcing volume, to 147,341 workers. In 2021 we received 3,132 workers’ feedbacks through the MicroBenefits and the WOVO platforms in China, Indonesia, Pakistan, Philippines and Vietnam, and the Amader Kotha Helpline in Bangladesh, which is a 207% increase compared to 2020. Among these thousands of feedbacks, 39 cases were escalated to PUMA as the factory did not respond within the agreed timeline. PUMA engaged with factory management to address the workers' concerns. All the other concerns not escalated to PUMA were handled and resolved directly by the factory management. To promote the PUMA Hotline, in 2021 we developed a video translated into nine languages to cover our major sourcing countries. We used MicroBenefits and WOVO platforms to reach 34,009 workers. After a worker watches the video related to the PUMA Hotline and then they complete a quiz to test their knowledge; this worker is then eligible for a lucky draw to win a prize offered by PUMA. According to the quiz, 99% of workers know the PUMA Hotline, and 84% workers in China could remember our 11-hotline phone number. 223 workers’ concerns were raised through PUMA’s Hotline across eight countries, 121% more than 2020. Our team resolved 99% of them. We also received six third-party complaints from external organizations related to PUMA’s manufacturing partners. They focused on freedom of association and fair compensation. Two complaints about freedom of association were resolved in 2021, the union representatives were either reinstated or compensated in agreement with the unions involved. Four are still under follow-up. ↗ T.04 WORKERS’ COMPLAINTS 2018 – 2021 Workers’ complaints Total received – external channels (3rd party platforms) Total received – PUMA Hotline Total confirmed Total Received - PUMA Hotline & escalated to PUMA via 3rd party platforms Resolved - PUMA Hotline & escalated to PUMA via 3rd party platforms Not resolved - PUMA Hotline & escalated to PUMA via 3rd party platforms 2021 3,132 223 3,165 262 261 1 2020 1,021 101 984 127 126 1 2019 2018 70 61 61 0 55 44 44 0 Resolved (%) 99.6% 99.2% 100% 100% 56 ↗ G.09 NUMBER OF MOST FREQUENT GRIEVANCES RAISED IN 2021 Annual Report 2021 ↗ Sustainability Through PUMA own Hotline, “Employment Relationship" and “Fair Compensation" are the most frequent concerns raised by workers in 2021. We maintain our focus on resolving the pending issue raised in 2021. CAMBODIA In early 2021 we received three complaints from one of the local unions in Cambodia. The allegation was about factories’ potential breach of Freedom of Association. While we worked to find the best solution related to these concerns, PUMA partnered with Better Factory Cambodia to provide a customized workshop to factory management, shop stewards and union representatives. 109 participants from 20 factories attended the training. The training covered • Rights and obligations of employer, unions and worker representatives and workplace relations. • Employment contract termination: Resignation, dismissal, retrenchment as per the Cambodian labour law, and policies & procedures. • Compensation in case of employment contract termination. The end line survey shows that factories have increased their awareness by 21% / 16% / 11% respectively on resignation/retrenchment/termination process and scenario. 57 Annual Report 2021 ↗ Sustainability ↗ CASE STUDIES Cambodia In early January of 2021, we received a letter from one of the local trade unions, to seek brand intervention to rectify violations of a worker's right at a Cambodia factory producing for PUMA. We immediately contacted the trade union, factory management and the ILO Better Factories Program (BFC) to understand the situation better. PUMA as brand played a vital role in organizing several meetings with the factory and the union for dialog. The factory became gradually more aware of Freedom of Association. After 8 months of efforts, this case came to a successful resolution: the union was officially registered at the factory, and the factory had meetings with the trade union to reach a mutual agreement to resolve issues related to workers rights. Indonesia In August 2021 PUMA received a concern from a trade union related to a subcontractor of one of PUMA Footwear’s suppliers. The allegation related to the employment termination of five union representatives due to decreased orders. We took immediate actions to engage with both the Footwear supplier and the subcontractor, the subcontractor agreed to reinstate the union leaders. All issues identified during our auditing and hotline activities are classified as zero-tolerance issues (such as child labor or forced labor), critical issues or other issues. As the name implies, zero-tolerance issues lead to the immediate failure of an audit. If these issues are reported for a new factory, the factory will not be allowed to produce PUMA goods. Established suppliers must remedy all zero-tolerance issues immediately by conducting a root-cause analysis and implementing preventive measures to avoid the issue from recurring in the future. As a last resort, business relationships will be terminated if the factory fails to cooperate. Other issues are also followed up by our Compliance team. During 2021 we identified and were able to remedy four zero-tolerance issues (workers’ compensation below legal requirement). ↗ T.05 ZERO TOLERANCE ISSUES (ZTIS) FOR THE LAST THREE YEARS Country Bangladesh Cambodia China Indonesia Vietnam Total 2021 2020 2019 2 2 4 4 0 0 0 0 4 0 0 1 1 1 3 58 Annual Report 2021 ↗ Sustainability “PUMA has demonstrated a strong and consistent commitment to worker’s rights through their longtime partnership with Fair Labor Association. An FLA accredited company since 2007, PUMA is an established social compliance leader, developing sustainable approaches and implementing robust systems designed to protect workers in their global supply chain.” SHARON WAXMAN President & CEO, Fair Labor Association 59 Annual Report 2021 ↗ Sustainability FAIR INCOME Target description: • Carry out fair wage assessments including mapping of a specific wage ladder for top five sourcing countries to help improve their wage levels and practices • Ensure bank transfer payment to workers by all core suppliers by 2022 • Ensure effective and freely elected worker representation at all Core T1 suppliers through collaboration with other brands Relates to United Nations Sustainable Development Goals 1, 2 and 10 KPIs: • Percentage of average wages compared to minimum wage • Percentage of workers with permanent contracts • Percentage of workers with social insurance coverage • Percentage of workers paid via bank transfer • Percentage of factories with freely elected worker representation • Percentage of factories with collective bargaining agreements • Number of countries with fair wage assessments over the last five years For the definition of fair wages, PUMA follows the requirements for compensation set out in the Code of Conduct published by the Fair Labor Association (FLA): https://www.fairlabor.org/our-work/labor-standards The Fair Wage Network conducts wage assessments and evaluates the wage systems of selected factories across 12 dimensions, focusing on five major areas: legal compliance, wage levels, wage adjustments, pay systems and social dialog and communication. https://fair-wage.com/12-dimensions/ As part of our efforts to ensure fair wage practices at the factories of our suppliers, we have defined the full payment of at least the minimum wage as a zero-tolerance issue. This means that to be taken on as or to remain active PUMA suppliers, companies must pay minimum wages in full compliance with local regulations. Provisions around payment of overtime hours and social insurance are also clearly articulated in the PUMA Code of Conduct and are scrutinized regularly based on our Compliance Audit Program. 60 Annual Report 2021 ↗ Sustainability FAIR WAGE ASSESSMENT For other dimensions of fair wages, we asked the Fair Wage Network (FWN) to conduct formal fair wage assessments at our core suppliers based in Bangladesh (2018), Cambodia (2019) and Indonesia (2021). During 2021 we purchased a license to the living wage database of the Fair Wage Network. PUMA together with Fair Wage Network conducted a fair wage assessment in 3 factories in Indonesia, one Footwear supplier scored 299/400, which means the factory received a Fair Wage Certificate. Among the 12 dimensions of Fair Wage, the factory achieved a ‘FAIR’ score in 8 dimensions: wage and overtime payment, communication, and social dialog, for example. In 2021 we asked the FWN to reconduct fair wage assessments among the same key suppliers in Bangladesh and Cambodia. It was positive that a number of factories had continued to strengthen some institutional elements such as wage grids and schemes relating pay to performance. At the same time, similar developments were not always reported on social dialog, with workers’ representatives not always involved in wage discussions, and with collective agreements being rarely signed at factory level, something that gives valuable information for follow-up and remediation in these specific factories but also for our 10FOR25 goals to ensure our Core T1 factories should have freely elected workers representatives. Overall, workers’ satisfaction with wages and working conditions was found to be relatively good, with almost all workers being either ‘fully’ or ‘partly’ satisfied with their wages and working conditions. The performance of 4 factories (3 Apparel factories, 2 in Bangladesh, 1 in Cambodia, 1 Footwear factory in Indonesia), including on the living wage front, were particularly outstanding so they were granted the Fair Wage certification. The other remaining factories in the 3 countries are asked to engage in a remediation process for improving their performance in the wage areas that were found to be less strong. FAIR COMPENSATION DASHBOARD At PUMA we have been collecting wage data annually from our Core T1 factories for several years. We use these data to report S-KPIs (table T.07). In 2021 we took the next step and uploaded the 2020 wage data of 46 strategic T1 suppliers into the Fair Labor Association (FLA) Fair Compensation Dashboard* for comparison with our industry peers and, where available, against living wage estimates of the Global Living Wage Coalition (GLWC)***. For this purpose, the Anker Methodology** was used to calculate workers wages and the gap to a living wage. Graph G.10 below indicates the results of our benchmarking for 46 Core T1 factories, in local currency, covering 2020. These data cover approximately 71% of PUMA’s global production volume. * Industry average wage data from FLA Fair Compensation Dashboard from November 2019 and October 2020. Users of the FLA’s Fair Compensation Dashboard have access to live average net wage calculations based on all wage data uploaded per country and year. Averages are adjusted as wage data is uploaded into the dashboard. ** Anker’s living wage methodology: Net Wage = Basic (Contracted) Wage + Cash Benefits + In-Kind Benefits – Mandatory Taxes and Legal Deductions. Payment of overtime is excluded. *** https://globallivingwage.org/ 61 ↗ G.10 FLA FAIR COMPENSATION DASHBOARD Annual Report 2021 ↗ Sustainability We can see that our strategic suppliers in China, Vietnam, Bangladesh, Cambodia and Turkey pay clearly above the FLA’s industry average. For rural areas in Vietnam, the average salaries also exceed the living wage set by the Global Living Wages Coalition. On the other hand, we also see that our suppliers in Indonesia are falling short of the average industry payments, and that the payments in Bangladesh, despite being above industry average, fall well short of the Global Living Wage Coalition Benchmark. Our suppliers in Pakistan reach 83% of the Global Living Wage Coalition Benchmark. In Indonesia, China and Turkey country-level GLWC benchmarks were not available in 2020. In 2022 we will start fair wage assessments or remediation with low performance factories in Bangladesh, Cambodia, Pakistan, Indonesia and Vietnam (Urban). RECRUITMENT FEES PUMA signed the Fair Labor Association /American Apparel and Footwear Association Commitment to Responsible Recruitment in 2018. Since then we have actively engaged with suppliers, industry peers and with the United Nation’s International Organization for Migration with the objective of ensuring that the labor rights of foreign and migrant workers are upheld in our supply chain. Through the efforts of multi-stakeholder engagements, factories paid back 42% of previously paid recruitment fees to 193 foreign migrant workers; we aim for the remaining 58% of payment to be covered in 2022. 62 Annual Report 2021 ↗ Sustainability ↗ T.06 FAIR INCOME TARGET STATUS Sub-targets 2021 Baseline 2020 Target 2025 Digital payment (% of Core T1 and T2 suppliers) % of workers that are receiving wage payments digitally 96.7% 98.2% 90% 100% Percentage of Core T1 supplier facilities that have trade unions or freely elected worker representation (Core T1) 35.4% 33% 100% Fair wage assessments (mapping of a specific wage ladder for top five sourcing countries) 3 out of 5 2 out of 5 5 out of 5 ↗ CASE STUDY Getting the full sustainability picture: Fair wage assessments by the Fair Wage Network (FWN) Beyond the close cooperation with the FLA, fair wage assessments carried out by the FWN represent a way to get the full picture in terms of wage practices: on the payment of wages, in full (without under-payments) and without delays but also on pay systems, on wage levels (compared to the legal minimum wage, compared to living wage benchmarks, compared to market rates) and also on wage adjustment mechanisms to ensure that wages are adjusted on a regular basis, notably through social dialog with workers’ representatives. Our lessons learned from these wage assessments are that it was difficult in a factory in Indonesia to dissociate the payment of a living wage from the need to reduce the number of overtime hours, as workers should not be in a position to systematically accept OT hours to be able to cover their family basic needs. Systemic overtime has remained a challenge in recent years, and we plan to conduct working hours management training to all T1 suppliers in 2022 and conduct a root cause analysis workshop with selected Core T1 suppliers to explore opportunities for improvement and engage with sourcing teams to follow up on improvement. Another example in Bangladesh showed that an important lever to pay wages up to a living wage was to somehow relate wages more closely to skills and to professional experience. In 2022 we will start fair wage assessment or remediation with low performance factories in Bangladesh, Cambodia, Vietnam (Urban) and Indonesia. PUMA case study – Fair (fair-wage.com) Table T.07 confirms that most of our core suppliers pay basic wages that exceed minimum wage significantly, 14.5% on average. When adding overtime and bonus payment, this figure increases to 80.2%, a strong increase compared to 2020. Social insurance coverage decreased slightly due to some factories not being legally obliged to pay workers’ social security if their attendance was less than 14 days during the lockdown period. Notably, the percentage of workers being covered by a collective bargaining agreement also increased significantly from 26.9% in 2020 to 37.2% in 2021. 63 ↗ T.07 SOCIAL KPIS PUMA CORE SUPPLIERS 2018-2021* Annual Report 2021 ↗ Sustainability 2020 KPI Gross wage paid above minimum wage excluding overtime and bonuses (%) Gross wage paid above minimum wage including overtime and bonuses (%) Workers covered by social insurance (%) Overtime (hours per week) Workers covered by a collective bargaining agreement (%) Female workers (%) Permanent workers (%) Annual turnover rate (%) Injury rate (%) Number of suppliers SOUTH ASIA SOUTHEAST ASIA EMEA 2021 2020 2019 2018 Bangladesh India Pakistan China Cambodia Indonesia Philippines Vietnam Turkey Average Average Average Average 17.1 NA 33.4 8.9 5.7 3.0 NA 31.1 2.5 14.5 13.0 17.6 20.9 69.3 NA 40.0 202.0 69.5 36.3 NA 111.1 33.2 80.2 54.7 73.1 83.7 100.0 13.6 0.0 38.2 100.0 36.6 0.5 9 NA NA NA NA NA NA NA NA 100.0 0.3 0.0 9.0 100.0 18.6 0.0 2 78.1 18.0 90.5 63.3 36.0 53.4 0.3 21 99.4 6.6 39.6 84.3 52.3 47.8 0.3 5 92.9 6.4 30.9 88.3 99.4 21.6 0.2 5 NA NA NA NA NA NA NA NA 95.1 100.0 6.5 6.9 99.2 77.6 41.1 32.7 0.1 20 0.0 56.0 100.0 27.3 0.4 1 95.1 8.3 37.2 59.5 75.5 34.0 0.3 63 95.6 5.4 26.9 58.8 74.4 29.9 0.4 58 93.6 7.1 25.4 59.4 69.1 38.2 0.5 59 *Data received from 63 PUMA core suppliers representing 77.36% of 2021 production volume and 80.22% production value; reporting period for data collection: November 2020 – October 2021 95.3 6.1 26.7 56.0 68.0 36.8 0.6 50 64 Annual Report 2021 ↗ Sustainability HEALTH AND SAFETY Target description: • Zero fatal accidents • Reduce accident rate to 0.5 at PUMA and at suppliers • Building safety operational in high-risk countries Relates to United Nations Sustainable Development Goal 3 Examples of the 10FOR25 action plan: • Expand building safety projects to include Indonesia • Ensure professional risk assessments are conducted regularly KPIs: • Number of fatal accidents at Tier 1 and Core Tier 2 factories • Average injury rate at PUMA (reported in the Our People section) • Average injury rate at Core Tier 1 suppliers • Number of factories subject to our Building Safety Assessment Program Ensuring safe working conditions for our own employees and hundreds of thousands of indirect employees at our manufacturing partners is an ethical imperative but also makes good business sense. In 2015 we set a target of zero fatal accidents and aimed to reduce the number of work-related accidents. In 2021 we revised our suppliers OHS handbook, requiring them to conduct an OHS risk assessment. We also published the PUMA OHS policy and rolled out an online training course for our own employees. Apart from our ongoing auditing program that includes occupational health and safety assessments, we implement our Building Safety Assessment Program in countries where we identified risks. We also set up professional risk assessments at all our major manufacturing partners. SUPPLIER TRAINING ON OHS RISK ASSESSMENT In 2021, OHS Risk Assessment Training was conducted with 249 participants from 94 T2 factories, focusing on the importance of OHS risk assessments, main elements of such an assessment, and PUMA’s expectation on OHS management in general. Following the training, our suppliers conducted their own risk assessment. We see the need to further increase their knowledge and understanding. Therefore, we updated our OHS Handbook to provide guidance on processes and tools for OHS risk assessment to the factory management and OHS person in charge. We will support our Core T2 suppliers to setup respective policies and procedures, as this has been the area where most need for improvment was indentified. 65 Annual Report 2021 ↗ Sustainability BUILDING SAFETY ASSESSMENTS From 2015 onwards, our Building Safety Assessment Program covered the following countries: ↗ T.08 BUILDING SAFETY ASSESSMENT PROGRAM Country Bangladesh India Indonesia Pakistan No. of factories Comments Part of our ongoing membership of the Bangladesh Accord 22 In partnership with Asia Inspection and Elevate In partnership with Asia Inspection 6 4 7 In partnership with Elevate A safe workplace is a top priority at PUMA. Bearing in mind that we continuously carry out building safety inspections among high-risk factories in our supply chain, in 2021 we were able to conduct the structural/fire/electrical safety inspection with three suppliers from Pakistan and India. Two of them have been assessed in the past. We saw improvements in electricity safety, however structural safety findings increased due to the extended audit scope. Going forward we will follow up with these factories in their remediation. None of our suppliers have been involved in any structural building safety incidents or factory fires since 2015. We are happy to report that we recorded zero fatal accidents at our suppliers for 2018, 2019, 2020 and 2021, as well as slightly reduced accident rates at our core suppliers. ↗ T.09 INJURY RATES AT CORE SUPPLIERS Country Bangladesh Cambodia China Indonesia Vietnam Average Fatal accidents Injury rate 2021 Injury rate 2020 Injury rate 2019 Injury rate 2018 0.5 0.3 0.3 0.2 0.1 0.3 0 0.4 0.2 0.6 0.2 0.2 0.4 0 0.3 0.5 0.5 0.2 0.3 0.5 0 0.3 3.2 0.5 0.3 0.3 0.6 0 * Average of the 5 countries included in this table. Global average injury rate for PUMA’s core suppliers in 2021 was 0.3 As we believe that the health and safety of the people working for PUMA and in PUMA production always come first, we will continue to work with our own entities and suppliers to avoid infections and accidents. For more information on PUMA’s own Health and Safety efforts, please refer to the Our People section. 66 Annual Report 2021 ↗ Sustainability ENVIRONMENT The purpose of our environmental efforts is to ensure that PUMA and its suppliers are in full environmental compliance and any negative impact on the environment is minimized. We frequently conduct efficiency audits at our own entities. Compulsory in the European Union, these audits help us identify energy saving opportunities at our offices, stores and warehouses and roll them out on a global basis. As far as our suppliers are concerned, our PUMA compliance audits (detailed in the Human Rights section) contain a dedicated section on environmental and chemical compliance. For example, during each audit we inspect environmental permits, waste management and effluent treatment plants. PUMA has moved from individual brand environmental audits to the use of industry-wide tools, such as the Higg Index Facility Environmental Module (FEM) 3.0. PUMA requires an annual external verification of the self-assessment FEM modules. This external verification may be completed by approved verifiers from PUMA’s internal team, other credited brands, or third-party organizations on the approved list from SAC. 100% of verifications are announced. ↗ T.10 NUMBER OF FACTORIES WITH FACILITY ENVIRONMENT MODULE (FEM) VERIFIED SCORE A B+ B- C D Total Number of factories *L&P: Label and Packaging 2021 Core T1 Core T2 Core L&P* 5 21 27 12 65 3 23 24 17 2 69 146 1 5 4 1 1 12 PUMA’s Environmental Performance Rating System is based on the ratings developed from the factories’ Higg FEM scores verified by SAC approved verifiers: A, B+, B-, C and D. The minimum passing grade from the environmental perspective is 40% (i.e., only A, B+ and B- ratings are passable) and C and D are failure ratings. This rating system was presented during suppliers and sourcing team meetings in 2020 and will be implemented gradually from 2022. Our environmental handbook has been updated accordingly. This rating system will be included in our vendor supplier scorecard along with social and chemical ratings in the future. Further data on the environmental performance of PUMA and our suppliers can be found in the Climate and Environmental KPI sections. 67 Annual Report 2021 ↗ Sustainability ↗ G.11 AGGREGATED VERIFIED FEM SCORE FOR PUMA FACTORIES BENCHMARKED WITH INDUSTRY * FEM 2020 PUMA average: 146 factories Industry median FEM (4409 factories): filter used industry sector (Apparel, Footwear, Accessories includes handbags, jewelry, belts and similar products) and Facility Type (Final Product Assembly, Printing, Product Dyeing and Laundering, Material Production including textile, rubber, foam, insulation, pliable materials) The Higg FEM assesses: • Environmental Management Systems - Energy Use and Greenhouse Gas Emissions - Water Use - Wastewater - Emissions to Air (if applicable) - Waste Management • Chemical Management (FEM chemical module is explained under the Chemical section of this report) In 2020 and 2021 we communicated to our core factories our expectation to improve their score by 10 points and use our new grading system. In 2021 we facilitated a training session conducted by SAC certified trainers. This training was compulsory to attend for low performance factories and for those not familiar with this industry tool. We then monitored closely to make sure the factories would complete the verification of their self-assessment timely. We saw the positive impact of cleaner production and renewable energy projects, wastewater treatment training and chemical management training on the scores of factories that joined these programs. Overall, our core factories have a score above 60% on wastewater, water, energy and environment management system. This has been aligned with our focus and work for many years. The highest score increase was observed in the area of target and improvement plan setting. We see topics such as chemicals, air and waste as a key focus. In 2021 we conducted a risk assessment for chemicals and waste and identified actions to be taken in the coming years. As a founding signatory of ZDHC, we follow up closely on the development and the progress of ZDHC air emission standards and guidelines and will apply these in the supply chain as applicable, once details are available. 68 Annual Report 2021 ↗ Sustainability SUPPLIER TRAINING Meeting Topics Number of factories Number of participants Supplier virtual meetings Sustainability updates, best practices sharing, etc. Approx. 466 per round (3 rounds) Approx. 1,083 per round (3 rounds) Higg FEM training Wastewater training Enablon eKPI collection training GRS/RCS training For core factories to understand how to complete the Higg FEM module correctly For suppliers who were not fully compliant, focus on remediation 103 18 For core factories how to correctly fill in the operation data 105 Guiding suppliers who produce products with recycled content for PUMA on how to apply relevant certificates 192 18 251 278 69 Annual Report 2021 ↗ Sustainability CLIMATE Target description: Existing science-based CO2 emission target: • Reduce greenhouse gas emissions from PUMA’s own entities (Scope 1 and 2) by 35% compared to the 2017 baseline (absolute reduction) • Reduce emissions from PUMA’s supply chain (Scope 3: purchased goods and services) by 60% relative to sales Additional 1OFOR25 targets • Align PUMA’s CO2 emission target with a 1.5-degree scenario (that is, what is required to limit global warming to 1.5 degrees) • Move 100% of PUMA’s own entities to renewable electricity • Expand the use of renewable energy at PUMA’s core suppliers to 25% Relates to United Nations Sustainable Development Goals 7 and 13 Examples of the 10FOR25 action plan: • Work with industry peers on climate action through the Fashion Industry Charter for Climate Action and the Fashion Pact • Join industry-level energy efficiency programs for suppliers in our top five sourcing regions • Join industry-level programs for renewable energy in our top five sourcing regions • Replace all coal-fired boilers at PUMA’s core suppliers • Reduce emissions from the transport of goods by transitioning to more carbon-efficient modes of transport • Gradually transition to materials with a lower carbon footprint such as recycled polyester • Switch all PUMA offices, stores, and warehouses to renewable electricity tariffs or renewable energy attribute certificates • Gradually move PUMA’s fleet vehicles to alternative engines (electric, or hydrogen) Indirect CO2 emissions from own entities (Scope 2*) Indirect CO2 emissions from manufacturing, business travel and transport of goods (Scope 3*) KPIs: • Direct CO2 emissions from own entities (Scope 1*) • • • Percentage of core suppliers covered by energy efficiency programs • Percentage of core suppliers covered by renewable energy programs • Percentage of core suppliers with coal-fired boilers (Tier 1 and Tier 2) * The GHG Protocol Corporate Standard classifies a company's GHG emissions into three “scopes" as below. Scope 1: Direct GHG emissions occur from sources that are owned or controlled by the company (offices, stores, warehouses) e.g., office building heating, car fleet emissions. Scope 2: Indirect GHG emissions from the generation of purchased electricity, steam, and heating/cooling consumed by the company. Scope 3: All other indirect emissions not covered in scope 2, such as extraction and production of purchased materials; transportation of purchased fuels; and use of sold products and services, business travel, employee commuting etc. 70 Annual Report 2021 ↗ Sustainability During the UN Climate Conference in Paris in 2015, PUMA agreed to set a science-based CO2 emissions target. In 2018, PUMA co-founded the Fashion Industry Charter for Climate Action, an industry-wide coalition which aims to align the fashion industry’s emissions with the targets included in the Paris Agreement. One year later, PUMA agreed and published its science-based emission target (SBT) with the SBT Coalition and joined the Fashion Pact, which also includes a climate action commitment. We combined our SBT agreement with an increased effort to support the use of renewable electricity by purchasing RECs for 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 retroactively and increased that figure to 74% in 2019 and to 100% in 2020 as well as 2021. In this way, we managed to reduce our combined Scope 1 and 2 emissions significantly, despite an increased business volume. Compared to our baseline 2017 our combined Scope 1 and 2 emissions were reduced 88% (market-based). Taking our RECs purchase into account, we already have exceeded our science-based emissions target of 35% for Scope 1 and 2 emissions. We also exceeded the absolute 50% reduction required to align our target with a 1.5-degree scenario. PUMA CEO Bjørn Gulden at the UN Climate Conference COP 26 in Glasgow After having achieved 100% renewable electricity for the offices, stores and warehouses under our control, we continued to source only green electricity in 2021 through renewable energy tariffs and the purchase of renewable energy attribute certificates (RECs). 71 Annual Report 2021 ↗ Sustainability To further reduce our Scope 1 emissions, which can be attributed largely to the vehicles in our fleet, we increased the number of zero or low emission cars globally to 108, or 15% of our global PUMA car fleet. For the future we plan to increase the number of cars with alternative engines by 10% each year. During the UN Climate Conference in Glasgow, PUMA CEO Bjørn Gulden confirmed PUMA’s commitment to the new targets of the Fashion Industry Charter for Climate Action, released on the 5th of November 2021. UNITED NATIONS (unfccc.int) Over the coming years we will aim to replace the RECs certificates with renewable energy tariffs and/or power purchase agreements where possible, and, as mentioned above, expand the percentage of cars equipped with alternative engines by 10% each year. For our Scope 3 emissions, we decided to focus on purchased goods and services, since this is also the category in which most of our indirect emissions are created. In addition, we set a target to reduce emissions from the transport of goods by 20% relative to the volume transported, mainly through reducing our air-freight ratio by 5% each year on a 2019 baseline. To reduce the emissions from the production of our PUMA goods, we worked with our suppliers on several programs ranging from energy efficiency to installing on-site solar photovoltaic power plants to generate renewable energy. PUMA CDP SCORE The Carbon Disclosure Project (CDP) is an investor-led coalition that ranks global companies and cities for their climate strategies and disclosure. PUMA has been a long-term participant with the CDP and we make our answers to the CDP questionnaire publicly available via the CDP website. In 2021, for the first time in our PUMA history, we received an A- score for our climate disclosure with CDP for the reporting year 2020, as well as a supply chain score of A. ↗ PUMA CDP CLIMATE SCORES ↗ 2021 CDP INDUSTRY AND GEOGRAPHICAL AVERAGE 72 Annual Report 2021 ↗ Sustainability PUMA’s rating is better than the average performance of the sector (textile and fabric goods) with an average rating of C. The overall global average rating stands at B-. Our improvement in the CDP rating came as recognition of various climate actions initiated during 2020 and 2021. This includes various emission reduction initiatives undertaken, including a detailed climate action roadmap, expansion of cleaner production projects in key sourcing countries, feasibility studies for onsite renewable energy opportunities and subsequent adoption of renewable energy by some of the PUMA core suppliers. Furthermore, we also received higher ratings in our improved governance system for climate action, risk disclosure and reduction in Scope 1 and 2 emissions. TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURE (TCFD) The Taskforce for Climate Related Financial Disclosures (TCFD) is an international financial initiative, aiming for more transparency between companies and investors on climate- related topics. At PUMA, we have mapped our existing climate disclosures against the TCFD recommendations, and provided a summary in table T.11 below. ↗ T.11 TCFD CROSS-REFERENCE TABLE Thematic area Recommanded disclosures Source of information in PUMA reporting Focus in 2021 Governance a) Describe the board’s oversight of climate-related risks and opportunities. AR p. 40-41 CDP C1.1 Created supervisory board sustainability committee. Disclose the organization’s governance around climate- related risks and opportunities. b) Describe management’s role in assessing and managing climate-related risks and opportunities. Strategy AR p. 40-41 CDP C1.2 Started regular updates to board of management. a) Describe the climate- related risks and opportunities the organization has identified over the short, medium, and long term. b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. CDP C2 AR p. 75 CDP C2.3 CDP C2.4 AR p. 80 Disclose the actual and potential impacts of climate- related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material. Climate-related risks and opportunities are part of the PUMA corporate risk assessment process and published in detail in our answer to the Carbon Disclosure Project. The consideration of the resilience of the organization’s strategy for well-below 2 °C scenario is part of our existing science- based target. 73 Annual Report 2021 ↗ Sustainability Climate-related risks are part of the PUMA corporate risk assessment process and are managed as part of our climate targets and climate-action program. Risk Management Disclose how the organization identifies, assesses, and manages climate-related risks. Metrics and Targets a) Describe the organization’s processes for identifying and assessing climate-related risks. AR p. 42-43 CDP C2.2 b) Describe the organization’s processes for managing climate-related risks AR p. 42-43, 75 CDP C2.2 c) Describe how processes for identifying, assessing, and managing climate- related risks are integrated into the organization’s overall risk management. AR p. 42-43 a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risk AR p. 79-86 CDP C6, C10 AR p. 79-86 CDP C6, C10 Disclose the metrics and targets used to assess and manage relevant climate- related risks and opportunities where such information is material. c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. AR p. 70-72 CDP C4.1, C4.2 PUMA has precise metrics and targets concerning its greenhouse gas emissions. In 2022, PUMA is working on aligning its science-based target with a 1.5 °C scenario. 74 Annual Report 2021 ↗ Sustainability CLIMATE ROADMAP AND RISK ASSESSMENT In 2021 we developed a climate roadmap and conducted a risk assessment using our risk assessment methodology. We see a regulatory landscape with unfavorable policies for renewables in some countries as a high risk. Furthermore, unstable business in our industry overall can restrain suppliers from investing in technologies and upgrading their facilities with low carbon machinery. Below are key focus areas for the coming years. Some actions have been taken in 2021 and are reported in this report. • Raise awareness: We see the need to increase internal awareness and thus are developing eLearning on climate action for our staff. We have already started to train 50 sourcing leaders. We will continue to conduct further basic GHG accounting to suppliers. • Knowledge of impact: We conduct Life Cycle assessment of our top 5 products, 3 LCA results are • reported under the product section of this report. We selected some core suppliers to set up science- based targets and developed climate target tools for the remaining core suppliers. Internal action: We translated Higg FEM into a PUMA grading system to include our supplier environmental performance in our vendor score card used by our sourcing leaders. We will strengthen climate data collection by increasing the frequency. We will maintain our focus on increasing the use of recycled material in our products and explore opportunities to use more biosynthetics. We aligned Scope 3 calculation with the GHG protocol. We will align our science-based targets with a 1.5-degree scenario. We will enroll more factories in cleaner production programs and renewable energy programs. • Collaboration and partnership: We will keep our active engagement in the Fashion Charter to drive climate action and influence policy makers for our suppliers to source renewable energy. SUPPLIER TRAINING In 2021, PUMA joined hands with other brands and key suppliers under the UN led “Fashion Industry Charter for Climate Action" to develop a standard training program on climate action for Apparel and Footwear suppliers in Asia, in partnership with the German Development Agency, GIZ. This online training program provides foundational knowledge to suppliers on global decarbonization efforts, GHG emissions accounting, climate target setting methodology and solutions to reduce emissions and achieve these targets. The training is available in English and other local languages such as Khmer, Mandarin, Bengali and Vietnamese. We encouraged our suppliers to participate in this self-paced online training course available free of cost. We also nominated 36 participants from 13 core suppliers in Vietnam, Cambodia, Bangladesh and Pakistan to join a tutor-assisted training program by GIZ; 92% of participants obtained a certificate with an average score of 72% with the final exam. In addition to the above 34 participants for the tutor-guided course, so far 30 participants from 25 supplier factories have completed the course and attempted the final exam. 86% of the participants have successfully passed the exam and obtained the certificate from GIZ, with an average score of 75%. We developed a training module with the objective of creating awareness among PUMA sourcing colleagues so that we can integrate climate change into business discussions with suppliers. 50 of our sourcing colleagues learned the basics of climate change, international agreements, PUMA’s climate change targets and roadmap, and suppliers’ target-setting. Refresh training will be conducted in 2022. 75 Annual Report 2021 ↗ Sustainability During 2021 we developed two training modules for our core suppliers to drive forward climate target- setting. One module focuses on the group of suppliers which need to establish science-based targets, and the other one targets the group of suppliers which need to establish climate targets based on a simplified tool developed in-house. To identify each group, we conducted a readiness level mapping of Core T1 and T2 suppliers with a survey based on the following criteria: • The supplier works with other brands with commitments to climate change similar to ours. • The supplier already has ambitious climate change targets (but not SBT). • The supplier participated/participates in a cleaner production program. In line with the survey outcome, we identified 10 T1 suppliers which contribute towards 60% of business volume and 23 T2 suppliers, which account for 51% business volume to join our climate action programs in 2022. Furthermore, to improve the awareness level of employees, we have developed a foundational eLearning training module for all employees. This module is in the final stage of development and is expected to be rolled out in the first half of 2022. Our core suppliers are involved in different climate action programs (details in the table T.12 below). Overall achievements are: • Greenhouse gas reduction: 72,745 tCO2e per year • Renewable energy: 66 MW (including renewable energy procurement through Direct Purchase Agreement and off-site wind power) • Water saving: 2,424,800 m3 per year • Energy saving: 156,160 MWh per year 76 Annual Report 2021 ↗ Sustainability ↗ T.12 SUPPLIER CLIMATE ACTION PROGRAMS Cleaner Production / Coal phase out programs Country Program/Partner Scope Number of factories % Sourcing volume (globally) Clean-by- Design(CbD)/aii Energy and water efficiency T2: 4 China-Taiwan Bangladesh Low Carbon Manufacturing Program (LCMP)/WWF Energy and water efficiency Partnership for Cleaner Textile (PaCT)/IFC Clean-by- Design(CbD)/aii, FABRIC/GIZ Energy and water efficiency Energy and water efficiency, Coal phase out Vietnam, Cambodia Vietnam Improvement Program (VIP)/IFC Energy and water efficiency Sustainable energy for all Energy efficiency Mexico Total * Non-core factories T1: 10 T1: 7 T2: 3 T1: 6 T2: 9 T1: 4 T2: 6 T1: 2* T1: 43 T2: 27 2021 Tier 1 – 51% Tier 2 – 63% Enrolled in 2022 Tier 1 – 69% Tier 2 – 71% Renewable energy programs Country Program/Partner Scope Number of factories % Sourcing volume (globally) Project Development Program (PDP)/ GIZ Rooftop Solar Self-initiative by factories Self-initiative by factories Partnership for Cleaner Textile (PaCT)/IFC Self-initiative by factories Project Development Program (PDP)/ GIZ Project Development Program (PDP)/ GIZ Vietnam, Cambodia China-Taiwan Bangladesh Pakistan Total T1: 6 T2: 1 T1: 3 T2: 2 T1: 4 T2: 6 T1: 2 T2: 3 Rooftop Solar Rooftop Solar, Offsite wind Rooftop Solar Rooftop Solar T1: 1 Rooftop Solar T1: 3 Rooftop Solar T1: 2 T1: 21 T2: 12 2021 Tier 1 – 48% Tier 2 – 18% Enrolled in 2022 Tier 1 – 69% Tier 2 – 70% 77 Annual Report 2021 ↗ Sustainability CASE STUDY In Bangladesh, DBL Group’s sustainability is based on five pillars: People, Process, Product, Community and Environment. Environment is a high priority for DBL Group, and they work to decrease carbon footprint, water consumption and waste from their manufacturing processes. DBL used 10,730 tons of recycled cotton in 2021. By increasing renewable energy use, it reduced its CO2 emissions by 1,934 tons per year. DBL collects water from rainwater, this water is used as process water for dyeing, finishing, printing and washing, saving 100,850 cubic meters of groundwater up to 2021. In Turkey, SLN is a founding signatory of the UNFCCC Fashion Industry Charter for Climate Action since 2018 as the first manufacturer. In January 2021 all SLN facilities started to use I REC certified clean and renewable electricity. The market-based carbon emissions from the electricity consumption of all SLN facilities is therefore 0 (zero) as of January 2021. PUMA CLIMATE ACTION PROGRAM In a time when the global COVID pandemic has wreaked havoc in the fashion sector, the climate crisis has only become more urgent and serious. The support and visible commitment demonstrated by PUMA’s CEO, Björn Gulden’s participation in the Charter’s event at COP 26 in Glasgow, therefore sent a strong and positive signal of commitment that also helped the wider fashion sector to join hands in moving faster into a climate smart future. Stefan Seidel, PUMA’s Head of Corporate Sustainability, has also competently and with great passion guided the Charter’s work in his role as co-chair of the Fashion Charters steering committee. PUMA is one of many leading fashion companies that have now made an ambitious, and necessary, commitment to align its operations with the Paris Agreement goal to keep global warming below 1.5 degrees C. The eyes of the world will now look to PUMA and is peers in the Fashion Charter to continue to show leadership and make good on those commitments. UNFCCC is looking forward to continuing working with one of the truly leading fashion brands in the area of real climate action. NICLAS SVENNINGSEN Manager, Global Climate Action, United Nations Climate Change 78 Annual Report 2021 ↗ Sustainability ↗ T.13 SCOPE 1 AND SCOPE 2 CO2E EMISSIONS FROM PUMA CO2e emissions1-6 (absolute figures) 2021 2020 2019 2018 2017 % Change 2020/2021 % Change 2017/2020 Scope 1 – direct CO2e emissions fossil fuels Vehicle fleet Heating Scope 2 – indirect CO2e emissions (location-based) Scope 2 – indirect CO2e emissions (market-based) 4,046 4,179 6,326 6,918 7,678 2,008 2,039 1,985 3,618 4,073 4,134 2,194 2,708 2,845 3,545 -3% 1% -7% -47% -51% -42% 32,545 29,839 40,986 43,366 40,029 9% -19% 1,458 1,078 11,533 22,128 40,029 35% -96% Electricity (location-based) 31,087 28,761 39,282 42,145 38,914 8% -20% Electricity (market-based) 0 0 9,828 20,907 38,914 - -100% District Heating 1,458 1,078 1,705 1,221 1,115 35% 31% Total Scope 1 and 2 (location- based) Total Scope 1 and 2 (market- based) Scope 1 and 2 relative to sales (t CO2e per € million sales) (location-based) Scope 1 and 2 relative to sales (t CO2e per € million sales) (market-based) 36,591 34,018 47,312 50,284 47,707 8% -23% 5,504 5,257 17,858 29,046 47,707 5% -88% 5.4 6.5 8.6 10.8 11.5 -17% -53% 0.8 1.0 3.2 6.2 11.5 -19% -93% 79 ↗ G.12 AGREED EMISSION TARGETS (SCOPE 1 AND 2*) (T CO2E) 2021 Annual Report 2021 ↗ Sustainability * Including renewable energy attribute certificates As indicated in T12 and G12, PUMAs own emissions from Scope 1 and 2 (market based) have been reduced by 88% between our baseline year 2017 and 2021. Therefore, we already exceeded our Science Based Target of 35% reduction until 2030. The reduction is mainly due to purchasing renewable electricity where available, and renewable energy attribute certificates where no renewable energy tariffs are available. 80 Annual Report 2021 ↗ Sustainability ↗ T.14 PUMA’S SCOPE 3 CO2E EMISSIONS FROM SELECTED VALUE CHAIN ACTIVITIES CO2e emissions1-6 (absolute figures) 2021 2020 2019 2018 2017 % Change 2020/2021 % Change 2017/2020 264,005 211,108 250,240 222,315 208,525 25% 27% Scope 3 – indirect CO2e emissions from corporate value chain Purchased goods and services – Tier 1 suppliers Upstream transportation and distribution Inbound Outbound** Fuel- and energy-related activities* 3,136 2,855 150,509 113,561 123,769 126,590 123,061 106,983 91,775 107,744 80,143 71,070 85,622 67,842 98,386 74,182 64,076 21,361 23,933 9,358 5,961 6,994 -11% 205% 33% 10% 17% 26% 22% 51% 34% Business travel (rail and air) 2,482 1,751 18,727 15,582 14,394 42% -83% Upstream leased assets* 895 1,166 -23% Total Scope 1-3 (market-based) 269,509 216,365 268,098 251,361 256,232 25% Annual sales PUMA (in € million) 6,805 5,234 5,502 4,648 4,136 30% 5% 65% Total Scope 1-3 relative to sales (t CO2e per € million sales) (market-based) Total Scope 3 relative to sales (t CO2e per € million sales) 39.6 41.3 48.7 54.1 62.0 -4% -36% 38.8 40.3 45.5 47.8 50.4 -4% -23% * Emissions from the respective Scope 3 categories were reported under Scope 1 and 2 before 2020. ** In 2020 upstream outbound values were adjusted to fully cover e-commerce business and exclude B2B express volumes. 1. PUMA’s greenhouse gas reporting is in line with the GHG Protocol International Accounting Standard. 2. Methodological changes over the last three years have influenced results. In 2020 updated emission factors were applied and the consolidated structure changed due to full alignment with the GHG Protocol. 3. The consolidation scope follows the operational control approach, including PUMA-owned or operated offices, warehouses, stores and own industrial sites (Argentina). 4. Outsourced Tier 1 production is accounted for in the Scope 3 emissions under purchased goods and services, covering CO2 emissions from all three product divisions (Accessories, Apparel and Footwear). 5. PUMA applied emission factors from internationally recognized sources, such as the International Energy Agency (IEA) (2019) and DEFRA Conversion Factors (2020). For some Scope 3 emissions, emission factors are based on supplier and industry-specific emission factors. 6. For sea freight transportation, PUMA follows the recommendation and new methodology of the Clean Cargo Working Group that has transitioned from the use of tank-to-wheel (TTW) CO2 to well-to-wheel (WTW) CO2-equivalent emission factors for all fuels. 81 Annual Report 2021 ↗ Sustainability SCOPE 3 EMISSIONS BEYOND TIER 1 MANUFACTURING Scope 3 emissions come from PUMA’s indirect business activities, mainly in the supply chain. In previous years we reported our Scope 3 emissions for the production of PUMA goods by our suppliers only at Tier 1 supplier level in our Annual Report. In addition, we also used the PUMA EP&L calculations and results for our science-based CO2 target setting and tracking. In 2021 we engaged lifecycle expert company Sphera to conduct a comprehensive assessment of our supply chain emissions beyond Tier 1 manufacturing, including Tier 2 manufacturing of fabrics and components as well as material production. With this data we aim to set a new baseline for our most important Scope 3 category 1, “purchased goods and services”. We can therefore see in the table below that our absolute emissions from the purchased goods and services category have decreased by 12% from 2017 to 2021 while our business has grown by 65%. Due to efficiency improvements and the use of renewable electricity at factory level, as well as the usage of more sustainable materials, our emissions relative to sales have decreased by 46% in the same period, in line with our Science based target of 60% reduction relative to sales until 2030. ↗ T.15 PUMA’S SCOPE 3 CATEGORY-1 CO2E EMISSIONS FROM SELECTED VALUE CHAIN ACTIVITIES Scope 3 Emissions (Category -1) 2017 (Baseline) 2020 2021 % Change 2017/2021 Absolute GHG emissions (t CO2 eq) 1,409,265 1,389,335 1,242,468 -12% Annual sales turnover (€ m) 4,136 5,234 6,805 65% GHG intensity (tCO2e/€ m turnover) 341 265 183 -46% Note: Scope 3 category 1 estimation includes GHG emissions associated with goods and services purchased by PUMA from its suppliers related to PUMA products and associated packaging. This excludes emissions associated with other goods and services acquired by PUMA offices, stores and warehouses. Scope 3 category-1 emissions mainly originate from two sources; the raw materials and the energy consumed by our Core T1, T2, T3 (production of raw material) suppliers to produce finished materials and components, as well as finished goods. The breakdown of total GHG emissions by sources is presented below. 82 ↗ G.13 SCOPE 3 EMISSION - CATEGORY 1 Annual Report 2021 ↗ Sustainability We are currently working with the Sphera team to also quantify the GHG emissions for the years 2018 and 2019 as well as additional Scope 3 categories. ENERGY USE COMING FROM RENEWABLE SOURCES IN THE SUPPLY CHAIN (E.G. AT MANUFACTURING AND PROCESSING FACILITIES, FIBRE PRODUCTION LEVEL) The share of renewable electricity sourcing by Tier-1 and Tier-2 suppliers has increased from 0.35% in 2017 to 4.3% in 2021, which marks a 1673% jump in renewable electricity sourcing. Looking at the tiers in the value chain the share of renewable electricity has increased from 0.18% in 2017 to 4.8% in 2021 by T1 suppliers, while it has increased from 0.74% to 3.1% for T2 suppliers during the same period. ↗ T.16 SHARE OF RENEWABLE ELECTRICITY AS COMPARED TO GRID ELECTRICITY 2017 2020 2021 % Change 2017/2021 Total Renewable Electricity (kWh) 817,644 3,588,937 14,494,042 1673% Total Grid Electricity (kWh) 234,323,351 252,665,750 324,910,084 39% Share of Renewable Electricity 0.35% 1.40% 4.3% 1128% Core T-1 Renewable Electricity (kWh) 298,283 1,999,458 11,149,103 3638% Core T-1 Grid Electricity (kWh) 164,904,224 169,593,745 218,804,548 33% Share of Renewable Electricity (Core T-1) 0.18% 1.17% 4.8% 2585% Core T-1 Renewable Electricity (kWh) 519,361 1,589,479 3,344,939 Core T-2 Grid Electricity (kWh) 69,419,127 83,072,005 106,105,536 Share of Renewable Electricity (Core T-2) 0.74% 1.88% 3.1% 544% 53% 312% Note: The total electricity does not include captive electricity generation from fossil fuels such as natural gas, diesel etc. The renewable energy includes iREC certificates purchased by core leather, polyurethane, textile factories in 2021, but excludes renewable energy sourced by the Tier 2 core factories e.g., packaging & labelling, trims, footwear bottom and knitted upper 83 Annual Report 2021 ↗ Sustainability CARBON FOOTPRINT IN THE SUPPLY CHAIN ↗ T.17 CARBON FOOTPRINT IN THE SUPPLY CHAIN (E.G., AT MANUFACTURING AND PROCESSING FACILITIES, TEXTILE PRODUCTION) Scope 3 Emissions (category-1) 2017 2020 2021 Absolute GHG Emissions from Tier 1 and Tier 2 suppliers (t CO2e) Annual sales turnover (€ m) GHG Intensity (tCO2e/ turnover in millions) 345,361 297,573 358,404 4,136 83.5 5,234 56.8 6,805 52.7 Absolute GHG emissions from Tier 3 suppliers (t CO2e) 252,251 223,909 284,215 GHG Intensity (tCO2e/ turnover in millions) 61.0 42.8 41.8 % Change 2017/2021 4% 65% -37% 13% -32% Note: T1 & T2 emissions are estimated based on actual energy consumption collected from Core T1 and T2 factories and extrapolated to cover all T1 and T2 supplier factories. T3 emissions are estimated by Sphera by using its GaBi database With a closer look at the emissions from our supply chain, we see that absolute GHG emissions from T-1 and T-2 suppliers have been increasing by 4%, while the GHG intensity relative to the sale turnover has declined by 37% from 2017 to 2021. Absolute GHG emissions from T-3 suppliers increased by 13%, while the GHG intensity relative to sales turnover declined by 32% from 2017 to 2021. This is mainly achieved through better material selection by gradually switching to more sustainable materials and probably due to better material efficiency. Starting in 2022, we plan to closely track the material efficiency of our products. We see opportunities to further scale up cleaner production and renewable energy programs to more T1 and T2 suppliers, and also to launch them at some of the spinners (T3). Drilling down into product divisions, the absolute emissions are reduced at the leather tanneries by 33%, followed by Footwear T1 factories by 14%. Whereas the emissions from synthetic leather and Textile T2 factories is increasing by 214% and 15% respectively. The increase in emissions from synthetic leather factories and decrease in emissions from leather tanneries is mainly due to the increasing replacement of leather with synthetic leather. The GHG contribution by product divisions is presented below. 84 ↗ G.14 GHG CONTRIBUTION 2017 AND 2021 SUPPLY CHAIN Annual Report 2021 ↗ Sustainability Note: T1: Apparel, Footwear & Accessories factories T2: Leather, textile, polyurethane factories CARBON FOOTPRINT AT MATERIAL LEVEL Absolute GHG emissions from raw material consumption are decreasing by 26% as the total material consumption itself is increasing by 19%, while the GHG intensity of materials is reducing by 55% since 2017. This is achieved due to our continuous endeavours to shift towards more sustainable materials, for example. More sustainable cotton and polyester increased from 40% and 47% respectively in 2017 to 99% and 80% respectively in 2021. T.18 CARBON FOOTPRINT AT A RAW MATERIAL LEVEL Total raw materials (T) 158,509 195,039 187,996 GHG emissions from materials (tCO2e) 811,654 867,853 599,849 Annual sales turnover (Mio €) 4,136 5,234 6,805 GHG intensity (tCO2e/turnover in millions) 196.2 165.8 88.1 2017 2020 2021 % Change 2017/2021 19% -26% 65% -55% Assumptions: During the Scope 3 assessment, it was observed that the material data collection has improved over time and recently we are able to comprehensively collect material data. For example, for 2017 material data was not available for all type of materials and some material data were incomplete. In the absence of comprehensive raw material data for 2017, material data is extrapolated from 2020. Furthermore, we observed that the polyester consumption data for Footwear was exceptionally high for 2020 and possibly erroneously overestimated. Therefore the polyester data for Footwear for 2017 and 2020 are extrapolated from 2019 data. 85 Annual Report 2021 ↗ Sustainability A breakdown analysis as shown in the chart below indicates that rubber contributes the most, followed by leather and polyester. The emissions share of polyesters has reduced from 12% in 2017 to 8% in 2021 and that of leather has reduced from 21% to 20%, whereas the share of rubber has decreased from 33% to 27%. Hence it confirms that our focus on increasing the usage of recycled polyester and offering recycled alternatives to conventional rubber and leather, as defined in our 10FOR25 targets, will help to reduce greenhouse gas emissions. We started collecting data for transit plastic packaging from 2021, and 100% are recycled. Downstream impacts are not covered in category 1 (purchased goods and services) and will be reported in our 2022 annual report. ↗ G.15 GHG CONTRIBUTION BY MATERIAL (2017- 2021) Note: Others include viscose, acrylic, linen, lycra, metals, adhesives etc. Leather is natural leather while polyurethane is imitation leather, also known as synthetic leather. 86 Annual Report 2021 ↗ Sustainability CHEMICALS Target description: • 100% of all PUMA products are safe to use • Maintain RSL compliance rate above 90% • Reduce organic solvent usage to under 10 gr/pair Relates to Sustainable United Nations Development Goals 3 and 6 KPIs: • Percentage of RSL compliance rate per product division • Percentage of core suppliers with chemicals inventory and MRSL conformance report (ZDHC Incheck reports) • Suppliers’ chemical performance (verified FEM scores under chemical management section) • VOCs used in footwear production (VOC index for shoes) PUMA follows the precautionary principle and takes measures to prevent harm to human health and the environment from its products and operations. All the materials used in PUMA products are subject to our Restricted Substance List (RSL) Testing Program to ensure compliance with global chemicals regulations. Rather than applying internal testing standards, for our tests, we rely on the AFIRM Group’s Product RSL and on the Manufacturing RSL developed by the Zero Discharge of Hazardous Chemicals Foundation (ZDHC). In 2021 we changed our target from less than 1% RSL failure rate to maintain the RSL compliance rate above 90%, to allow for increased new material development and innovation, where each material is tested, and hence more failures can happen. In any case, no material with a failed RSL test can be used for PUMA products until the failure has been corrected and the material has successfully passed the test. In this way we mitigate the risk of product-level RSL failures. We will still track our RSL failure rates to identify improvement opportunities and prevent such failures from occurring in the future. At the manufacturing level, as part of our Zero Discharge of Hazardous Chemicals commitment we continued to ban the intentional use of priority chemical groups classified as particularly hazardous under ZDHC standards. This phase-out was supported by the widespread use of bluesign® and OEKO-TEX®- certified materials. While the use of most of these chemical groups was never intentional, poly-fluorinated and per-fluorinated chemicals (PFCs) were used until 2017 for water repellent finishes on Apparel and Footwear products. In 2021 we re-started to use Gore-Tex bluesign®-certified membranes and finishes which are either completely PFC-free or free from PFCs of environmental concern. In February 2017 Gore announced the “Goal and Roadmap for Eliminating PFCs of Environmental Concern (PFCEC)” from the lifecycle of its consumer fabrics products following discussions with Greenpeace. Gore Fabrics Division is still fully committed to the PFCEC-free goals for its consumer products and is now on track to transition the vast majority of its portfolio by the end of 2025. Our phase-out of hazardous substances is also reflected in the results of wastewater tests performed by our wet-processing suppliers. The tests show compliance levels of over 93% for the 14 MRSL parameters listed in the ZDHC MRSL. Most parameters show compliance rates of 100% or close to 100%. Some MRSL chemicals were still found in certain samples because we share production lines with other brands and retailers. 87 Annual Report 2021 ↗ Sustainability There is a total of 179 ZDHC Gateway accounts connected with PUMA. 34 are Core T1 and 65 Core T2 factories and the remaining are non-core factories. These factories are part of different ZDHC programs, depending on what applies to them: InCheck reports for MRSL conformance, ClearStream reports for wastewater conformance and the Supplier To Zero program for chemical management. CHEMICAL RISK ASSESSMENT AND NEXT STEPS In 2021 we conducted a risk assessment using our risk assessment methodology. We used the Higg FEM chemical management 2020 score with our core suppliers and engaged with AFIRM and the ZDHC foundation to review our risk assessment. We see a high risk for upcoming regulatory requirements. We will keep our engagement with AFIRM and FESI as the platforms to engage with policy makers in different regions and countries, such as the EU and US. PUMA has had a long-lasting program to ensure compliance with industry standards, we also updated our chemical handbook and increased the number of supplier trainings in 2021. These are the reasons why we see a low risk to factory workers’ and communities' health and medium risk of product claim. We will keep using the China IPE database to screen any environmental violations by factories located in China producing PUMA products or materials. We will keep monitoring the compliance with the ZDHC wastewater guideline, ZDHC MRSL and AFIRM RSL. We developed a tailored-made program for factories with lower RSL compliance rate, to improve their efficiency for materials to pass tests and optimize their testing procedure. FEM CHEMICAL MODULE PUMA has moved from individual brand chemical and environmental audits to the use of industry-wide tools, such as the Higg Index Facility Environmental Module (FEM) 3.0. PUMA requires an annual external verification of the self-assessment FEM modules (verification visits are announced). This external verification may be completed by approved verifiers from PUMA’s internal team or other brands, or third- party organizations on the approved list from SAC. The FEM Chemical Management Section measures factory performance from inventory and purchasing, to production, storage and waste. PUMA’s Chemical Performance Rating System is based on the ratings developed from the factories’ verified Higg FEM scores under Chemical Management Section as verified by SAC approved verifiers: A, B+, B-, C and D. This rating system was presented during suppliers and sourcing team meetings in 2021 and will be implemented gradually from 2022. Our chemical handbook has been updated accordingly. This rating system will be included in vendor supplier score cards along with social and environmental ratings in the future. 88 Annual Report 2021 ↗ Sustainability AGGREGATED VERIFIED FEM SCORE FOR PUMA FACTORIES BENCHMARKED WITH INDUSTRY The table below shows the aggregated verified FEM2020 chemical module scores (median) for PUMA core factories with industry benchmarking. Compared to the industry, the verified FEM score overall for our factories is higher than the industry score. ↗ G.16 VERIFIED FEM SCORE % - CHEMICAL MANAGEMENT * FEM 2020 PUMA average: 146 factories Industry median FEM 2020 (4409 factories): filter used industry sector (Apparel, Footwear, Accessories includes handbags, jewelry, belts, and similar products) and Facility Type (Final Product Assembly, Printing, Product Dyeing and Laundering, Material Production including textile, rubber, foam, insulation, pliable materials) In 2021 PUMA also facilitated our core factories to participate in the ZDHC Supplier To Zero program, which contains a chemical management checklist to help factories identify opportunities to improve their chemical performance. A total of 50 Core T1 and Core T2 factories have completed the ZDHC Supplier To Zero assessment: 48 are at foundational level while 2 are at progressive level. PUMA will continue reviewing progress and map good practice to share with our suppliers. In addition, we have conducted a good practice sharing session in chemical management at a suppliers’ meeting. In 2022 we will continue to engage with our PUMA Core T1 & T2 factories in capacity building activities and projects in chemical management. Our target is to improve each factory’s verified FEM score for the chemical module to above 40%. We will continue together with industry expert groups like ZDHC and AFIRM to organize training webinars and to develop training videos in local languages. Supported by organizations such as GIZ (The Deutsche Gesellschaft für Internationale Zusammenarbeit – German Corporation for International Cooperation), and chemical experts, we will deliver more practical training and one-on-one coaching sessions. In 2022 PUMA will join the PIE (Program for Improvement of Environmental performance of factories) of GIZ in countries such as Vietnam, Pakistan and Bangladesh. PUMA will partner with other external consultants in China. 89 Annual Report 2021 ↗ Sustainability SUPPLIER TRAINING To help our suppliers better understand the requirements set by PUMA and the industry, we trained suppliers in standards, guidelines and tools, as well as methodology for nonconformance investigation and remediation. Case studies of conventional parameter failures have been used in the training. In 2021, chemical management training sessions covered MRSL, factory chemical management (FEM), RSL, Wastewater and corrective actions for non-conformance. A total of 17 training sessions were conducted in 6 different languages. More than 470 factories and 1,400 participants were invited. More than 80% of participants were satisfied with the training arrangement and content. Here are training sessions that have been organized in 2021: Virtual training Topics Number of factories Number of participants Chemical inventory and InCheck Report, Supplier To Zero (Chemical Management), Wastewater ClearStream Report, ZDHC Gateway, Conformance improvement with case study Industry chemical management standards, guidelines and platforms (Jointly organized with ZDHC) Conducted in 2 different languages RSL (Jointly organized with ZDHC and accredited third-party laboratory) Approx. 132 Approx. 430 Conducted in 6 different languages RSL standard and testing matrix update and implementation Approx. 118 Approx. 375 RSL Since 2019 we have increased the number of RSL tests from 6,605 to 8,184 with the overall RSL compliance rate maintained at above 98%. When materials fail an RSL test, they cannot be used for PUMA products until the failure has been corrected and they successfully pass the test. In this way we mitigate the risk of product-level RSL failures. 90 ↗ G.17 2021 RSL COMPLIANCE RATE BY DIVISION (%) Annual Report 2021 ↗ Sustainability ↗ T.19 RSL TEST STATISTICS 2019-2021 Product Division Footwear Apparel Accessories Others Total 2021 2020 2019 No. of test reports Compliance rate (%) No. of test reports Compliance rate (%) No. of test reports Compliance rate (%) 5,847 1,467 737 133 8,184 98.8 99.0 94.4 97.7 98.4 5,117 1,318 878 152 7,465 99.3 98.9 96.8 91.4 98.8 4,668 1,239 639 59 6,605 99.2 99.1 96.2 100.0 98.9 RANDOM TESTING Every year, PUMA performs random RSL testing for high-risk materials on finished products. In 2021 we tested 160 materials from 23 finished products from Footwear, Apparel, and Accessories from different suppliers in different sourcing regions. The pass rate was 96.9%. In case of RSL failures, we check all products met all legal requirements in the selling countries. We also ask factories’ management to trace the concerned material to segregate it, so it is not used for production. To prevent further test failure, we work with our T1 factories to increase material test frequency for high- risk test failure before product manufacturing, and to improve the manufacturing process at T2 factories. 91 Annual Report 2021 ↗ Sustainability RSL ZERO FAILURE RATE PROGRAM This program has been formulated based on the industry standards and PUMA requirements, focusing on input, process and output as defined in chemical management. Through this program we monitor closely the factory chemical management system (based on SAC FEM and ZDHC Supplier To Zero) and materials test protocol (especially for material with a high risk of RSL test failure). Factory materials’ testing process is then reviewed and optimized. ↗ G.18 PROCESS OVERVIEW In 2021 the program was piloted with 7 suppliers (5 Footwear and 2 Accessories). In 2022 we will keep monitoring the performance of these 7 suppliers and expand the program to more suppliers. MRSL In addition to testing materials and products via the RSL from the AFIRM Group, we also adopted the ZDHC Manufacturing RSL at supplier level. GoBlu International has created an easy-to-use app (BHive) for chemical management in the supply chain. This app uses OCR technology which allows manufacturing facilities to take smart phone photos of chemical product labels, in order to generate a full and accurate chemical inventory. Within seconds, it identifies which chemical products meet MRSL requirements adopted by many brands/retailers. Facilities management can then see which chemicals they should keep using and which they should phase out — all at a glance. During 2020 we successfully piloted BHive. As of end of 2021, 66 of our core factories used either BHive, CleanChain or E3 tools to track MRSL compliance. Out of 146 core factories, 18 factories do not use chemical and/or water during the manufacturing process. 92 Annual Report 2021 ↗ Sustainability This means that 55% of T1 factories and 44% of T2 factories within the scope of our MRSL program have an Incheck report. We will follow up and support those factories to improve their MRSL conformance rate. In 2022 we will focus on the remaining core factories. We will map if they use CleanChain or E3 tools to track their MRSL compliance, and if not, we will request them to use BHive by Goblu. We will also start launching this tool with non-Core T2 factories with wet processes. VOLATILE ORGANIC COMPOUNDS With the help of our Footwear suppliers, we managed to further reduce the volatile organic compounds (VOCs) in grams per pair of shoes to 13.6 grams in line with our target for 2025. This reduction was a direct result of our long-standing VOC Program, which saw the first targets achieved as early as 2003. We are confident that the increase in use of hotmelt or water-based adhesives, and less VOC content in the products of major adhesive suppliers will help us achieve our VOC target of below 10gr/pair by 2025. ↗ G.19 VOC INDEX DEVELOPMENT OVER TIME* * Since 2019 figure-based for core suppliers in alignment with the general reporting scope 93 WATER AND AIR Annual Report 2021 ↗ Sustainability Target description: • Industry good practice for effluent treatment is met by 90% of core PUMA suppliers with wet-processing facilities Industry good practice for air emissions is met by 90% of core PUMA suppliers with significant emissions • • Reduce water consumption at PUMA core suppliers per pair or piece by 15% (based on 2020 baseline) Relates to United Nations Sustainable Development Goals 6, 14 and 15 Examples of the 10FOR25 action plan: • Ensure regular wastewater testing at relevant suppliers • Ensure regular air-quality assessments at relevant suppliers • Support the development of an industry-wide air quality standard KPIs: • Percentage of core suppliers meeting good practice standards for wastewater • Percentage of core suppliers meeting good practice standards for air emissions • Percentage of water saved per pair/piece WATER ROADMAP AND RISK ASSESSMENT In 2021 we developed a water roadmap and conducted a risk assessment using our risk assessment methodology. Water risk across PUMA supply chains was assessed referring to the WWF water stewardship criteria: Basin Risk and Operational Risk. Basin Risk was analyzed by the WWF Water Risk Filter. The Operational Risk was based on the water management in Higg FEM water management 2020 by our core suppliers. Those scoring under 50% were ranked with a high level of operational risk. According to the analysis from WRI Aqueduct and WWF Water Risk Filter, some of our core suppliers in China, Vietnam and Bangladesh have some risks such as flooding, poor water quality or water depletion. Below are key focus areas for the coming years. Some actions were taken in 2021 and are reported in this report. • Raise awareness: We see the need to increase internal awareness and thus will develop an eLearning on water for our staff. • Knowledge of impact: We conduct a Life Cycle assessment of our top 5 products. 3 LCA results are reported under the product section of this report, 2 LCAs are still being finalized. PUMA also adopted the ELEVATE intelligence or “EiQ”, a comprehensive suite of supply chain analytics, to: - Assess our supply chain risks by geography, commodity and issue. - Complete a risk assessment for suppliers, factories and sites. - Manage risks that are material for each supplier, factory or site. We will prioritize core suppliers for further action by using the Water Risk Analysis tool. 94 Annual Report 2021 ↗ Sustainability • Internal action: We translated Higg FEM into a PUMA grading system to include our supplier environmental performance in the future in our vendor score card used by our sourcing leaders. We will strengthen water data collection by increasing the frequency. We will maintain our focus on increasing the use of recycled material in our products. We will continue to enroll more factories in cleaner production programs to improve their water efficiency. We asked our core suppliers to set their own water reduction targets. • Collaboration and partnership: We will map further water governance in our key sourcing countries and conduct local key stakeholder mapping to explore opportunities for a collaborative approach. Since 2015 we have increased the number of wastewater tests from 33 to 117 suppliers and 207 test reports, covering approximately 98% of our core wet-processing facilities. The test results confirm that priority hazardous chemicals have been phased out as planned. Regarding the conventional wastewater parameters that apply only to suppliers which discharge their wastewater directly into natural water bodies. In 2021, test results show over 90% compliance with the ZDHC Wastewater Guidelines (foundational level). Seven parameters hit a 100% compliance level. This means we have achieved our wastewater target for 10FOR25 cycle. PUMA has continued to adopt the ZDHC ClearStream report for wastewater testing. For 2021, 113 out of 117 suppliers have a ZDHC ClearStream report. 95 Annual Report 2021 ↗ Sustainability ↗ G.20 SUPPLIER PERFORMANCE TO ZDHC WASTEWATER QUALITY GUIDELINE – CONVENTIONAL PARAMETERS In terms of heavy metals and the chemical parameters regulated in the ZDHC MRSL, the suppliers we tested were able to keep their high compliance rates above 90% for each parameter. The only exemption is antimony. As suggested by ZDHC, antimony was tested for reference only, considering the exemption of polyester manufacturing during which antimony is used as a catalyst. PUMA closely follows up the development progress with the ZDHC Task Team and the supply chain for better alternatives. When a wastewater test fails, we support factories to conduct a wastewater and sludge root cause analysis and create corrective actions, using the industry standard template. In 2021 we received 4 action plans. We will follow up on their implementation through wastewater testing in 2022. In 2021 we conducted good practice sharing during the capacity building training to support factories to improve. 87 out of 117 factories are 100% compliant for all parameters as per ZDHC Wastewater Guidelines. Those that are not compliant are requested to improve. 96 Annual Report 2021 ↗ Sustainability ↗ G.21 SUPPLIER PERFORMANCE TO ZDHC WASTEWATER QUALITY GUIDELINE – HEAVY METALS * Antimony is exempt for mills that produce or dye polyester fabric. ↗ G.22 SUPPLIER PERFORMANCE TO ZDHC WASTEWATER QUALITY GUIDELINE – RESTRICTED CHEMICALS 97 Annual Report 2021 ↗ Sustainability SUPPLIER TRAINING To help our suppliers better understand the requirements set by PUMA and the industry, we trained suppliers in standards, guidelines and tools, as well as methodology for nonconformance investigation and remediation. Case studies of conventional parameter failures have been used in the training. Here are 2021 training sessions that have been organized: Virtual Training Topics Number of factories Number of participants MRSL and Wastewater (Jointly organized with ZDHC and accredited third-party laboratory) Conducted in 5 different languages Root Cause Analysis and Corrective Actions MRSL standard and wastewater guideline update and implementation (use of industry platform and reporting) (Jointly organized with ZDHC and accredited third-party laboratory) Conducted in 3 different languages Non-conformance investigation and remediation for MRSL, RSL and wastewater conformance Approx. 86 Approx. 268 Approx. 136 Approx. 330 In addition, we also encouraged the suppliers’ chemical management teams to attend in-depth training courses under ZDHC Academy as conducted by ZDHC approved service providers. These have been developed by industry experts and can be available in local languages. Examples of the training courses that have been attended by PUMA suppliers were ZDHC Top 10 Issues & best practices and the newly launched Chemical Management System (CMS) and Technical Industry Guide (TIG) training in 2021. We see water savings of 2,424,800 m3 per year as a result of our core suppliers enrolled in a cleaner production program, which includes water efficiency action. Our Core Tier 1 suppliers have been able to reduce the amount of water per piece of apparel significantly by 44%, due to actions taken by our core factories in water efficiency through the Cleaner Production Program. We will now focus on our core footwear suppliers. For data on water consumption, please refer to the Environmental Key Performance Indicator Section of this report. The publication of the ZDHC Air Emission Guidelines was not finalized in 2021, so we decided to internally monitor our core supply chain’s performance regarding air emissions. We designed a set of questionnaires to gather the relevant air emission compliance information on top of our online Enablon data collection campaign for our core factories (T1 and T2). The result shows that 100% of the core factories sampled were compliant with the local regulation for air emission in 2021. 2021 PUMA CDP WATER SCORE: B- PUMA’s CDP water score improved from C in 2020 to B- in 2021. Besides our consistent improvement on supply chain water efficiency, we clearly set up the water target to 15% water efficiency (water consumption reduction per unit of products manufactured) in 2025 compared to the baseline 2020. 98 Annual Report 2021 ↗ Sustainability PLASTIC AND THE OCEANS Target description: • Support initiative and scientific research on microfibers, work with core suppliers to reduce microfiber release • Research biodegradable polyester for use in PUMA products • Eliminate plastic bags from PUMA stores and review the impact of hangers and fixtures Relates to United Nations Sustainable Development Goals 3, 14 and 15 KPIs: • Tons of plastic bags used in PUMA stores • Percentage of PUMA offices that have eliminated single-use plastic • Percentage of plastic packaging recycled ↗ T.20 ELIMINATION OF SINGLE USE PLASTICS Sub-targets Plastic consumer shopping bags (stores, tons) Plastic consumer shopping bags recycled content (%) Plastic hangers used in stores (stores, tons) Plastic hangers with 100% recycled content (%) 2020 400 80% 112 51% Primary product plastic packaging (tons) 245 4.7 Plastic transit packaging (factory to warehouse) * (tons) Plastic transit packaging recycled content (%) * 557.7 100% Offices that have eliminated single-use plastic cups and cutlery (%) 0% 88% * We started to collect transit packaging (from factory to warehouse) data since 2021 2021 190 Target 2025 0 80% Zero plastic bags 134 97% Switch to recycled content or wood 100% Zero plastic packaging Switch to recycled content or paper 100% 100% Plastic pollution of our oceans is one of the most urgent challenges to sustainability of our time. As a company that uses polymers for most of its products, we have a special responsibility to work on this issue. Avoiding plastic pollution is also one of the three pillars of the Fashion Pact, of which PUMA is a founding member. Also, several countries and regions have formed initiatives to ban certain types of single-use plastics or plastic bags. Therefore we have added Plastics and Oceans to our 10FOR25 sustainability strategy as well as our sustainability bonus targets. 99 Annual Report 2021 ↗ Sustainability Plastic shopping bags and single-use plastics aggravate the problem of plastic pollution significantly. By eliminating them from our stores and office environment we can set a positive example for our consumers and colleagues and at the same time reduce our use of plastics by several hundred tons per year. In recent years we switched our shopping bags to FSC-certified paper bags or polyethylene bags with 80% recycled content. During 2020 our Retail division devised a detailed plan to completely phase out plastic bags from our global stores. Our stores ordered 430 tons of polyethylene bags in 2019 and 400 tons in 2020. In 2021 our stores ordered 189 tons. By 2023 at the latest, we will replace all polyethylene bags for consumers with paper bags or durable multi-use bags for sale. At the same time, we switched other plastic items in our retail stores, such as hangers and shoe fixtures, to recycled polymers or FSC certified wood. We also started working on more environmentally friendly solutions for our B2B product packaging for Apparel and Accessories, which is also based on polyethylene bags. As a result of these efforts, we switched our transit packaging B2B plastic bags to 100% recycled content. In addition we are also piloting transit bags made from paper in the USA. During 2021 we also switched most plastic primary packaging B2C to paper (we reported 245 tons of plastic primary packaging used in 2020). At our offices we have challenged our catering partners and employees to avoid single-use plastics such as coffee cups, lids, stirring sticks, cutlery or straws. In 2021, 88% of our offices globally have already eliminated single use plastic cups and cutlery. MICROFIBERS PUMA joined TMC (The Microfibre Consortium) to understand and address the environmental concerns for fibre fragments (microfibre) as generated from natural and synthetic clothing during manufacturing and the consumer use phase in the industry. Microfibers originating from synthetic fibers can have an environmental impact and are a challenge for the industry. With this, PUMA has put more focus on testing synthetic materials, such as polyester. In 2021 we conducted 17 shedding tests (with 12 polyester 100%, 5 blended compositions) per TMC test method. In view of the test results analytics from TMC on 100% polyester, the average on filter mass change from PUMA fabrics was less than compared with that of the overall database average (PUMA = 0.0029g vs Overall = 0.0033g). This means that PUMA tested fabrics released less microfibers in mass compared to those tested fabrics from the TMC Microfibre Data Portal. As feedback from TMC, we understand that analysis of the shedding data is complex and is to be on-going. At present there is no clear trend with the signatory’s data across the members from TMC in terms of yarn type or structure type. More data entries have been a call-out from TMC. PUMA will continue to participate and support the industry in the shedding study. PUMA’s representative worked in the TMC task team with other industry representatives to develop a guideline: “Control of fiber fragmentation, within textile manufacturing wastewater”. The final draft is awaiting open consultation by different stakeholders, such as the ZDHC Foundation, prior to public release. PUMA will review the official version of the guideline upon release. PUMA has also participated in the development of a biodegradability report on the available test methods and claims. This could support alignment within the industry. In September 2021 TMC released the 2030 roadmap. It has laid down its committee with clear accountable outputs - enabling signatories from across the industry to take meaningful, science-based, coordinated action on fiber fragmentation from natural and synthetic textiles. PUMA will continue to support the TMC roadmap and commitment, including building understanding by contributing to research data on fiber 100 Annual Report 2021 ↗ Sustainability fragmentation, reducing fiber fragmentation by adopting mitigation actions once practically available from the industry, drive progress by participating in Task Teams and scaling global uptake. 101 Annual Report 2021 ↗ Sustainability CIRCULARITY Target description: • Set up or join product takeback schemes in major markets • Reduce production waste to landfills by at least 50% (shared target) • Develop recycled materials as alternatives to leather, rubber, cotton and polyurethane (shared targets) Relates to United Nations Sustainable Development Goals 9, 12, 14 and 15 KPIs: • Percentage of major markets with takeback scheme • Amount of waste sent to landfills • Percentage of recycled polyester, cotton, leather, rubber and polyurethane In 2021 we launched our PUMA Circular Lab and announced as first concrete project the RE:SUEDE, an experiment for a biodegradable shoe, made with chrome-free Zeology leather, hemp, cotton and biodegradable TPE sole, which will launch in 2022 with a first batch of 500 pairs. PUMA® - No Time for Waste: PUMA pilots testing for biodegradable RE:SUEDE version of its most iconic sneaker RE:SUEDE RE.GEN collection PUMA’s exploration of the issue of circularity dates back to 2011 when we partnered with Cradle-to-Cradle co-founder Michael Braungart. Our rich history as the first company in our industry to develop a Cradle-to- Cradle-certified collection – our InCycle collection launched in 2013 – led us to put circularity back on the agenda with our 10FOR25 sustainability strategy. We are aware that the linear business model currently applied in our industry is far from the ideal concept of a circular economy. Rethinking the way we produce and moving towards a more circular business model is one of the priorities of our sustainability strategy. Therefore we have set circularity targets for PUMA, for example, scaling up the use of recycled polyester and cotton and using recycled alternatives to leather, rubber and polyurethane (PU), the materials we use most frequently after cotton and polyester. 102 Annual Report 2021 ↗ Sustainability We have also started to encourage our suppliers to reuse and recycle the fabric waste they are creating for production, either through applications outside of our industry or ideally, by recycling offcuts into new polyester or cotton yarns. At the end of 2021 our material toolboxes included recycled options for all the above materials and nylon. For recycling and recycled PU, we have started a research project with chemical company Covestro and shared first insights during our stakeholder dialog in 2021. Our Circularity Strategy was one of the two main topics discussed during our stakeholder dialog. During 2021, building on our training with Circle Economy, we rolled out an e-learning tool on Circularity for the global PUMA colleagues. Based on the PUMA identity and our material toolboxes we identified circular design approaches around the longevity and cyclability of our products. The e-learning focuses ont our new Circularity Policy, as well as our circular design guidelines. Regarding Apparel products, we developed a textile-to-textile recycling opportunity with partners in Europe. The initiative enables the recycling of unsellable polyester items (for example due to expired licensing contracts) through an innovative chemical recycling process into new textile items. To communicate our use of recycled materials, we continued our First Mile collection made from recycled plastic bottles and expanded the concept into all our Business Units. In 2021 we also launched our Re.Gen collection made from recycled cotton, recycled leather straps and recycled polyester. The use of recycled cotton for our Apparel products increased from 0.6% in 2020 to 2.3% in 2021, and for Footwear it increased from 0.5% to 4%. The use of recycled polyester increased for all product divisions from 14% in 2020 to 43% in 2021. More than 60% of pre-consumer waste is either reused or recycled by our Core T1 and T2 suppliers as of 2021, with only 4% of waste ending up in landfills for Apparel suppliers and 14% for Footwear suppliers. Volume of recycled leather, from production waste Volume of recycled cotton, from production waste Volume of recycled polyester, from post-consumer waste Volume of recycled nylon, from post-consumer waste Quantity of pre-consumer waste generated annually % of pre-consumer waste sent to reuse or recycling % of textiles and fabric destroyed (sent to incineration) Core T1* 43,459 tons 62.4% 7% * Includes Core Tier 1 suppliers, apparel, footwear, and accessory (62 factories), not including Cobra ** Includes Core Tier 2 suppliers, leather, synthetic and textile (43 factories) 1.2 tons 1,147 tons 16,799 tons 159 tons Core T2** 78,210 tons 79.4% 0.4% 103 Annual Report 2021 ↗ Sustainability TAKEBACK SCHEME PILOT To demonstrate our responsibility as a producer and to secure options for more circular material streams in the future, we also have set the target to offer takeback schemes in all our major markets by 2025. In our efforts to extend the lifespan of our products and re-integrate used materials into our production, we operate a project group headed by our Retail division. Since September 2019, PUMA customers in Hong Kong have the possibility to put their used sportswear to good use and support disadvantaged communities across the world, as the sports company teams up with non-profit organization Crossroads Foundation. Hong Kong customers can donate used garments of all brands at PUMA recycling bins, which have been set up in 4 selected stores. For every bag of clothing that is donated, customers receive a 20% discount voucher for their next purchase. 130 kg and 104 kg of garments were donated to the Cross Foundation in 2020 and 2021 respectively. PUMA SWOP Shops opened from July 9 to 11, 2021 and from July 15 to 17, 2021 in Hong Kong to promote “recycle and reuse”, earth lovers and fashionistas were invited to grant their sport style garment a second life by donating them at PUMA SWOP SHOP, while swapping for the same number of clothes items or accessories. 555 kg of garments were donated to the Cross Foundation. During 2021 we developed a take back scheme for Ecom, complementing our existing takeback pilot scheme in Hong Kong. Our colleagues at PUMA North America continued to work with Soles for Souls and collected 522kg of used shoes, an initiative where shoes can be donated for reuse in support of a charitable cause. Soles 4 Souls takeback bin in the USA WASTE ROADMAP AND RISK ASSESSMENT In 2021 we developed a waste reduction roadmap and conducted a risk assessment. The waste data published in our report cover both material waste and factory & office operation waste: cardboard, paper, plastic, light bulbs etc., to ensure a comprehensive scope to cover the waste generated on production sites. We see plastic, chemical, oil lubricant waste and e-waste as high risk. To prioritize these risks, we engaged with other brands and INSEE (a cement company that offers waste treatment services using co-processing technology in Vietnam, Cambodia, Bangladesh & Indonesia). To prioritize our actions we analyzed waste data collected in 2020 and the Higg FEM waste management score of our core factories. 104 Annual Report 2021 ↗ Sustainability Below are key focus areas for the coming years. Some actions were taken in 2021 and are reported in this report. • Raise awareness: We will engage our suppliers in FEM waste management training with peer learning sessions. • Knowledge of impact: We conduct a Life Cycle assessment of our Top 5 products, including end of life. 3 • LCA results are reported under the product section of this report. Internal action: We translated Higg FEM into a PUMA grading system to include our supplier environmental performance in future in our vendor score card used by our sourcing leaders. We improved waste data collected in 2021 and will increase the data collection frequency. We require our core supplier to set up waste reduction targets. We will maintain our focus on increasing the use of recycled material in our products. • Collaboration and partnership: We will map further waste governance in our key sourcing countries and conduct local key stakeholder mapping to explore opportunities for a collaborative approach. 105 Annual Report 2021 ↗ Sustainability PRODUCTS Target description: • 90% of PUMA Apparel and Accessories products contain >50% more sustainable materials • 90% of our Footwear contains at least one more sustainable component • Increase use of recycled polyester (Apparel and Accessories) to 75% by 2025 (shared target) Relates to United Nations Sustainable Development Goal 12 KPIs: • Percentage of Apparel and Accessories with 50% more sustainable material • Percentage of Footwear with at least one more sustainable component • Percentage of recycled polyester used in Apparel and Accessories The PUMA Environmental Profit and Loss Account (EP&L) attributes more than 50% of our environmental impact to material and raw material production. Against this background we have decided to prioritize the large-scale use of more sustainable raw materials. In our 10FOR25 strategy we have set 100% targets for more sustainable raw materials such as cotton, polyester, leather and cardboard. In addition to measuring the use of more sustainable materials, we now also determine the percentage of more sustainable products, that is, products made with a significant proportion of more sustainable materials. As defined in our PUMA Sustainability Index, or S-Index, more sustainable Apparel or Accessories products contain at least 50% more sustainable materials by weight. For Footwear we currently measure sustainability by including one or more main components made from more sustainable materials. During 2021 we developed and rolled out an E-Learning toolkit on more sustainable products and our PUMA S-Index for the PUMA family. The training allows designers, developers and product managers to understand which materials qualify as more sustainable, how the PUMA S-Index is calculated, and which certifications need to be in place to externally communicate on product level. The training was completed by over 1,000 PUMA colleagues in 2021. 106 ↗ G.23 PUMA FOREVER BETTER PYRAMID Annual Report 2021 ↗ Sustainability ↗ T.21 MORE SUSTAINABLE PRODUCTS Product Category Styles 2021 Volume 2021 Volume 2020 Target 2025 Apparel with at least 50% more sustainable material Accessories with at least 50% more sustainable material Footwear with at least one more sustainable component TOTAL Number of Vegan Styles 67% 79% * 81% 90% 30% 60%* 47% 90% 52% 58% 29 styles 46% 64% 24% 16 styles 90% 90% * In 2021 we implemented a calculation of 50% more sustainable material by weight, which is stricter than the calculation used in 2020. Our long-term efforts to scale up more sustainable materials in partnership with our material suppliers have helped us to increase the use of more sustainable material. With 99% more sustainable cotton, 80% polyester, 99.9% leather, 100% certified accross all product divisions (Apparel, Footwear and Accessories), we are coming close to achieving our targets of 100% more sustainable materials for all these categories. In 2021 we used 94% more sustainable cotton and 37% more sustainable polyester for our Footwear, which is a significant increase compared with 2020. This explains why the volume of more sustainable Footwear products has almost doubled since 2020. To respond to an increased demand of our consumers, in 2021 we also offered 29 vegan certified styles, after 16 styles in 2020. 107 Annual Report 2021 ↗ Sustainability In 2021 we successfully launched multiple more sustainable collections such the EXHALE yoga collection co-created with Cara Delevingne which uses recycled polyester and natural dyes, and offsets the carbon footprint and the RE.GEN collection made from regenerated materials from our own industry waste. Other highlights include our new BETTER FOAM in Footwear, a material partly made from sugarcane. We also officially announced the launch of the RE:SUEDE, an experimental version of our most iconic sneaker, the SUEDE, to test for a biodegradable product and expanded our PUMA x FIRST MILE collection with products made from recycled polyester to further business units. PUMA Exhale collection 108 Annual Report 2021 ↗ Sustainability PRODUCT LIFE CYCLE ASSESSMENT In light of enhancing the sustainability performance of our products, we have decided to undertake Life Cycle Assessments (LCA) of our top product portfolios. Outcomes of an LCA act as a quantifiable measure of our efforts towards a safer, cleaner and more sustainable value chain. LCAs also encourage innovation. This year we have completed a screening LCA study for three of our best selling products (Footwear products such as Lifestyle shoes, performance shoes and Apparel products such as Cotton Pants) to map their environmental footprint on greenhouse gases and water consumption across their entire value chains (cradle to grave) as per ISO 14040 and 14044 standards. Sphera, a leading consulting organization in the LCA domain, has conducted these Life Cycle Assessments, including all elements of these product life cycles, from the overall manufacturing including supply of material and energy carriers to the end of life. The data and methodology was peer-reviewed by an external expert. The products studied are: Performance shoes - Velocity Nitro net weight 0.72 kg Lifestyle shoes - Future Rider Play on net weight 0.78 kg Apparel pants - Modern Basic Pants (66% BCI cotton/34% polyester) with 30 wash cycles net weight 0.68 kg Results of the analysis can be summarized as follows: 109 ↗ G.24 BREAKUP OF GWP IMPACT Annual Report 2021 ↗ Sustainability For performance shoes the global warming potential (GWP) (kg CO2e) has been influenced by materials which include base material, midsole, outsole, etc. (38.9%) and manufacturing energy (54.4%). While for lifestyle shoes, global warming potential (kg CO2e) has been influenced by materials by 58% and manufacturing energy by 35.1%. The lifestyle shoes are made of leather, which explains why the global warming potential for material is 58%. Leather in the lifestyle shoes has a higher contribution than other materials. EVA, polyester, hotmelt glue and glue adhesives have high contributions in both Footwear styles. Energy impact is lower in the case of lifestyle shoes (3.3 kg CO2), whereas performance shoes have a higher impact (4.14 kg CO2) mainly because the data is considered for the whole factory that produces the performance shoes (not specifically for the product as such). We see opportunities to improve manufacturing energy efficiency in the factory in question. Materials, adhesive and water used for production as well as packaging all together have a significant global warming potential for both Footwear styles (38.9% for performance shoes and 58% for lifestyle shoes). For Apparel pants, global warming potential (kg CO2e) has been influenced by cotton farming (11%), yarn spinning (34%), dyeing and finishing (44%) and use stage (37%). Primary energy* demand has major contributions from cotton farming (23%), yarn spinning (37%), dyeing and fabric finishing (28%) and use stage (35%). Blue water** consumption has higher contributions from cotton (91%) than other materials such as polyester, chemicals (13%), electricity and fuel (4%). Footwear products usually don’t require extensive cleaning during their lifetime, and hence the impact of the use phase is negligible. Therefore the GHG emission of use phase from Footwear is not considered1. However, for Apparel products about ~37% GWP impact lies in the use phase where washing and drying are required and result in respective emissions from energy consumption. End of life phase includes reuse, recycling, incineration and landfilling based on European scenarios, which contributes to about 2-7% in global warming potential (GWP) impacts. 1 Source : Quantis “Draft product environmental footprint category rules (PEFCR), Apparel and Footwear” 110 ↗ G.25 3 PRODUCTS ENVIRONMENTAL FOOTPRINT Annual Report 2021 ↗ Sustainability Apparel and Footwear products supply chain is quite complex and vast, which involves multiple stages such as cultivation, processing, finishing, assembly, distribution, use and end of life. The LCA study is used as a lens to understand the value chain environmental impacts of our products. PUMA now intends to use the outcomes of the study to increase internal awareness and improve the Product Environmental Footprint by increasing the use of more sustainable materials (recycled or biosynthetic), improving resource efficiency, optimizing energy use, promoting renewable energy in the value chain, and enhancing circularity of our products. MATERIAL ORIGIN Mapping and assessing risk and impact practices in the lower tiers of the supply chain identify opportunities for improvement to be better integrated at the strategic level. We have required our suppliers to source more sustainable cotton, grown in farms which are licensed or certified as having good farming and Human Rights standards, or recycled cotton. More than 90% of the cotton comes from the USA, Australia, India and Brazil. In parallel, we work on improving the traceability of the leather we use via the traceability system of the Leather Working Group. The leather used in PUMA Footwear comes from the USA (47%), Argentina (15%), Australia (15%), Italy (8%), Brazil (2%), Uruguay (0.4%) and Paraguay (0.3%). * Primary energy is the energy that is harvested directly from natural resources: coal, oil, natural gas and uranium. ** Blue water is water that has been sourced from surface or groundwater resources and is either evaporated or incorporated into a product. 111 Annual Report 2021 ↗ Sustainability We monitor our LWG (Leather Working Group) medal rated tanneries' traceability performance. Most suede tanneries work with agents and intermediaries along with direct tanneries to guarantee a stable sourcing supply, suede being a byproduct of the full grain business. This creates a challenge to have full traceability. This explains why our suede leather LWG tanneries have a lower traceability performance than full grain LWG tanneries. We nevertheless aim to increase all our LWG medal rated tanneries’ traceability performance over time. We also keep track of the origin of the down and recycled polyester used in PUMA products. 97% of the down used in our products comes from China, 3% from Vietnam. 90% of our recycled polyester comes from Vietnam, China, Taiwan (China) and Korea. MATERIAL CONSUMPTION DATA ↗ G.26 MORE SUSTAINABLE MATERIALS DEVELOPMENT Cotton & polyester including Apparel and Accessories material (excluding trims) As in previous years, a significant percentage of our more sustainable materials can be attributed to cotton from the Better Cotton Initiative, bluesign® and/or OEKO-TEX®-certified polyester, and Leather Working Group (LWG)-certified tanneries. In addition, we only use down feathers certified by the Responsible Down Standard, and 38% of our viscose is made by the world’s leading viscose suppliers with proven track record on sustainability. Therefore more than 67% of our Apparel, 30% of Accessories and 52% of Footwear products are already classified as more sustainable products, in line with the definition in our PUMA Sustainability Index. Coverage and calculation are more complex for Footwear because all our shoes are made from several components. As main materials we use polyester, polyurethane, rubber, leather and nylon. In line with our earlier targets, we have achieved 99.9% coverage of LWG-certified leather. For the other materials, in 2021 our sourcing teams worked to find more sustainable solutions that are also cost-efficient. For example, we now are using recycled materials for all our counters and many of our linings and have replaced the polyester-based backing of most polyurethane (PU) materials, which we use as an alternative to leather, with recycled polyester. 112 Annual Report 2021 ↗ Sustainability In 2021 we started reporting our material data including trims, such as threads, zippers, ribbons, interlining, etc. We see opportunities to increase the use of more sustainable material in trims in 2022, along with fabrics/materials. This explains why the percentage of more sustainable cotton for Apparel seems to decrease compared with 2020, but the use of more sustainable cotton in volume increased by around 45%. In our effort to improve our material data quality, this year we included material data for headwear (in addition to trims) under accessories. Fabric (99% of total volume) is made of more sustainable cotton, while trims are made with conventional cotton (1% of total volume). We used dope dye technology for the lining of our bags. Dope dye technology eliminates the need for the yarn dyeing process. In 2021 we conducted a Life Cycle Assessment on dope dyed polyester (as per international standards ISO 14040 and ISO14044) through a third party for the dyeing and finishing process, and we found: Energy saving: 29.69%, Water saving: 13.84%, Chemical use saving: 34.41%. ↗ T.22 COMPARISON BETWEEN POLYESTER FABRIC, REGULAR DYED AND POLYESTER FABRIC DOPE DYED, AVERAGE Raw material Yarn processing Weaving process Dyeing and finishing process Finishing process Final fabric packaging Final fabric transportation Total GHG difference (%) Water Consumption difference (%) Cumulative Energy Demand difference (%) -0.72% -0.72% -0.72% -19.51% -0.58% -11.66% -0.72% -0.72% -0.72% -29.37% -13.84% -29.69% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -9.22% -3.67% -6.89% In 2021 we used 94% more sustainable cotton and 37% more sustainable polyester for our Footwear, which is a significant increase compared with 2020, which explained why the volume of Footwear products with more sustainable material doubled. In 2021 we included outer cardboard data into the Paper & Cardboard section below. Our focus remains on increasing Paper & Cardboard FSC certified or recycled. We hardly used wool throughout 2021, thus we have not yet initiated responsible wool standards, but we still aim to reach 100% certified wool in 2025. 113 Annual Report 2021 ↗ Sustainability ↗ T.23 DEVELOPMENT OF MORE SUSTAINABLE MATERIAL USAGE* Apparel Accessories Footwear Total Cotton Conventional Recycled Better Cotton Polyester Conventional Dope dye Recycled Bluesign Oekotex Manmade Cellulosics Green-shirt rated fiber producers** Conventional Polyamide (nylon) Conventional Bluesign Recycled Leather Conventional LWG medal rated tannery Recycled Rubber Synthetic Natural PU Conventional Water-based 1% 2.3% 96.7% 1% 55% 21% 22% 38% 62% 15.3% 60.3% 24.4% 0.7% 99.3% 23% 6% 28% 42% 85.5% 14.5% 100% 100% 6% 4% 90% 63% 32% 5% 97.4% 2.5% 0.1% 99.9% 0.03% 69% 31% 99% 1% 1.2% 2.3% 96.4% 20% 2% 43% 15% 19% 38% 62% 74.1% 18.4% 7.5% 0.1% 99.9% 0.03% 69% 31% 99% 1% 114 Annual Report 2021 ↗ Sustainability Down Certified RDS Apparel Accessories Footwear Total 100% 100% * Figures including trims and excluding licensee production ** Green shirt rated fiber producers, as set by the annual Canopy Hot Button report, encourage existing fiber suppliers to commit to CanopyStyle and a Canopy Audit (https://hotbutton.canopyplanet.org/). ↗ T.24 MORE SUSTAINABLE MATERIAL USAGE PER PRODUCT DIVISION Apparel More sustainable cotton More sustainable polyester Accessories More sustainable cotton More sustainable polyester Footwear More sustainable cotton More sustainable polyester More sustainable leather More sustainable PU L&P paper/cardboard products Recycled and/or FSC certified 2021* 2020 2019 2025 target 99% 100% 99% 99.5% 82% 98% 100% 100% 99% 100% 100% 100% 100% 100% 100% 94% 0.18% 100% 37% 12.1% 6% 100% 99.9% 97.9% 1% NA NA 88%** 99% 98.9% 100% * 2021 figures including trims and excluding licensee production – 2020 figures excluding trims and licensee production ** Including outer cardboard boxes, which were excluded in previous years. ↗ T.25 NUMBER OF FACTORIES CERTIFIED Number of factories certified GRS/RCS GOTS Apparel & Accessories T1 & T2 Footwear T1 & T2 Leather Tanneries 21 63 15 OCS 6 RDS 6 NA LWG NA NA 27 gold 2 silver We are working to complete the GRS/RCS certification of our T1 Footwear factories and Footwear T2 manufacturers of insole, outsole or midsole. 115 Annual Report 2021 ↗ Sustainability BIODIVERSITY Target description: • Support the industry in setting a science-based target for biodiversity • 100% cotton, leather and down procured from certified sources (shared target) • Zero use of exotic skins and hides Relates to United Nations Sustainable Development Goals 14 and 15 ↗ T.26 SUSTAINABLY SOURCED NATURAL MATERIALS* Sub-targets 2021* 2020 Target 2025 Science Based Target (SBT) Cotton (BCI** and/or recycled) Leather (LWG-certified tanneries) Down (RDS-certified) Sustainably sourced viscose / MMCF Cardboard and paper (FSC and/or recycled) Number of vegan styles * Including trims and excluding licensee production Not started Joined Fashion Pact activities on biodiversity SBT set 99% 99.9% 100% 38% 88%*** 29 100% 98% 100% 100% 99% (product packaging supply chain) 16 100% 100% 100% 100% 100% NA ** Better Cotton Initiative (BCI) principle: Biodiversity and Land Use is one of the seven Better Cotton Principles and Criteria. Management practices address identifying and mapping biodiversity resources, identifying and restoring degraded areas, enhancing populations of beneficial insects, ensuring crop rotation and protecting riparian areas. https://bettercotton.org/wp-content/uploads/2019/06/Better-Cotton-Principles-Criteria-V2.1.pdf *** Including outer cardboard Scientific reports point to the fact that the loss of biodiversity has increased over the last decade. Once extinct, species can never be brought back and are lost forever. Not only because our logo features a wild animal, but we have also decided to dedicate one of our 10FOR25 targets to biodiversity. PUMA is a signatory of the Fashion Pact, a global coalition of companies in the fashion and textile industry (ready-to-wear, sport, lifestyle and luxury) including their suppliers and distributors, all committed to a common core of key environmental goals in three areas: stopping global warming, restoring biodiversity and protecting the oceans. Our biodiversity blueprints are described below: Biodiversity loss and climate change are interdependent and mutually reinforcing. For example, protecting forests could help reduce greenhouse gas emissions. In turn, the rise of global temperatures increases the risk of species extinction. In 2019 PUMA published its science-based emission target (SBT) with the SBT 116 Annual Report 2021 ↗ Sustainability Coalition and joined the Fashion Pact. PUMA climate action and progress are reported in the Climate section of this report. Most of the negative impact on biodiversity comes from three stages in the value chain: raw material production, material preparation and processing, and end of life. To mitigate the risk of biodiversity loss due to the production process, we address environmental pollution risk through our targets and suppliers’ program on Climate, Chemicals, Water and Air. In 2021 we developed roadmaps for water and waste, which can be found in Water and Air, Plastic and Ocean sections of this report. 100% of our transit packaging is made of recycled plastic, we work on eliminating plastic product primary packaging and plastic shopping bags. Our targets and progress are described in the Plastic and Ocean section of this report. We use approximately 50,000 tons of cotton and 4,300 tons of leather per year for our products. Both cotton farming and cattle ranching require extensive land use and have been cited to reduce biodiversity. 99% of cotton used in PUMA products are BCI or recycled. 99% of the leather used in our footwears are sourced from LWG rated tanneries. Leather traceability is a first step towards reduced deforestation. We monitor our LWG (Leather Working Group) medal rated tanneries' traceability performance. In addition, our annual paper and cardboard consumption amounts to 19,500 tons (shoebox, hangtags and outer cardboard). As of end of 2021, 88% are FSC certified or recycled. In 2021 we engaged with Canopy, a Canadian non-profit organization with a mission to protect the world’s forests, species and climate, and to help advance indigenous communities’ rights. They helped us to develop our policy on forest protection. We engaged in Canopy‘s initiatives: CanopyStyle and Pack4good; through these initiatives we started investigating into next generation raw materials with a focus on biobased material, such as wheat, as a partial substitute for paper in our shopping paper bags. In addition, in 2020 we mapped out our viscose supply chain with the goal of procuring 100% of our viscose from suppliers committed to reducing the risk of sourcing from ancient and endangered forests. In June, PUMA formally joined the CanopyStyle initiative to support this goal. In 2021, 38% of viscose was sourced from Canopy’s 2021 Hot Button Report green-shirt rated suppliers; we prioritized sourcing new fabrics containing viscose to replace polyester in our Apparel products. To implement our new strategy, we used not only fabrics from green-shirt rated viscose, but also old carry-over fabrics developed over the past 5-10 years. The volume of viscose used in 2021 is 4 times higher than in 2020. In 2022 we aim at only sourcing green-shirt rated viscose as per our Biodiversity and Forest protection policy launched in April 2021 and also to prefer viscose made from recycled textiles. We hardly used wool throughout 2021, thus we have not yet initiated Responsible Wool Standards, but we still aim to reach 100% certified wool in 2025. 117 Annual Report 2021 ↗ Sustainability POLICIES In 2021 we published the PUMA biodiversity policy and animal welfare policy, to create a framework on our approach related to biodiversity and animal welfare. These policies are published on our website. As part of the Fashion Pact, we commit to support the development of science-based targets on biodiversity. To help the protection of endangered forests and species, PUMA commits not to use any wood or wood- derived fabrics made from ancient and endangered forests. • PUMA engages as a supporting partner of the CanopyStyle Initiative, aiming to source our viscose only from green-shirt rated suppliers. • We commit to sourcing the leather used in PUMA products only from manufacturers who implement industry good practice standards of environmental management and traceability, such as the leather working group. • We commit to sourcing all our paper and paper-based packaging from recycled sources and/or Forest Stewardship Council certified sources. PUMA is engaging as a partner of Canopy’s Pack4Good initiative to collectively reduce any risk of sourcing from ancient and endangered forests by 2022 and promoting next generation solutions. At PUMA we care for the welfare of animals. We do not accept the use of animal products which originate from animals which have been inhumanely treated. Therefore we aim at implementing high welfare and traceability standards. PUMA consults on a regular basis with animal protection organizations to review our policy and actions. “We are delighted to have PUMA as part of our CanopyStyle and Pack4Good initiatives to end sourcing from ancient and endangered forests. Keeping forests standing is 30% of the climate solution, and PUMA – a company named after a majestic forest creature – is showing leadership on their behalf. We look forward to working with the PUMA team to get them to 100% green shirts, accelerate production of circular alternatives and secure ambitious levels of forest conservation.” NICOLE RYCROFT Canopy’s Founder and Executive Director, Canopy 118 Annual Report 2021 ↗ Sustainability ENVIRONMENTAL KEY PERFORMANCE DATA During 2021 we revisited the methodology of our PUMA Environmental Profit and Loss Account, or EP&L. The methodology, which was developed in 2011 by PWC and Truecost, and later further refined by Kering with the help of PWC, mainly relies on material input and spend data. During our review, we realized that many savings made by our Tier 1 and Tier 2 suppliers had not been captured by the EP&L methodology, and for some of our major materials used, such as BCI Cotton, no specific EP&L emission factors have been developed. Therefore we decided to pause the publication of our EP&L for 2021 and rework the methodology to more accurately reflect our environmental performance in the future. As in previous years, we are reporting the underlying datasets as Environmental Key Performance Indicators in this chapter. ↗ T.27 E-KPIS PAPER 1-3 Paper 2021 2020 2019 2018 2017 % Change 2020/2021 % Change 2017/2021 PUMA own entities Paper and cardboard consumption (tons)* Certified or recycled paper and cardboard consumption (tons) Percentage of certified or recycled paper and cardboard consumption (%) PUMA production Paper and cardboard consumption from PUMA production (shoe boxes, hangtags) (tons) Percentage of certified or recycled paper and cardboard consumption from PUMA production (%) 4,152 2,638 2,281 2,292 2,756 57% 51% 3,306 1,848 1,818 1,120 2,025 79% 63% 79.6% 70% 80% 49% 74% 19,670** 18,538 14,863 13,607 14,129 25% 31% 88%** 99% 100% 98% n/a * Including paper bags, office paper and cardboard consumption of offices, warehouses and stores ** Including outer cardboard boxes 1. Figures include PUMA-owned or operated offices, warehouses and stores. Includes our 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 are excluded. 2. Data includes extrapolations or estimates where no real data could be provided. 3. Methodological changes over the last three years have influenced results. 119 ↗ T.28 E-KPIS PUMA AND TIER 1 & TIER 2 PRODUCTION – ENERGY 1-3 Annual Report 2021 ↗ Sustainability Energy PUMA own entities Non-renewable electricity consumption (MWh) Electricity consumption from renewable sources (green tariffs and on-site photovoltaics) (MWh) Electricity consumption guaranteed with EACs (MWh) 2021 2020 2019 2018 2017 % Change 2020/2021 % Change 2017/2021 0 0 12,683 29,766 52,508 - -100% 13,749 10,839 11,547 11,695 11,611 27% 18% 54,117 50,526 37,269 25,051 0 Total electricity consumption (MWh) 67,866 61,365 61,499 66,512 64,119 Percentage of renewable electricity consumption (excluding EACs) (%) Percentage of renewable electricity consumption (including EACs) (%) Energy from non-renewable fuels (oil, natural gas, etc.) (MWh) 20% 18% 16% 15% 18% 100% 100% 79% 55% 18% 10,006 10,739 10,975 11,724 14,430 Energy from district heating (MWh) 10,795 6,247 7,915 5,734 5,155 Total energy consumption (MWh) 88,666 78,350 80,389 83,970 83,704 7% 11% n/a 6% -7% 73% 13% -31% 109% 6% PUMA production (Tier 1)* Non-renewable energy consumption (MWh) Renewable energy consumption (MWh) Percentage of renewable energy consumption (%) PUMA production (Core Tier 2)** Non-renewable energy consumption (MWh) Renewable energy consumption (MWh) Percentage of renewable energy consumption (%) 331,199 221,641 246,160 195,866 194,881 52% 67% 17,763 3013 294 492% 5950% 5% 1% 0.1% 400% 4900% 795,673 607,310 586,986 31% 36% 39,317 3,393 524 1059% 7399% 5% 0.6% 0.1% 233% 4900% * Includes Tier 1 suppliers, Apparel, Footwear and Accessories (181 factories) ** Includes Core Tier 2 suppliers, leather, synthetic and textile (43 factories) 1. Figures include PUMA-owned or operated offices, warehouses and stores. Includes our 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 are excluded. 2. Data includes extrapolations or estimates where no real data could be provided. 3. Methodological changes over the last three years have influenced results. 120 Annual Report 2021 ↗ Sustainability ↗ T.29 E-KPIS PUMA AND TIER 1 & TIER 2 PRODUCTION - WASTE & WATER 1-3 Waste & Water 2021 2020 2019 2018 2017 % Change 2020/2021 % Change 2017/2021 PUMA own entities Total waste (tons) Recycled waste PUMA own entities (tons) Recycled waste PUMA own entities (%) 5,215 3,949* 3,644* 4,877 5,293 32% -1% 2,220 1,436* 1,603* 2,282 3,419 55% -35% 43% 36% 44% 47% 65% Water PUMA own entities (m3) 116,829 96,569 89,676 95,291 106,397 21% 10% PUMA production (Tier 1) ** Total waste (tons) 33,806 23,498 24,205 16,682 14,686 44% 130% Percentage production waste to landfill (%) 10% 9% Water consumption (k m³) 2,706 2,332 2,572 2,030 2,149 PUMA production (Core Tier 2) *** Total waste (tons) 8,689 5,968 Percentage production waste to landfill (%) 9% 18% Water consumption (k m³) 5,769 4,796 26% 11% 16% 46% 50% 20% * Waste data for PUMA’s own entities in 2019 and 2020 restated due to an underreporting in those years. ** Includes Tier 1 suppliers, Apparel, Footwear and Accessories (181 factories) *** Includes Core Tier 2 suppliers, leather, synthetic and textile (43 factories) 1 Figures include PUMA-owned or operated offices, warehouses and stores. 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 are excluded. 2 Data includes extrapolations or estimations where no real data could be provided. 3 Methodological changes over the last three years have influenced results. As we can see from T.29, our own waste creation and water consumption increased, over the last years. This increase can partially be attributed to our increased sales volume, as waste creation in our stores in directly linked to sales turnover, with the main waste created from shoeboxes or apparel packaging. We will take those increases as an opportunity to focus on our own entities waste and water performance as well within the next three years. We continue to work with our core suppliers to reduce their environmental footprint. In 2021 we continued the cooperation with the Apparel Impact Institute’s Clean by Design Program and with the International Finance Corporation’s PaCT Project on resource efficiency and renewable energy in Bangladesh. We also continue to joint forces with the German Development Agency, GIZ, to conduct solar photovoltaic feasibility studies at 22 suppliers across Asia. We have developed an internal training module on climate change for our internal stakeholders (branch managers and production teams) to provide them a clearer idea about our targets and our requirement for suppliers, so that they would be able to better support us when we work with suppliers on climate change topics. 121 Annual Report 2021 ↗ Sustainability We also prepared an e-learning module for other colleagues who are interested in knowing more about our targets and our work on carbon footprint reduction. This e-learning module will be completed and made available online in 2022. For our suppliers’ engagement we created an in-house tool to guide core suppliers to set up their climate change target following different ambition levels (their own SBTs or at least as ambitious as the one PUMA set for supply chain). A training workshop that will be conducted in 2022 February to give instructions for suppliers on how to better use this target setting tool. There is an overall trend of carbon emission reduction (within our Core Tier 1 suppliers) per pair of footwear (-32%) or piece of apparel product (-34%) since 2017, as an outcome of our core factories which joined cleaner production and renewable energy projects promoted by PUMA. During the same period, our Core Tier 1 suppliers have been able to reduce the amount of water per piece of apparel significantly by 44%, due to actions taken by our core factories in water efficiency with the cleaner production program, while water consumption at Tier 1 Footwear suppliers increased by 18%. Apparel and Footwear suppliers reported an increase in production waste of 34% and 30% respectively since 2017. Since we launched our goals in 2020 to reduce production waste to landfill by 50% by 2025, we have worked on securing the data quality to secure our baseline. The waste data published in this report cover both material waste and factory & office operation waste: cardboard, paper, plastic, light bulbs etc., to ensure a comprehensive scope covered for the waste generated on production sites. This is an increased scope compared to the measure for capturing the waste data in 2017, which partially explains the increase. We also added 10 new core factories for Apparel, which have not yet been engaged in cleaner production programs. For Footwear we increased the number of more complicated styles, which implies that the number of components and overlays has increased. The more components and overlays we have, the more waste is generated. The list of core factories for Footwear was stable between 2020 and 2021, which explains why Footwear factories decreased their waste per pair by 3%, while Apparel factories increased their waste per piece by 15%. Most of our Tier 1 production waste is recycled, with only 4% of waste ending up in landfills for Apparel suppliers and 14% for Footwear suppliers. ↗ T.30 FOOTWEAR E-KPI RESULTS (T1) Summary of supplier e-KPIs Weights Change Value Energy/pair (kWh) CO2/pair (kg) Water/pair (l) Waste/pair (g) 2021 1.41 0.68 2020 1.31 0.74 2019 1.30 0.96 2018 1.25 0.93 2017 2020-2021 2017-2021 1.40 1.00 8% 1% -8% -32% 11.95 15.08 15.21 12.30 14.50 -21% -18% 140.88 144.80 126.66 108.51 115.90 -3% 22% Number of Suppliers 21 21 21 21 Waste to landfills/pair (g) 19 24 -19% 122 Annual Report 2021 ↗ Sustainability ↗ T.31 APPAREL E-KPI RESULTS (T1) Summary of supplier e-KPIs Weights Change Value Energy/piece (kWh) CO2/piece (kg) Water/piece (l) 2021 0.55 0.20 4.23 2020 0.56 0.22 4.60 2019 0.57 0.24 4.39 2018 0.57 0.26 4.20 0.72 0.31 7.58 Waste/piece (g) 62.33 54.27 56.33 46.50 44.00 Waste to landfills/piece (g) 2.4 2.6 -24% -34% -44% 42% -1% -9% -8% 15% -9% 26 26 26 26 2017 2020-2021 2017-2021 Number of Suppliers Since 2017 we have also been measuring average environmental key performance indicators (E-KPIs) from textile and leather manufacturing. We have included our main material suppliers in our energy and water efficiency programs and other brands also have expanded their cleaner production programs to include our shared material suppliers. Some of the CO2 emissions reductions can be attributed to coal and oil for boilers being replaced with less polluting fuel sources such as biomass fuel. The CO2 emissions indicator for textile supply chain in 2021 when compared to 2017 is observed with a 3% increase, not in line with our expectations. This is mainly because of our textile strategy: 14 new core factories were added, for which we had not engaged in a cleaner production program. When we compare improvement in carbon efficiency like-for-like with the 19 suppliers which were core factories for PUMA in 2020 and 2021 we record a 7% reduction in their carbon footprints per unit of textile produced for PUMA in 2021. ↗ T.32 LEATHER E-KPI RESULTS (T2) Summary of supplier e-KPIs Weights Change Value 2021 2020 2019 2018 2017 2020-2021 2017-2021 Energy/m2 (kWh) CO2/m2 (kg) Water/m2 (l) Waste/m2 (kg) 6.5 1.9 60.9 0.5 7.0 2.7 68.3 0.7 8.2 3.2 74.7 0.8 8.7 3.2 90.2 0.8 9.1 3.4 -8% -29% -30% -44% 91.8 -11% -34% 1.6 -32% -70% Number of factories 6 6 6 6 ↗ T.33 TEXTILES E-KPI RESULTS (T2) Summary of supplier e-KPIs Weights Change Value 2021 2020 2019 2018 2017 2020-2021 2017-2021 Energy/t (kWh) 13,393.6 13,049.1 12,636.3 13,386.80 13,679.11 CO2/t (t) Water/t (m3) Waste/t (kg) 4.58 98.7 4.47 4.37 4.45 4.45 103.4 105.5 122.78 119.30 -4% -17% 121.38 78.9 62.08 70.63 299.59 54% -59% 3% 3% -2% 3% Number of factories 32 32 32 32 123 Annual Report 2021 ↗ Sustainability REPORTING IN ACCORDANCE WITH THE EU TAXONOMY REGULATION Taxonomy objectives The Taxonomy Regulation (EU) 2020/852 (in the following “Taxonomy”) entered into force on 22 June 2020. The purpose of this new regulation is to provide a definition of what constitutes a sustainable economic activity and to redirect capital flows into companies who are aligning their business models on such sustainable economic activities. The focus of the Taxonomy lies on 6 environmental objectives: • Climate change mitigation • Climate change adaptation • Sustainability and protection of water and marine resources • Pollution prevention and control • Protection and restoration of biodiversity and ecosystems • Transition to a circular economy The Taxonomy has identified eligible economic activities that substantially contribute to each of these environmental objectives. Linked to these eligible activities are technical screening criteria that define whether the activity is considered sustainable or not (aligned). The first two Delegated Acts on the climate objectives (climate change mitigation (Annex I) and climate change adaptation (Annex II)) (in the following “Climate Delegated Act”), was published in the Official Journal on December 9, 2021 and entered into force on January 1, 2022 ((EU) 2021/2139). Further delegated acts for the remaining objectives will be published in 2022. New disclosure requirements for non-financial undertakings According to Articles 2 Climate Delegated Act and 8 of the Taxonomy Directive EU2020/852 any undertaking subject to the Non-Financial Reporting Directive (NFRD) must provide information on “environmentally sustainable” revenues, investments (capital expenditure) and operating expenses (opex). According to Article 10 of the Climate Delegated Act of the Taxonomy Directive EU2020/852 from January 1, 2022 until December 31, 2022, non-financial undertakings shall only disclose the proportion of Taxonomy- eligible and Taxonomy non-eligible economic activities in their total turnover, capital and operational expenditure. Eligibility of activities implies that an activity is included in the Climate Delegated Act. Whether an activity is Taxonomy-eligible or not says nothing about the (un)sustainability of that activity. Being Taxonomy-eligible is merely an indication that a certain activity makes a substantial contribution to one of the six environmental objectives of the Taxonomy. Taxonomy-eligibility of PUMA’s sales in respect of climate change mitigation and climate change adaptation The technical screening criteria in Annex I and Annex II of the Delegated Regulation (EU) 2021/2139 as of June 4, 2021 for the first two environmental objectives, namely climate change mitigation and climate change adaptation, do not list any business activities that are linked to the production and sale of Footwear, Apparel and Accessories. This means that PUMA’s business activities related to sales are not included in the Climate Delegated Act. This is not surprising due to the fact that currently the EU has prioritized economic activities that can make the most relevant contribution to the two environmental objectives of climate adaptation and mitigation. Therefore PUMA’s business activities in this regard are not considered Taxonomy-eligible (so far). Eligible capital expenditure PUMA understands the Taxonomy and the Delegated Act to Article 8 of the Taxonomy Directive nonetheless require non-financial undertakings with Taxonomy non-eligible sales activities to report on the part of the capital expenditure related to the purchase of output from taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions. 124 Annual Report 2021 ↗ Sustainability In this regard PUMA reviewed the so-called cross-cutting activities that are not directly related to PUMA’s primary business activity and are not revenue-generating for PUMA, but still are relevant to support PUMA’s sustainability efforts. Taxonomy-eligible capital expenditure could be identified in regard to “Transport” and “Real Estate Activities”. In 2021 PUMA started operations in several newly rented buildings with high requirements on energy- efficiency, such as, for example: • Logistics center in Geiselwind, Germany • Office building in Strasbourg, France • Office building in Stockholm, Sweden • Office building in Boston, USA As part of PUMA’s 10FOR25 sustainability targets, PUMA is transitioning its car fleet to more sustainable transport vehicles. Therefore in 2021 PUMA invested in the lease of a number of low or zero emission vehicles. The total capital expenditure as defined by the taxonomy (IAS 16, 38 and IFRS 16) of the PUMA Group amounts to 449,445 TEUR for the financial year 2021. The eligible capital expenditure as definded by the taxonomy regarding “Transport” and “Real Estate Activities” amounts to 244,023 TEUR. Eligible operational expenditure PUMA understands the Taxonomy and the Delegated Act to Article 8 of the Taxonomy Directive including its Annexes to nonetheless require non-financial undertakings with Taxonomy non-eligible activities to report on the part of the operational expenditure related to the purchase of output from taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions. Due to the nature of our business model, which is the design, development, marketing and sale of Footwear, Apparel and Accessories, the eligible operational expenditure is not material in the context of the first two environmental objectives of the Taxonomy, therefore we report the numerator of our taxonomy eligible operational expenditure as zero. For the denominator, Article 2, Annex 1 Section 1.1.3.1. of the Climate Delegated Act requires reporting on the total operational expenditure derived from the categories “research and development, building renovation measures, short-term lease, maintenance and repair and any other direct expenditures related to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets”. The total operational expenditure from these categories amounts to 78 TEUR for the financial year 2021. Outlook PUMA expects that its business activities will be defined to contribute significantly to the “Transition to a circular economy” objective. Therefore we anticipate a more detailed Taxonomy reporting for 2022. 125 Annual Report 2021 ↗ Sustainability SUMMARY AND OUTLOOK With the start of the Forever Better platform, our sustainability journey accelerated further in 2021. While our strategy to move the most important materials of all our products to more sustainable sources continued, for example with nearly 100% (99.9%) LWG certified leather, we also launched some exciting sustainability focused collections in 2021. Our Exhale collection in collaboration with Cara Delevingne also uses recycled input materials. In addition, we also calculated the carbon footprint of the collection and offset all CO2e emissions, making the collection effectively carbon-neutral. Our Re.gen collection is inspired by the principles of circularity and maximizes the usage of recycled input materials and contains products made from recycled cotton, polyester and leather scraps. To expand on circularity, we started our Circular Lab and announced the RE:SUEDE, an experiment for a biodegradable version of our iconic suede sneaker. We also started working on garment-to-garment recycling and transformed 3 tons of unsellable garments into new fabrics using an innovative chemical recycling process. Our takeback scheme in Hong Kong continued, and together with a Swop Shop event, we collected 660kg of secondhand garments. Our Soles 4 Souls program in the USA was able to collect another 522kg of footwear. The expansion of our takeback scheme to Ecom was prepared laying the foundation for further expansions in line with our 10FOR25 target to have takeback schemes ready in all major markets by 2025. During the UN Climate Conference in Glasgow, our CEO Bjørn Gulden reiterated PUMA’s full support of the UN Fashion Charter for Climate Action and the ambitious new commitments set by this industry-led coalition under the umbrella of the UN Climate Secretariat. We live our climate commitment by using 100% renewable energy for our owned and operated offices, stores and warehouses worldwide, mainly through the purchase of renewable energy attribute certificates. In addition, we have also started to transition our car fleet to zero emission vehicles. As of December 2021, our fleet includes 24 electric vehicles and 7 hydrogen vehicles, which make up 15% of our cars used in our home country Germany. Globally, 108 cars in our fleet are already classified as low or zero emission cars. At the supply chain level, we continued and expanded our efforts to enroll more suppliers in cleaner production programs, feasibility studies to install rooftop solar panels and to phase out coal fired boilers, and engaged lifecycle experts from Sphera to calculate our supply chain emissions more precisely. To reduce CO2 emissions at material stage, we focused on increasing the usage of recycled polyester in all product divisions, 43% among polyester usage is recycled in 2021. To support our Human Rights goals, we commissioned a risk assessment on forced labor management in our supply chain and used the results to upgrade our due diligence process by implementing stricter standards. An important element of Human Rights is fair compensation. During 2021 our People and Organization Team (HR department) used the Living Wage Database provided by the Fair Wage Network to screen [and confirm] the payment of living wages for all PUMA staff globally. 126 Annual Report 2021 ↗ Sustainability At the supplier level we used the Fair Wage Benchmark tools of our long-term partner Fair Labor Association to assess the wage levels paid by our core suppliers in 7 major sourcing countries. While we see that our suppliers are paying above industry average in the countries, China, Cambodia, Turkey, Bangladesh and Vietnam, we also realized that in Bangladesh and Pakistan our manufacturing partners still need to improve wages. In terms of new regulations, 2021 saw the introduction of the EU Green Taxonomy Delegated Act. As part of the EU Green Deal, this regulation will enable investors to have clarity on the sustainability of their investment portfolios. For publicly listed companies like PUMA, this means the tracking and publishing of Taxonomy aligned sales, capital expenditure and operational expenditure. The first two topics targeted by the Taxonomy (Climate Change Mitigation and Adaptation) focus on major greenhouse gas emitting industries such as utilities, the car industry or heavy industries. The manufacturing and sale of Apparel and Footwear were excluded in this first round. Nevertheless, we screened our owned and operated buildings and car fleet for taxonomy eligibility and share first numbers in this report. We anticipate a more detailed reporting once the other taxonomy criteria, such as circularity, are published. Finally, we are happy to report that our long-term sustainability engagement continues to be recognized with an increasing number of awards and recognitions. Highlights during 2021 include our first ever A- rating from the Carbon Disclosure Project, a Triple A rating from MSCI, a leading rating agency for sustainability topics, our continued inclusion in the FTSE4Good and ISS Prime Rating, as well as our first inclusion in the Corporate Knights 100 most sustainable companies worldwide. We are well aware that our sustainability journey is ongoing, and much remains to be done to transition our company on the path towards being Forever Better. There is only one Forever. Let’s make it Better! 127 Annual Report 2021 ↗ Sustainability INDEX FOR 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 combined non-financial report consists of the chapter "Sustainability", the section "Culture" in the chapter "Our People" as well as the Corporate Governance Statement in the chapter “Group Essential Information”. The reporting period covered is January 1, 2021 to December 31, 2021. No restatements of information have been made in this report. We did recalculate the waste figures for PUMA in 2019 and 2020, which were corrected due to underreporting in those years. We have provided separate reports for PUMA SE and the PUMA Group within the “Our People” section only. Separate reporting of other sustainability data would not add any meaningful new information or value and would require significant 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. We have not identified any most significant non-financial performance indicators according to §289c, section 3, number 5 of the German Commercial Code (HGB). This combined sustainability report has undergone a voluntary “limited assurance” with focus on accordance with the German CSR Implementation Act (CSR-RUG) by Deloitte. Since 2003 PUMA’s sustainability reports are based on the guidelines of the Global Reporting Initiative (GRI), which developed detailed and widely recognized standards on sustainability reporting. This report has been prepared in accordance with the GRI Standards: Core option. This option enables us to report on the impacts related to our economic, environmental, social and governance performance. 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. 128 GENERAL DISCLOSURES ORGANIZATIONAL PROFILE 102-1 Name of the organization 102-2 Activities, brands, products and services 102-3 Location of headquarters 102-4 Location of operations 102-5 Ownership and legal form 102-6 Markets served 102-7 Scale of the organization 102-8 Information on employees and other workers 102-9 Supply chain 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 STRATEGY * 102-14 Statement from senior decision-maker 102-15 Key impacts, risks, and opportunities ETHICS AND INTEGRITY 102-16 Values, principles, standards and norms of behavior GOVERNANCE 102-18 Governance structure * CSR Directive Implementation Act: Index for Non-Financial Statement Annual Report 2021 ↗ Sustainability x x x x x x x x x x x x x x x x x CSR Directive Implementation* Page 150 150 150 156-157 150 167-169 158, 220 20, 22, 158 203-204 165-169 87 32-33 32-33 CSR Directive Implementation* Page 5-8 42-43, 75, 203-212 CSR Directive Implementation* CSR Directive Implementation* Page 52-53 Page 12 129 Annual Report 2021 ↗ Sustainability STAKEHOLDER ENGAGEMENT 102-21 Consulting stakeholders on economic, environmental and social topics x CSR Directive Implementation* 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 Important topics and concerns REPORTING PRACTICE 102-45 Entities included in the consolidated financial statements 102-46 Defining report content and topic boundaries 102-47 List of material topics 102-48 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 Contact point for questions regarding the report 102-54 Claims of reporting in accordance with the GRI Standards 102-55 GRI content index 102-56 External assurance * CSR Directive Implementation Act: Index for Non-Financial Statement x x x x x x x x x x x x x x x x x CSR Directive Implementation* Page 32 32-33 60-64 32-33 32-33 32-33 Page 229-234 34-35, 41 34-35 128 128 128 128 128 322 128 128-141 142-144 130 Annual Report 2021 ↗ Sustainability SPECIFIC STANDARD DISCLOSURES ENVIRONMENTAL TOPICS MANAGEMENT APPROACH Materials 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 301-1 Materials used by weight or volume x x x x CSR Directive Implementation* * CSR Directive Implementation Act: Index for Non-Financial Statement Page 111-112 111-112 111-112 111-115 Part omitted: Materials used by weight or volume Reason: Confidentiality constraints Explanation: The total materials’ weights are obtained to calculate the target progress. For confidentiality reasons, only the percentages reached are disclosed. 131 Annual Report 2021 ↗ Sustainability MANAGEMENT APPROACH Energy 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 302-3 Energy intensity * CSR Directive Implementation Act: Index for Non-Financial Statement CSR Directive Implementation* x x x x Page 71-72 71-72 71-72 79, 81-82, 84-85, 120 132 Annual Report 2021 ↗ Sustainability MANAGEMENT APPROACH Emissions CSR Directive Implementation* 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 305-1 Direct (Scope 1) GHG emissions 305-2 Energy indirect (Scope 2) GHG emissions 305-3 Other indirect (Scope 3) GHG emissions 305-4 GHG emissions intensity 305-5 Reduction of GHG emissions * CSR Directive Implementation Act: Index for Non-Financial Statement x x x x x x x x Page 71-72 71-72 71-72 79 79 81-86 79-86 79-86 133 Annual Report 2021 ↗ Sustainability SOCIAL TOPICS MANAGEMENT APPROACH Supplier Social Assessment 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 414-1 New suppliers that were screened using social criteria 414-2 Negative social impacts in the supply chain and actions taken x x x x x * CSR Directive Implementation Act: Index for Non-Financial Statement CSR Directive Implementation* Page 46 46 46 46, 54 54 134 Annual Report 2021 ↗ Sustainability MANAGEMENT APPROACH Freedom of Association and Collective Bargaining 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk * CSR Directive Implementation Act: Index for Non-Financial Statement x x x x CSR Directive Implementation* Page 46 46 46 57, 64 135 Annual Report 2021 ↗ Sustainability MANAGEMENT APPROACH Forced or Compulsory Labor 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor * CSR Directive Implementation Act: Index for Non-Financial Statement x x x x CSR Directive Implementation* Page 46 46 46 57, 64 136 Annual Report 2021 ↗ Sustainability MANAGEMENT APPROACH Human Rights Assessment 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 412-1 Operations that have been subject to Human Rights reviews or impact assessments * CSR Directive Implementation Act: Index for Non-Financial Statement CSR Directive Implementation* x x x x Page 46 46 46 53 137 Annual Report 2021 ↗ Sustainability MANAGEMENT APPROACH Occupational Health and Safety 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 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 for Non-Financial Statement x x x x CSR Directive Implementation* Page 22, 65 22, 65 22, 65 23, 66 138 MANAGEMENT APPROACH Diversity and Equal Opportunity 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 405-1 Diversity of governance bodies and employees * CSR Directive Implementation Act: Index for Non-Financial Statement Annual Report 2021 ↗ Sustainability CSR Directive Implementation* Page 18-20, 195-199 18-20, 195-199 18-20, 195-199 18-20, 195-199 139 Annual Report 2021 ↗ Sustainability ECONOMIC TOPICS MANAGEMENT APPROACH Anti-Corruption 103-1 Explanation of the material topic and its boundary 103-2 The management approach and its components 103-3 Evaluation of the management approach 205-2 Communication and training about anti-corruption policies and procedures x x x x * CSR Directive Implementation Act: Index for Non-Financial Statement CSR Directive Implementation* Page 191-192 191-192 191-192 191-192 140 MANAGEMENT APPROACH Tax 207-1 Approach to tax Annual Report 2021 ↗ Sustainability “WE PAY OUR FAIR SHARE“ is the core principle the PUMA Group is taking into consideration for its global tax strategy. In this regard, PUMA fully commits to act in accordance with all international tax regulations and to fulfill any tax obligations arising from its business activities. PUMA is not following artificial structures solely to save taxes with these. Of course, taxes play a role in business decisions to know what these are and so to do the right thing, however, tax consequences are not the relevant drivers for failing a final sign off on business strategies in this regard. It is key for PUMA to pay an appropriate portion of its pre-tax profit to tax administrations in the respective countries. Paying tax is accepted as a general business principle of PUMA. An effective tax rate of around 25% over recent years confirms this. As it is a general principle for PUMA to follow tax rules and to pay applicable taxes, taxes as such are not a material issue within the sustainability approach. Consequently, PUMA does not report in detail on the GRI Standard in this regard. 141 Annual Report 2021 ↗ Sustainability DELOITTE ASSURANCE STATEMENT LIMITED ASSURANCE REPORT OF THE INDEPENDENT PRACTITIONER REGARDING THE SEPARATE NON-FINANCIAL GROUP REPORT Translation – German version prevails To PUMA SE, Herzogenaurach Our Engagement We have performed a limited assurance engagement on the Separate Non-Financial Group Report of PUMA SE (hereinafter: “the Company”) in accordance with Section 315b German Commercial Code (HGB), which was combined with the Non-Financial Report of the parent company, PUMA SE, Herzogenaurach, in accordance with Section 289b German Commercial Code (HGB) for the period from January 1 to December 31, 2021 (hereinafter: “Combined Non-Financial Report”). This Combined Non-Financial Report consists of the chapter “Sustainability”, the section “Culture” in the chapter “Our People” and the sections “Compliance Management System” and “Corporate Social Responsibility” in the chapter “Corporate Governance Statement in accordance with Section 289f and Section 315d HGB” of the Annual Report 2020 of PUMA SE, Herzogenaurach. The external documentation sources, interviews or expert opinions mentioned in the non-financial reporting are not the subject of our audit. Responsibilities of the Executive Directors The executive directors of the Company are responsible for the preparation of the non-financial report in accordance with §§ 315c in conjunction with 289c to 289e German Commercial Code (HGB) and Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (hereafter referred to as “EU Taxonomy Regulation”) and the delegated acts adopted thereon, as well as with their own interpretation of the wording and terminology contained in the EU Taxonomy Regulation and the delegated acts adopted thereon, as is presented in section “EU-Taxonomy” of the consolidated non-financial report. The responsibility of the Company’s legal representatives includes the selection and application of appropriate methods for preparing the Combined Non-Financial Report as well as making assumptions and estimates related to individual non-financial disclosures, which are reasonable in the circumstances. In addition, the legal representatives are responsible for such internal control they have determined necessary to enable the preparation of the Combined Non-Financial Report that is free from material misstatements, whether intentional or unintentional. Some of the wording and terminology contained in the EU Taxonomy Regulation and the delegated acts adopted thereon are still subject to considerable interpretation uncertainty and have not yet been officially clarified. Therefore, the executive directors have laid down their own interpretation of the EU Taxonomy Regulation and of the delegated acts adopted thereon in section “EU-Taxonomy” of the consolidated non- financial report. They are responsible for the selection and reasonableness of this interpretation. As there is the inherent risk that indefinite legal concepts may allow for various interpretations, evaluating the legal conformity is prone to uncertainty. The accuracy and completeness of environmental data in the non-financial report is thus subject to inherent restrictions resulting from the way how the data was collected and calculated and from assumptions made. 142 Annual Report 2021 ↗ Sustainability Independence and Quality Assurance of the Firm We have complied with the German professional requirements on independence and other professional rules of conduct. Our firm applies the national statutory rules and professional announcements – particularly of the “Professional Charter for German Public Auditors and German Sworn Auditors” and of the IDW Quality Assurance Standard “Quality Assurance Requirements in Audit Practices” (IDW QS 1) promulgated by the Institut der Wirtschaftsprüfer (IDW) and does therefore maintain a comprehensive quality assurance system comprising documented regulations and measures in respect of compliance with professional rules of conduct, professional standards, as well as relevant statutory and other legal requirements. Responsibilities of the Practitioner Our responsibility is to express a conclusion on the non-financial report based on our work performed within our limited assurance engagement. We conducted our work in accordance with the International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other than Audits or Reviews of Historical Financial Information” (ISAE 3000 (Revised)), adopted by the IAASB. This Standard requires that we plan and perform the assurance engagement so that we can conclude with limited assurance whether matters have come to our attention to cause us to believe that the non-financial report of the Company has not been prepared, in all material respects, in accordance with §§ 315c in conjunction with 289c to 289e HGB and the EU Taxonomy Regulation and the delegated acts adopted thereon, as well as with the interpretation by the executive directors presented in section “EU-Taxonomy” of the consolidated non-financial report. The procedures performed in a limited assurance engagement are less in extent than for a reasonable assurance engagement; consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. The choice of assurance work is subject to the practitioner’s professional judgment. Within the scope of our limited assurance engagement, which was performed from January to April 2022, we conducted, amongst others, the following audit procedures and other activities: • Obtaining an understanding of the structure of the sustainability organization and of the stakeholder • engagement Interview of the legal representatives and relevant employees that participated in the preparation of the Combined Non-Financial Report about the process of preparation, the measures on hand and precautionary measures (system) for the preparation of the Combined Non-Financial Report as well as about the information within the Combined Non-Financial Report Identification of the risks of material misstatement within the Combined Non-Financial Report • • Analytical evaluation of selected disclosures within the Combined Non-Financial Report • Reconciliation of the disclosures within the Combined Non-Financial Report with the respective data within the consolidated financial statements as well as the management report • Evaluation of the presentation of the disclosures • Assessment of the process for identifying taxonomy-capable economic activities and the corresponding information in non-financial reporting. As the EU Taxonomy Regulation and the delegated acts adopted thereon contain indefinite legal concepts, it is necessary that the executive directors make an interpretation. The executive directors’ assessment of their interpretation’s legal conformity is prone to uncertainty, which, in this respect, is also true for our assurance engagement. 143 Annual Report 2021 ↗ Sustainability Practitioner’s Conclusion Based on the work performed and the evidence obtained, nothing has come to our attention that causes us to believe that the non-financial report of the company for the period from January 1, to December 31, 2021 has not been prepared, in material respects, in accordance with Sections. 315c in conjunction with 289c to 289e HGB and the EU Taxonomy Regulation and the delegated acts adopted thereon, as well as with the interpretation by the executive directors presented in section “EU-Taxonomy” of the consolidated non- financial report. We do not provide an audit opinion on the external sources of documentation, interviews or expert opinions mentioned in the non-financial reporting. Restriction of Use and Liability We would like to point out that the assurance engagement was carried out for the purposes of the company and the report is only intended to inform the company about the findings of the assurance engagement. Consequently, it may not be suitable for any purpose other than the above. The note is therefore not intended for third parties to make (financial) decisions based on it. Our responsibility is solely towards the company and is also limited according to the "General Terms and Conditions for Auditors and Auditing Firms" of January 1, 2017 of the Institut der Wirtschaftsprüfer in Deutschland e.V. However, we do not accept or assume liability to third parties. Our conclusion of the assurance engagement is not modified in this respect. Munich/Germany, April 26, 2022 Deloitte GmbH Wirtschaftsprüfungsgesellschaft Dr. Thomas Reitmayr German Public Auditor Sebastian Dingel 144 Annual Report 2021 ↗ Combined Management Report COMBINED MANAGEMENT REPORT OF PUMA SE FOR THE FINANCIAL YEAR 2021 146 Overview 2021 150 150 150 154 156 158 PUMA Group Essential Information Commercial Activities and Organizational Structure Targets and Strategy Product Development and Design Sourcing Employees 162 Management System 163 Information regarding the Non-Financial Report 164 Economic Report 164 165 167 170 General Economic Conditions Sales Regional Development Results of Operations 174 Dividends 175 Net Assets and Financial Position 179 182 Cash Flow Statement regarding the Business Development and the Overall Situation of the Group 183 Comments on the Financial Statements of PUMA SE in accordance with the German Commercial Code (HGB) 187 190 Information concerning takeovers Corporate Governance Statement in accordance with Section 289f and Section 315d HGB 200 Risk and Opportunity Report 213 Outlook Report Combined Management Report: This report combines the Management Report of the PUMA Group and the Management Report of PUMA SE. 145 Annual Report 2021 ↗ Combined Management Report OVERVIEW 2021 2021 was a year full of exceptional successes for PUMA’s athletes and teams and also an excellent year for PUMA’s business. However, the year was once again marked by the COVID-19 pandemic, which had different consequences in different countries around the world. This forced us to react quickly to lockdowns and restrictions, especially in our supply chain. We successfully continued our strategy of working together with all of our partners to manage the short-term challenges, such as store and factory closures, without hindering our mid-term momentum. Factories for footwear, apparel and accessories in the south of Vietnam, one of our most important sourcing countries, were closed because of strict local lockdown measures. Because of this, production was suspended for about 10 weeks, and this affected approximately 15% of our global sourcing volumes. We tried to minimize production delays as much as possible and, where feasible, we shifted production to other sourcing locations. Given the quick rollout of the vaccination program and increasing vaccination rates in Southern Vietnam, the factories gradually reopened starting at the end of September. Throughout the year, we prioritized the health and safety of our partners, customers and employees and we rolled out vaccination programs for our employees in countries where this was possible. This is how we achieved a vaccination rate above 90% at our headquarters in Herzogenaurach already by mid-July and followed up with booster vaccinations at the end of the year. In countries that were hit exceptionally hard by the pandemic, such as India, we also assisted employees and their families in getting access to medical care when necessary. For our efforts to provide an attractive workplace, we were named Top Employer Europe for the second time in a row. By partnering with some of the best athletes and teams in the world, we gain credibility as a sports brand and stay true to our roots in performance, which also boosts our brand heat. We expanded our PUMA family of ambassadors with several new signings in 2021. In Teamsport, we welcomed French national team players Raphaël Varane and Kingsley Coman as well as U.S. player Christian Pulisic. NHL All-Star Leon Draisaitl became the first NHL ice hockey player to join PUMA as a brand ambassador for training and fitness. In Basketball, we signed the most valuable player in the WNBA Breanna “Stewie” Stewart as well as French NBA guard Killian Hayes. PUMA athlete LaMelo Ball, who presented his first signature shoe this year, was voted Rookie of the Year in the NBA. The summer of 2021 was exceptional for our teams and athletes, who delivered world class performances on the track and on the pitches. Italy’s national football team, which is sponsored by PUMA, won the UEFA Euro 2020, which was held in 2021, and with Giovanni Di Lorenzo, Giorgio Chiellini, Harry Maguire, Kyle Walker and Jordan Pickford we had five players wearing PUMA’s latest football boots in the final. All four PUMA federations (Austria, Czech Republic, Italy and Switzerland) progressed to the knock-out stages and PUMA had three teams in the quarterfinals - more than any other sports brand. At the Tokyo Olympics, PUMA athletes won a total of 22 Gold, 24 Silver, and 20 Bronze medals. Norwegian hurdler Karsten Warholm entered the history books when he won gold and set a new 400m hurdles world record in what was described as the “Best Race in Track&Field History”. For his performance, Karsten was crowned World Athlete of the Year in December. Karsten wore PUMA’s new EvoSPEED Future FASTER+ spike, which was created together with Formula 1 team MERCEDES AMG PETRONAS. Other PUMA athletes who won a gold medal in Tokyo included Canadian Sprinter Andre De Grasse (200m), pole vaulter Armand “Mondo” Duplantis, Italian high jumper Gianmarco Tamberi and Jamaican hurdler Hansle Parchment (110m). U.S. runner Molly Seidel wore shoes with PUMA’s latest NITRO running technology, when she took 146 Annual Report 2021 ↗ Combined Management Report the bronze in the women’s marathon. At the Paralympic Games, PUMA’s athletes also showed a strong performance, as Cuban sprinter Omara Durand won 3 Gold medals and set a new world record. In football, our club teams also performed at the top of their game. Manchester City won the Premier League for the third time in four years and reached the Champions League final. In Germany, Borussia Dortmund won the DFB Cup and our Brazilian team Palmeiras won the Copa Libertadores twice in a row. We also signed additional top clubs including Fenerbahce Istanbul in Turkey or Shakhtar Donetsk in Ukraine. In Golf, PUMA player Bryson DeChambeau won the Arnold Palmer Invitational in March 2021, while in Motorsport, PUMA teams Mercedes AMG Petronas, Red Bull Racing Honda and Scuderia Ferrari secured the top three spots in the Formula 1 Constructors’ Championship. Red Bull driver Max Verstappen won the Drivers’ Championship. To celebrate his first title, PUMA gave him a special pair of golden Speedcat Pro shoes. As both the Olympic Games and Euro2020 were delayed by a year due to the pandemic, we sought to capture the spirit of our successful athletes in 2021 and celebrate optimism and self-believe with our ONLY SEE GREAT campaign. Inspired by cultural icon, entrepreneur and philanthropist Shawn “JAY-Z” Carter, PUMA ambassadors such as Boris Becker and Neymar Jr. told their story of how they achieved greatness in a series of media interviews and content on PUMA’s digital channels. In 2021, we made a big step towards establishing PUMA as a credible running brand by launching a completely new line-up of performance running shoes made with our new cushioning technology NITRO. The DEVIATE, DEVIATE ELITE, VELOCITY, LIBERATE, and ETERNITY received very positive reviews from runners and the media alike. The success of athletes such as Molly Seidel, Nils Voigt and Precious Machele added to the new products’ appeal. As part of our efforts to create a leading product offer for women, we launched our SHE MOVES US platform, which featured our top female brand ambassadors such as Dua Lipa, Cara Delevingne, Magdalena Eriksson and Jodie Williams to celebrate the women who have moved culture and sports forward and inspire other women around the world. The SHE MOVES US campaign also included a partnership with Women Win, an organization which organizes sports events for women and girls around the world, and founding PUMA’s own team in the W Series, the international motor racing series for female drivers. In 2021, PUMA North America and our international marketing organization moved into their new offices in the Boston suburb of Somerville, Massachusetts. The new building offers 150,000 square feet of flexible office space. In Germany, we opened our new logistics center in Geiselwind, which was ramped up gradually in the second half of the year. We also launched new PUMA.com online stores in the United Arab Emirates and Mexico. PUMA’s belief in the importance of local decision making was confirmed by the COVID-19 pandemic, which developed at a different pace across the world. That’s why PUMA gives its local management the tools to react quickly to changes in the markets they know best. PUMA’s reentry into basketball continued and helped us become a credible sports brand in the North American market. PUMA athlete LaMelo Ball, who won the NBA’s Rookie of the Year Award, created his first signature shoe with PUMA. We followed up on last year’s success of the RS-DREAMER Basketball sneaker, designed by J.Cole, with the RS-DREAMER 2. The Basketball business launched several successful collaborations this year such as with the Black Fives Foundation, cartoon series Rugrats or video game NBA 2K. Sustainability played an important part in our strategy in 2021. With our FOREVER BETTER communications platform, we educated consumers about our sustainability efforts. To signal a move towards a more circular business model, we announced the RE:SUEDE experiment. As part of this project, we developed an 147 Annual Report 2021 ↗ Combined Management Report experimental version of our most iconic sneaker, the SUEDE, to test whether we can make it biodegradable. As sustainability matters throughout our product range, we introduced a new shoebox design, which will save 2,800 tonnes of cardboard each year. We also became a partner of not-for-profit environmental organization Canopy and committed to protect forests around the world when sourcing paper, cardboard and viscose. As PUMA has grown strongly over the past years, we further strengthened our organization and expanded our Board of Management from three members to four by creating the new role of Chief Commercial Officer. Arne Freundt took on this new role on June 1 and he oversees Sales, including Retail & E- Commerce, and Logistics. Also, effective June 1, 2021, Hubert Hinterseher was named as the new Chief Financial Officer, taking over from Michael Lämmermann who retired after 28 years with the company. Hubert Hinterseher is responsible for Finance, Legal, IT and Business Solutions. Despite the negative impact of the COVID-19 pandemic, 2021 was an excellent financial year for PUMA. Our operational flexibility in dealing with a wide range of challenges contributed significantly to PUMA's strong sales development and financial performance in 2021. The year 2021 began with an all-time high of COVID- 19 cases worldwide and continuing restrictions on our operations in numerous markets. Furthermore, supply bottlenecks caused by container shortages and port congestion had a negative impact on product availability. In addition to the impact of the COVID-19 pandemic, difficult market conditions in some of our key markets also had a significant impact on our business. Despite these uncertainties, in the past financial year PUMA managed to exceed € 6 billion in sales for the first time in the company's history. Currency- adjusted sales increased by 31.7%. In the reporting currency, the euro, this corresponds to an increase in sales of 30.0% from € 5,234 million in the previous year to € 6,805 million in 2021. The strong growth in sales was achieved primarily as a result of sustained brand momentum, successful product launches with high sell-through rates, and a strong focus on flexibility in our operations. PUMA thus succeeded in surpassing its sales forecast of at least 25% currency-adjusted sales growth in financial year 2021, which had already been adjusted upward during the year. In addition to the strong sales growth, the improvement in the gross profit margin also significantly contributed to the increase in profitability in the financial year 2021. PUMA's gross profit margin increased by 90 basis points from 47.0% in the previous year to 47.9% in 2021. This was driven by better sell-through and less promotional activity. By contrast, exchange rate effects, regional and distribution channel mix effects, and cost increases for inbound freight had a negative impact on the gross profit margin development. Other operating income and expenses increased by a total of 20.3% in the 2021 financial year. The increase was mainly due to higher marketing expenses, an increase in the number of PUMA's own retail stores, and higher sales-related distribution and warehousing costs. In addition, PUMA continued to be faced with operational inefficiencies, particularly in the supply chain, due to COVID-19. The weaker increase in other operating income and expenses compared to sales growth reflects the operating leverage achieved. As a result of continued cost control, it was possible to achieve a significant reduction in the cost ratio from 43.3% in the previous year to 40.0% in 2021. This also contributed significantly to the improvement in profitability in the 2021 financial year. During the financial year under review, the operating result (EBIT) rose by 166.3% from € 209.2 million to € 557.1 million, thus exceeding the outlook, which had already been adjusted upward during the year to a range between € 450 million and € 500 million. Overall, the significant improvement in profitability in the 2021 financial year is attributable to the strong growth in sales combined with an improved gross profit margin and the operating leverage achieved. As a result, the EBIT margin increased from 4.0% in the previous year to 8.2% in 2021. The significant improvement in profitability is also reflected in the development of consolidated net earnings and earnings per share, both of which improved by more than 292% compared to the previous year. Consolidated net earnings increased from € 78.9 million in the previous year to € 309.6 million, while 148 Annual Report 2021 ↗ Combined Management Report earnings per share rose accordingly from € 0.53 in the previous year to € 2.07. As a result, PUMA was able to achieve or even outperform its financial targets in the past financial year. The positive net earnings enable the Management Board and the Supervisory Board to propose a dividend payout of € 0.72 per share for the financial year 2021 to the Annual General Meeting on May 11, 2022. This corresponds to a payout ratio of 34.8% of consolidated net earnings according to IFRS and is in accordance with PUMA's dividend policy, which foresees a payout ratio of 25% to 35% of consolidated net earnings. In the previous year, a dividend of € 0.16 per share was paid out (payout ratio for previous year: 30.3%). In the course of the expansion of the DAX from 30 to 40 members, PUMA's shares have been included in the stock market index of the largest companies on the German stock market since September 2021. After starting 2021 at a price of € 92.28, PUMA's share price fell to a low of € 80.42 at the end of January 2021. PUMA's share price then recovered significantly by the end of the year, rising to € 107.50 — an increase of 16.5% on the previous year. The market capitalization of the PUMA Group increased accordingly to around € 16.1 billion at year-end 2021 (previous year: € 13.8 billion). 149 Annual Report 2021 ↗ Combined Management Report PUMA 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 description can be found in the segment reporting in chapter 25 of the Notes to the Consolidated 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, 2021, 100 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 (in the subsection “Group of consolidated companies”). TARGETS AND STRATEGY PUMA has continued its brand mission to become the fastest sports brand in the world and continued to focus on its existing eight strategic priorities: create brand heat, develop product ranges that are right for the consumers, build a comprehensive offer for women, improve the quality of our distribution, increase the speed and efficiency of our organizational infrastructure, strengthen our positioning in the North American market by leveraging our re-entry into basketball and an even stronger focus on local relevance and sustainability. For more than 70 years, PUMA has created brand heat by working with the most famous and successful athletes in history: Usain Bolt, Sir 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 famous ambassadors. In football, we continue to work with star players such as Antoine Griezmann, Neymar Jr. and Nikita Parris, top football manager Pep Guardiola, world-leading federations such as the Italian National team and international top clubs such as Manchester City, Borussia Dortmund, Valencia CF, Olympique Marseille, AC Milan, and Palmeiras São Paulo. In 2021, we also added French national team players Raphaël Varane and Kingsley Coman as well as U.S. player Christian Pulisic to our roster of world- class assets, underlining our continued focus on the football category. In track & field, we have also established a strong line-up of world-leading athletes including Norwegian hurdler and world record holder Karsten Warholm, Canadian sprinter André De Grasse, Swedish pole vault world record holder Mondo Duplantis, American long-distance runner Molly Seidel and the Jamaican Olympic Federations who all stood out at this year’s Summer Olympics in Tokyo. In Motorsport, our Formula 1 teams Mercedes AMG Petronas, Red Bull Racing Honda and Scuderia Ferrari dominated yet another season. We continued to work closely with seven-time world champion and PUMA brand ambassador Sir Lewis Hamilton and established our own team in the W Series, the international single seater championship for female drivers only. In golf, we ensured continued brand heat through our long-term partnerships with iconic players such as Lexi Thompson, Rickie Fowler and Bryson DeChambeau. Teaming up with the best athletes, teams and federations is key in keeping the credibility and relevance of the PUMA brand at the highest levels. 150 Annual Report 2021 ↗ Combined Management Report To connect with young, trend-setting consumers, PUMA also drives brand heat by working with icons of culture and fashion such as Jay-Z, J. Cole, Cara Delevingne, Winnie Harlow and Dua Lipa. This has made PUMA one of the hottest sports brands for young consumers around the world. PUMA aims to design “cool stuff that works” and in 2021, we significantly improved our product offering across all our business units. In performance footwear, we keep on moving forward with our innovative PUMA ULTRA and FUTURE Z football boots as well as our running & training shoes featuring our proprietary NITRO cushioning technology. Our new lineup of running shoes offer an effortless run and received very positive reviews from runners and the media alike and featured prominently at this year’s Summer Olympics in Tokyo. In Sportstyle, we continued to see strong sell-through of our key footwear product families such as RS, RIDER, and CALI. The demand from our consumers for these product families was maintained through the launch of successful new models in 2021 and we also added a lot of newness with the introduction of styles such as the MAYZE or the MAYU. The Classics pillar of our business, with models such as the iconic PUMA SUEDE, also continued to perform strongly throughout the year. In apparel and accessories, we also saw a good development across all of our business units, with strong sell-through of our performance and Sportstyle products, including multiple successful collaborations with companies such as French-Japanese fashion label Maison Kitsuné or Chinese high-end designer brand PRONOUNCE. Our COBRA Golf and PUMA Golf business had another successful year with strong sales of our innovative COBRA Golf clubs as well as PUMA Golf Footwear, Apparel and Accessories. We also extended our golf club offering by introducing our first generation of putters, including our first 3D-printed putter. The women's category remains a key strategic priority for PUMA, manifested in our continued vision to be the most fashion forward sports brand. With increasing female sports participation worldwide and the combination of sportswear and fashion being more popular than ever, PUMA meets the female consumer with a comprehensive product offer across performance and Sportstyle, as well as inclusive product initiatives like extended sizing and maternity wear. The launch of our new women’s communications platform SHE MOVES US in March 2021, represents the evolved positioning of “PUMA owns the space where the gym meets the runway”. Our new SHE MOVES US communications platform, celebrates women who move together to achieve and connect – through sport, culture, and values. Led by global pop superstar Dua Lipa, PUMA has brought together its top female brand ambassadors to generate inspiring content over the course of 2021, such as talks, videos and interviews. By connecting its ambassadors with female consumers around the world, we created a global network, which sparks a conversation around issues important to girls and women. PUMA will continue to empower girls and young women through its partnership with Women Win, a global women’s fund which uses sport to advance gender equality from the bottom up. PUMA will continue to use its communications channels to spotlight the joint efforts to impact girls and women’s rights globally. An increased focus on women in sports will mark the year 2022. Together with our female ambassadors this has been identified as a key area for girls and young women to achieve health and prosper as individuals and team members. Our re-entry into basketball, with an approach that resonates well on and off the court, 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 developed a strong product offering across footwear, apparel and accessories over the past seasons that can be worn on and off the court. We also continued to partner with highly talented NBA players across several teams and signed additional players such as Killian Hayes. PUMA player LaMelo Ball was voted Rookie of the year in the NBA. In close collaboration with LaMelo Ball, we developed and launched the PUMA MB.01 – his first personal PUMA signature shoe. We also signed Breanna “Stewie” Stewart, the most valuable player in the WNBA, who will get her own signature shoe in 2022. In order to further strengthen our position in women’s basketball, we created and launched our first women’s basketball collection in close collaboration with stylist and designer June Ambrose, who joined PUMA as a creative director in 2020. Our basketball business continues to grow beyond the key North 151 Annual Report 2021 ↗ Combined Management Report American market, and we onboarded national teams like the Russian and Turkish basketball federations and the Israeli double holder Maccabi Tel Aviv. Our basketball inspired Sportstyle products, such as the PUMA CLYDE and RALPH SAMPSON, continued to resonate well with our consumers. While basketball is especially important for North America, we also focused on ensuring strong local relevance in all our other markets worldwide. As the PUMA brand and products continue to resonate very well around the world, we see an increased need to focus on the trends, sports, ambassadors, collaboration partners and communication platforms that are most relevant in the different markets. Therefore, we further strengthened our regional creation centers, which are located in important markets such as the US, Europe, China, India, and Japan and create locally relevant products. In parallel, we increased our local- for-local sourcing setup in key markets such as China to react faster to changes in local consumer preferences. We also continued to strengthen our position in several locally relevant sports such as cricket, handball, netball, rugby, or Australian rules football. Over the years, we have established a strong portfolio of locally relevant brand ambassadors and influencers such as Pamela Reif in Germany, Virat Kohli in India or Danna Paola in Mexico, who complement our roster of top global ambassadors. The COVID-19 pandemic, which impacted our markets very differently in the course of 2021, has confirmed PUMA’s belief to empower our local teams and give them the freedom and tools to react quickly to changes in the markets they know best. PUMA improved the quality of its distribution and expanded its presence in leading sports performance and Sportstyle accounts around the world. We continued to strengthen the relationships with our retailers by being a flexible and service-oriented business partner. At a time of limited product supply due to COVID-19- related lockdowns in key sourcing countries, we prioritized our retailers and worked very closely together with them to improve the sell-through of our products and gain more shelf space in their stores. In parallel, we also continued to invest in our direct-to-consumer business, which includes our owned-and-operated retail stores as well as our e-commerce business. Our e-commerce business continued to grow by double- digits and we invested in our respective front-end and back-end capabilities. We continued to improve the user experience and product offering of our existing e-commerce channels and launched new e-commerce sites in important markets such as Mexico, Argentina, and the United Arab Emirates. We also developed our first-ever PUMA shopping app, which we will launch in pilot markets in early 2022 and we increased our investments in performance marketing to drive traffic and conversion across all our e-commerce channels. Furthermore, PUMA continued to upgrade its owned-and-operated retail store network and opened selective new Full-Price Stores and Factory Outlet Centers around the world, as consumer traffic and demand rebounded and stores re-opened after COVID-19-related lockdowns. Operationally, we continued to improve the infrastructure, processes and systems that are required to support our overall growth ambition for the upcoming years. In 2021, a strong focus was put on expanding our logistics network in key markets. We successfully opened our highly automated multi-channel distribution center in Geiselwind, Germany. New state-of-the-art distribution centers like the one in Geiselwind provide us with the required back-end infrastructure to support our future growth in the Wholesale and Direct-to-Consumer channels. Our teams in the Unites States moved into a new headquarter in Somerville, MA and we inaugurated new modern offices in several countries such as France and Sweden. Moreover, we continued to focus on further developing our ERP systems and enhancing our product development tools. This, combined with improvements of the overall IT infrastructure, enabled faster and better communication and information exchange with internal and external stakeholders. Due to continued travel restrictions related to the COVID-19 pandemic, we also invested in additional digital capabilities along the go-to-market process, from virtual product development to virtual sell-in meetings. The long-term collaboration with our valued suppliers remains the key component of our sourcing strategy. It ensures a stable sourcing base, consistent quality of our products and prepares us for future growth and changes in the trading environment. The strong collaboration with our suppliers, who are mainly based in Asia, has helped us during the COVID-19 pandemic and has contributed to a very resilient supply chain 152 Annual Report 2021 ↗ Combined Management Report situation throughout the year, despite several lockdowns in key sourcing countries such as Vietnam and Bangladesh. Sustainability remains one of our strategic priorities and we continue to fully integrate sustainable practices into every aspect of our business with a special focus on increasing the number of sustainable products in our ranges and stronger consumer-facing communication. In 2021, we continued to build on our FOREVER BETTER communication platform, which serves as the overarching umbrella for all consumer- facing communication on sustainability. All of our sustainability efforts are connected and are measured against our 10FOR25 targets, which are aligned with the United Nations’ Sustainable Development Goals and outline our ambitious objectives until the year 2025. One of these ambitious targets is to increase the share of products with more sustainable materials from 5 out of 10 products in 2020 to 9 out of 10 products in 2025. In order to reach these targets, we successfully launched several more sustainable collections such as PUMA x FIRST MILE with products made from recycled polyester, the EXHALE yoga collection co- created with Cara Delevingne, which uses recycled polyester, natural dyes, and offsets unavoidable carbon emissions and the RE.GEN collection, which is made from regenerated materials from our own industry waste. Other highlights include our new BETTER FOAM in footwear, a material partly made from sugarcane. In 2021, PUMA committed to protecting forests around the world when sourcing paper, cardboard, and viscose, as part of its new partnership with not-for-profit environmental organization Canopy. We continued our leading role at the Fashion Charter for Climate Action, which at the climate conference COP26 in Glasgow announced more ambitious climate action, to limit the global temperature rise to 1.5 degrees Celsius above pre-industrial levels. PUMA worked with other key stakeholders on all levels to promote more sustainable business practices in our industry. In relation to human rights, we took the necessary actions to safeguard our suppliers and workers during the COVID-19 pandemic by honoring all of our purchasing commitments. We also ensured that all workplace safety and legal standards were met through our long-standing social compliance program. 153 Annual Report 2021 ↗ Combined Management Report PRODUCT DEVELOPMENT AND DESIGN At PUMA, we have a history of more than 70 years of moving sports and culture forward. Our archive offers a vast database from which our designers can draw inspiration when they create new styles. In 2021, one example of how we blend the new and the old came in the shape of the MAYZE, our newest franchise, which is selling very well. Presented by pop superstar Dua Lipa, the MAYZE is ready to become the next PUMA classic and was launched in several colors and executions throughout the year, such as the MAYZE Classic and the MAYZE Chelsea, a twist on the classic Chelsea Boot. We continued with our successful women’s franchise CALI and added a men’s model, the CA Pro. The RS franchise resonated well with consumers, with new versions of the RS-X and the RS-Z. Our classics such as the PUMA SUEDE performed well in 2021, especially in North America, and we successfully re-introduced the SUEDE in kids’ sizes. The SUEDE also played a major role in our collaboration with Brooklyn-based artist collective KIDSUPER STUDIOS. KIDSUPER won the prestigious Lagerfeld Prize, which is awarded to up-and-coming talents in the fashion industry. Other successful collaborations in 2021 included a collection with London-based female fashion brand Liberty, which combined the brand’s iconic floral prints with PUMA’s most recognizable footwear styles. We also teamed up with Australian skater brand Butter Goods for a 1990s-inspired collection, which featured high-quality materials and classic silhouettes, combined with sports-inspired graphics. In 2021, we overhauled our line-up of running products and introduced our proprietary NITRO foam, following years of research and testing. Our new running range also included products specifically engineered for female runners, based on a brand-new last which was optimized for the female foot. The success of our athletes, such as US marathon runner Molly Seidel, underscored the performance of these products. Together with Formula 1 team MERCEDES AMG PETRONAS, PUMA designed its fastest, lightest and most propulsive track & field spike ever as part of the FASTER+ program. The EvoSPEED Future FASTER+ spike was worn by Norwegian hurdler Karsten Warholm when he won the Gold medal and set a new 400m hurdles world record. Canadian sprinter Andre De Grasse wore the EVOSPEED TOKYO FUTURE NITRO FASTER+ when he took the Gold medal in the 200m race. Technological advances from the FASTER+ program were also passed down and integrated into other track and field spikes. In Teamsport, the innovative FUTURE franchise continued in 2021 with the new FUTURE Z, which was launched in January. In June, we designed a special version of the FUTURE for our ambassador Neymar Jr. ahead of the Copa America. In July, PUMA showed its commitment to women’s football by launching its ULTRA boots for the first time in both a Unisex and Women-specific fit, as part of its FASTER FOOTBALL campaign. Together with Neymar Jr., PUMA launched several Teamsport products throughout the year, including his first ever lifestyle collection. PUMA also introduced ULTRAWEAVE, a completely new performance apparel technology, which allowed us to create our lightest-ever football jersey. In Golf, lifestyle-inspired golf apparel and footwear such as the GRYLBL, Arnold Palmer and Excellent Golfwear collections as well as the RS-G and Fasten8 shoes performed well. Additionally, collaborations with Kygo’s Palm Tree Crew created brand heat for PUMA Golf. For COBRA Golf, the RADSPEED family was a commercial success, which also resonated well with the media. COBRA also launched two new putter families, the KING Vintage Series and the KING 3D Printed Series. 154 Annual Report 2021 ↗ Combined Management Report Our Motorsport offering for the first time included footwear co-created with our long-term partner Scuderia Ferrari. This marks the start of a new strategy for PUMA and Ferrari to enter the high-fashion segment. Our successful SPEEDCAT low-profile franchise was expanded this year with the introduction of the SPEEDCAT LS. Together with Red Bull Racing Honda driver Max Verstappen, we created a special edition of the SPEEDCAT PRO, which celebrated the return of Formula 1 to the Netherlands. We also introduced several collections with a sustainability focus. Our RE.GEN collection was made with PUMA’s own industry waste and other recycled materials. Together with model, actress and activist Cara Delevingne, PUMA also created EXHALE, a yoga collection, which was made of at least 70% recycled polyester and for which PUMA offset all unavoidable CO2 emissions. Research and product development at PUMA mainly comprise the areas of innovation (new technologies), product design and model and collection development. The research and product development activities range from the analysis of scientific studies and customer surveys through the generation of creative ideas to the implementation of innovations in commercial products. The activities in research and product development are directly linked to sourcing activities. As of December 31, 2021, a total of 1,136 people were employed in research and development/ product management (previous year: 1,049). In 2021, research and development/ product management expenses totaled € 114.5 million (previous year: € 102.6 million), of which € 61.7 million (previous year: € 56.6 million) related to research and development. 155 Annual Report 2021 ↗ Combined Management Report SOURCING 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 forecasts from PUMA subsidiaries and licensees worldwide, translates these forecasts 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 vendors. 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 collaboration, product, quality, growth management, margins and landed cost, and sustainability. The centralization of sourcing and procurement allows for continuous improvements in all of these areas. Furthermore, the integration of the PUMA sustainability function (social, environmental and chemical) into PGS, ensures these focus areas are part of our day-to- day business. Another key aspect in our sourcing setup since 2016 has been the PUMA Vendor Financing Program. The program allows vendors to be paid earlier and is based on PUMA’s credit rating. The International Finance Corporation (IFC), banking group BNP Paribas and HSBC as well as Standard Chartered offer attractive financing terms to our suppliers, which are able to maintain their own lines of credit. The year 2021 saw the resumption of demand in our key markets after extended lockdowns in Europe, America and other parts of the world in 2020. As a result, our focus shifted to building capacity across our supply base in all product divisions. Starting from the second quarter of this year, we started to experience significant challenges on the supply side due to regional COVID-19 related lockdowns. Bangladesh and certain parts of China were exposed to temporary production disruptions. More notably, South Vietnam suffered from a twelve-week extended lockdown resulting in office restrictions, manufacturing closures and curfews. During this time our suppliers had to keep factories closed or could only operate at reduced capacity. We immediately focused on supporting our suppliers during this time, while health and safety of the employees was our top priority. To mitigate capacity constrains in South Vietnam, we rebalanced production allocation to other areas such as China, Cambodia and North Vietnam; this also applied for products still in development and sampling stage. At the same time, we prioritized our orders in alignment with the sales subsidiaries. Once the lockdown situation started to ease, we shifted our efforts to tracking and restoring capacities with our partners. 156 Annual Report 2021 ↗ Combined Management Report THE SOURCING MARKETS During the financial year 2021, PIT purchased from 134 independent suppliers (previous year: 139) in 27 countries worldwide. The strategic cooperation with long-term partners did not only remain to be one of the key competitive advantages, but it was also crucial in navigating through the supply chain challenges of 2021. Asia remains the strongest sourcing region overall with 95% of the total volume, followed by the Americas with 3% and EMEA with 2% (thereof Europe with 1% and Africa with 1%). As a result, the six most important sourcing countries (93% of the total volume) are all located on the Asian continent. Vietnam remained to be the strongest production country with a total of 32%. Due to lock downs during the third quarter Vietnam saw a minor decrease of global production share by three percentage points compared to last year. Mainly China compensated for the situation in Vietnam and increased its share by three percentage points to 29%. Bangladesh, with a focus on apparel, was in third place at 14% and Cambodia was in fourth place at 13%. Indonesia, which focuses on footwear production, produced 4% of the total volume and was in fifth place. India was in sixth place at 2%. Rising wage costs, fluctuating material prices and macroeconomic developments, have continued to influence sourcing markets in 2021. Such impacts need to be taken into account in allocating the production to ensure a secure, sustainable and competitive sourcing of products. In this regard sourcing has extended its local supply chain initiatives for markets such as China, India, Latin America, Turkey and others. ↗ G.01 SOURCING REGIONS OF PUMA (in %) 157 Annual Report 2021 ↗ Combined Management Report EMPLOYEES NUMBER OF EMPLOYEES The global number of employees on a yearly average was 14,846 in 2021, compared to 13,016 in the previous year. Personnel expenses increased by a total of 22.0% from € 583.7 million to € 712.4 million in 2021. On average, personnel expenses per employee amounted to € 48.0 thousand, compared to € 44.8 thousand in the previous year. ↗ G.02 DEVELOPMENT EMPLOYEES (annual average / year-end) As of December 31, 2021, the number of employees was 16,125, compared to 14,374 in the previous year. This corresponds to an overall increase in the number of employees of 12.2% compared to the previous year. The development in the number of employees per area is as follows: ↗ G.03 EMPLOYEES (Year-end) 158 Annual Report 2021 ↗ Combined Management Report TALENT RECRUITMENT AND DEVELOPMENT The global COVID-19 pandemic continued to influence our business operations in 2021, in particular in the various phases that in some cases saw governments worldwide take extensive measures to restrict contact. As mobile working and virtual collaboration were already common practice at PUMA, we were able to respond with maximum flexibility in terms of where and when our employees did their work. To adapt to these new circumstances, we have increased the flexibility of our regular working time models and have developed hybrid concepts for all training courses that were previously classroom-based. We have continued to place particular emphasis on creating a safe working environment and avoiding financial cuts for our employees. Their high level of commitment has meant that we have been able to continue our business operations as smoothly as possible, and we feel well prepared for our further growth path. To ensure our competitiveness in an increasingly complex environment and to promote growth, it is essential that we have highly qualified and motivated personnel whom we can retain for the long term at our Group companies. To attract external candidates, in addition to our careers website we use digital platforms and social media for our target-group-specific, individual, and proactive recruiting measures. Having a range of initiatives at universities gives us the opportunity to approach potential employees and identify suitable candidates. Extensive networks of qualified applicants and 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 potential employees are of critical importance. PUMA's attractiveness is evidenced by its top rankings as an employer and numerous awards. We are very proud of the fact that in 2021, a total of sixteen PUMA subsidiaries around the world received a coveted Top Employer Award, which honors our outstanding corporate culture and working environment. In 2021, the focus was again on simplifying, accelerating, and harmonizing business processes worldwide, as well as on further digitalization. Since 2017, we have been using the "Workday" software solution for a variety of human resources processes. This software provides employees and managers with the processes and tools required for daily human resources management. In addition, easy-to-use dashboards provide managers with the information and data-driven insights they need for planning and management. The analysis of our centrally available global data provides a solid basis for strategic decisions and measurable results. Digital signatures and chatbots contributed to the further digitalization and optimization of key processes worldwide. Our aim is to nurture our employees both on an individual basis and in an international environment while successfully retaining them at PUMA for the long term. Based on the Workday software, a systematic succession plan is created as part of talent management in addition to performance assessment and target-setting. We identify the talent available within the Group as part of annual performance reviews and global talent conferences and foster talent development based on individual development plans. This type of talent management means that we can offer our employees attractive career and development opportunities. In this reporting year, we continued to fill the majority of our key positions through internal promotions or horizontal moves around the world. This strengthens our talent and development strategy. In order to be successful in the long term, it is essential that our workforce has the necessary skills to ensure continuous growth and market competence, especially in times of extensive change. We guarantee this by means of the ongoing and systematic professional and personal development of our employees. Workday helps us to avoid skills gaps and gain transparency about the skills available in the workforce. The range of training that we provide includes a number of online and offline training courses and workshops, which are either standardized or tailored to individual needs. In 2021, we expanded this offering. With "LinkedIn Learning" and "Good Habitz," there are now almost 18,000 different training courses available for our employees. A wide range of learning categories are available for self-directed personal and professional development. Furthermore, learning content covering topics such as mental 159 Annual Report 2021 ↗ Combined Management Report well-being, resilience, mindfulness, and emotional stability in particular helped us as an employer to provide the best possible support to our employees around the world in the exceptional situation caused by the COVID-19 pandemic. We want to expand the use of agile working methods even further and therefore offer Digital Agile Coach programs for different target groups. With a range of apprenticeships and dual-study programs, as well as study-related internships, we offer adequate entry-level and development opportunities for talented individuals at all levels. We offer our managers numerous training and development opportunities. All managers worldwide complete our internal global leadership training program, consisting of the ILP ("International Leadership Program") and ILP². The program helps participants to develop over a long period of time and includes intensive training and coaching units—including interactive learning, role plays, and best practice learning—as well as joint projects. The digitalization and the changing work environment have posed new challenges for managers in particular. The key topics are therefore coaching, mindful leadership, and agile working methods. In 2021, we also introduced a new training program: the PUMA Leadership Expedition, which aims to empower our managers to lead effectively in the VUCA world (VUCA is an acronym for volatile, uncertain, complex, and ambivalent). The program is completely virtual, easily accessible, and designed as a self-directed and tailor-made learning format. It includes self-selected virtual training sessions with a trainer, regular communication with other international participants in smaller working groups, and coached sessions, as well as individual learning sprints and check-ins with the trainers. Our training from employee to manager is intended to prepare employees who are taking on a management position for the first time specifically for their new role. In addition to the training module, the program also offers individual coaching. Our personnel development programs "Speed Up" and "Speed Up²" target employees at different hierarchal levels. Various groups consisting of top talent receive intensive preparation for the next step in their careers by taking on interdisciplinary projects and tasks, targeted training courses, mentoring and coaching, as well as job rotations. Increased visibility to upper management, the creation of cross- functional collaborations and establishing a strong network are also important components of this program. Feedback from our employees is very important to us. This is why, in addition to regular pulse checks, we conduct global surveys every two years. In 2021, 12,875 employees participated in our employee survey and took the opportunity to share their opinions about their workplace and professional life. This equates to a participation rate of 86% (2019: 85%). Despite the difficult circumstances caused by the COVID-19 pandemic, we have achieved higher approval levels in all categories. We are particularly proud that our 92% (2019: 91%) employee engagement rate has increased once again, which is a testimony to the high level of our employees' commitment and loyalty to the PUMA brand. These results encourage us to continue and further strengthen the measures that have been implemented. The results of the survey were communicated at global, local, and departmental level and any follow-up measures were defined. WORKS COUNCIL The trust-based and constructive collaboration with the Works Councils is an important part of our corporate culture. In 2021, the European Works Council of PUMA SE represented employees from 13 European countries and had 16 members. The German Works Council of PUMA SE was made up of 15 members and represents the employees of the PUMA Group in Germany. A designated member of the Works Councils in Germany represents the interests of employees with disabilities. 160 Annual Report 2021 ↗ Combined Management Report COMPENSATION We at PUMA offer our employees a targeted and competitive compensation system, which consists of several components. In addition to a fixed base salary, the PUMA bonus system, profit-sharing programs, and various social benefits form part of an attractive and performance-based compensation system. In addition, we offer our employees comprehensive services in the areas of further development, employee motivation, health management, and wellbeing. 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. 161 Annual Report 2021 ↗ Combined Management Report MANAGEMENT SYSTEM We use a variety of indicators to manage our performance in relation to our top corporate goals. We have defined growth and profitability as key targets within finance-related areas. Our focus therefore is on improving sales and operating result (EBIT). These are the financial control parameters that are of particular significance. Moreover, we aim to minimize working capital and improve free cash flow. Our Group’s Planning and Management System has 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. Changes in net sales are also influenced by currency exchange effects. 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 are used for comparison purposes and are based on the values that would arise if the foreign currencies included in the consolidated financial statements were not translated at the average rates for the previous reporting 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 regarded as additional information. We use the indicator free cash flow 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 free cash flow before acquisitions, which goes beyond free cash flow and includes an adjustment for incoming and outgoing payments that are associated with shareholdings. We use the indicator working capital in order to assess the financial position. 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 at PUMA. The calculation of the key financial control parameters that PUMA uses is 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 recognized as expenses during the reporting period. PUMA’s operating result (EBIT) is the sum of net sales and royalty and commission 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 taxes. The financial result includes interest income and interest expenses as well as currency conversion differences. The EBIT margin is calculated as EBIT divided by net sales. 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 attributable to working capital. Current financial and lease liabilities are also not part of working capital. We also use the EBITDA indicator, which represents the operating result before interest (= financial result), taxes and depreciation and amortization, to assess the results of operations. EBITDA is calculated based on the operating result (EBIT) adding depreciation and amortization, which may also contain any incurred 162 Annual Report 2021 ↗ Combined Management Report impairment expenses relating to fixed assets and financial assets. The EBITDA margin is calculated as EBITDA divided by net sales. INFORMATION REGARDING THE NON-FINANCIAL REPORT In accordance with Sections 289b and 315b of the German Commercial Code (Handelsgesetzbuch - 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-financial report external to the Combined Management Report, in which we report on environmental, social and other non-financial aspects. PUMA has been publishing Sustainability Reports since 2003 under the provisions of the Global Reporting 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 2021 will be available by April 30, 2022, at the latest on the following page of our website: https://about.PUMA.com/en/investor-relations/financial- reports Furthermore, important sustainability information can always be found in the Sustainability section of PUMA’s website: https://about.puma.com/en/forever-better 163 Annual Report 2021 ↗ Combined Management Report ECONOMIC REPORT GENERAL ECONOMIC CONDITIONS GLOBAL ECONOMY According to the winter forecast published by the Kiel Institute for the World Economy (IfW Kiel) on December 15, 2021, the global economic recovery has lost momentum since the middle of the year. In many parts of the world, renewed increases in the number of COVID-19 cases inhibited economic activity, supply bottlenecks hampered the upturn in industrial production, and growth in the Chinese economy appears to have slowed. Following the drastic economic slump caused by the COVID-19 pandemic in the previous year, experts at IfW Kiel expect global gross domestic product (GDP) to increase by 5.7% overall in 2021. Global industrial production recovered swiftly from the severe slump at the start of the pandemic and had already returned to pre-crisis levels by the fall of 2020. However, supply bottlenecks and capacity issues in logistics, especially in maritime transport, have played a more prominent role in slowing down global trade and industrial production since mid-2021. In terms of fiscal policy, economic development in developed economies—and to a lesser extent in many emerging economies—continued to be supported for the time being, and extensive additional spending and tax deferral approaches were adopted to mitigate the economic impact of the pandemic. SPORTING GOODS INDUSTRY 2021 was a challenging year for the sporting goods industry, with a variety of operational issues needing to be addressed. For example, the problematic situation in the freight sector throughout the year, with high freight rates, insufficient capacity and congested ports, as well as production downtime due to a COVID-19 lockdown in South Vietnam in the third quarter, contributed to limited product availability. Despite this, in 2021, the sporting goods industry recovered from the shock caused by the COVID-19 pandemic in the previous year and was able to build on the growth of previous financial years once again. The resumption of amateur and professional sporting events and the staging of major sporting events in 2021, such as the European Football Championships and the Summer Olympics in Tokyo, had a positive impact on the sporting goods industry. Moreover, as a result of the COVID-19 pandemic, more sporting activity and an increasingly healthy and sustainable lifestyle, continued to gain in importance for an ever- increasing proportion of the world's population. Among other things, this resulted in the increased popularity of athletic footwear and leisure/athletic apparel as an integral part of everyday fashion ("athleisure"). 164 Annual Report 2021 ↗ Combined Management Report SALES ILLUSTRATION OF SALES DEVELOPMENT IN 2021 COMPARED TO THE OUTLOOK In the 2020 Combined Management Report, PUMA had forecasted at least a moderate currency-adjusted increase in sales for the financial year 2021, due to the negative impact of the COVID-19 pandemic. This outlook was increased several times during the year and, at the end of the third quarter, PUMA anticipated a currency-adjusted increase in sales of at least 25% for the financial year 2021. Thanks to continued brand momentum, successful product launches and a strong focus on flexibility in business operations, PUMA was able to outperform the adjusted outlook for the full-year 2021, significantly exceeding the original sales target. More details on sales development in the financial year 2021 are provided below. SALES PUMA's net sales in the reporting currency, the euro, increased by 30.0% to € 6,805.4 million in the financial year 2021 (previous year: € 5,234.4 million). Adjusted for currency exchange effects, sales increased by 31.7%. PUMA thus succeeded in continuing the sales growth of previous financial years after a decline in sales in 2020 caused by the COVID-19 pandemic. All regions and all product divisions contributed to this development in 2021 with double-digit growth rates. ↗ G.04 SALES (in € million) In the Footwear division, sales in the reporting currency, the euro, rose by 33.6% to € 3,163.6 million. Currency-adjusted sales increased by 36.0%. The strongest growth was achieved in the Sportstyle and Running & Training categories. The share of the Footwear division in total net sales rose from 45.2% in the previous year to 46.5% in 2021. Sales in the Apparel division in the reporting currency, the euro, increased by 27.5% to € 2,517.3 million. Currency-adjusted sales grew by 28.6%. The Sportstyle category was the main driver of sales growth. The Running & Training and Teamsport categories also contributed to this growth. The share of the Apparel division decreased slightly to 37.0% of Group sales (previous year: 37.7%). The Accessories division recorded a 26.0% growth in sales in the reporting currency, the euro, to € 1,124.5 million, equivalent to currency-adjusted sales growth of 27.2%. The growth in sales was in particular driven by higher sales of socks and bodywear and of Cobra golf clubs. The division's share of Group sales fell from 17.1% in the previous year to 16.5% in 2021. 165 Annual Report 2021 ↗ Combined Management Report ↗ G.05 SALES BY PRODUCT DIVISIONS (€ million) RETAIL BUSINESSES PUMA's own retail activities include direct sales to our consumers ("Direct-to-Consumer business"). This includes selling to our customers in PUMA's own retail stores, the so-called "Full Price Stores" and "Factory Outlets." Our e-commerce business on our own online platforms and on the platforms of online retailers, which we refer to as "marketplaces," is also part of the direct sales to our consumers. Our own retail businesses ensure regional availability of PUMA products and the presentation of the PUMA brand in an environment suitable to our brand positioning. PUMA's retail sales increased by 22.8% currency-adjusted to € 1,724.8 million in the financial year 2021. This corresponds to a share of 25.3% in total sales (previous year: 27.2%). Sales in PUMA's own retail stores recorded a currency-adjusted increase of 30.3% in 2021 following the temporary closure of stores in numerous countries around the world due to restrictions to mitigate the COVID-19 pandemic in the previous year. In contrast, there were only isolated retail store closures in 2021. In the e-commerce business, currency-adjusted sales increased by 11.3% in 2021, following extremely strong sales growth of over 60% in the previous year. This development in 2021 reflects the fact that consumers still value the shopping experience in retail stores, following a shift in consumer shopping behavior towards increased online shopping in the previous year. Notwithstanding, our e-commerce activities were particularly successful on special days in the online business, such as Singles' Day in China on November 11, the world's largest online shopping day, as well as on Black Friday on November 26 and Cyber Monday on November 29. 166 Annual Report 2021 ↗ Combined Management Report ↗ G.06 RETAIL SALES LICENSING BUSINESS PUMA grants licenses to independent partners for various product divisions, such as watches, glasses, safety shoes and gaming accessories such as the Playseat. In addition to design, development and manufacture, these companies are also responsible for product distribution. Income from license agreements also includes some distribution licenses for different markets. After PUMA's royalty and commission income fell in the previous year due to the COVID-19 pandemic, the 2021 financial year saw a 48.2% increase in royalty and commission income to € 23.9 million (previous year: € 16.1 million). REGIONAL DEVELOPMENT In the following explanation of the regional distribution of sales, the sales are allocated to the customers' actual region ("customer site"). It is divided into three geographical regions (EMEA, Americas 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 25 of the Notes to the Consolidated Financial Statements. PUMA's net sales in the reporting currency, the euro, increased by 30.0% in the financial year 2021. This corresponds to a currency-adjusted sales increase of 31.7% compared to the previous year. All regions contributed to this development with double-digit growth rates. In the EMEA region, sales in the reporting currency, the euro, rose by 27.7% to € 2,531.7 million. Adjusted for currency effects, this corresponds to an increase in sales of 28.2%. Almost all countries in the region contributed to this development with double-digit growth rates. Particularly strong growth came from France, Italy, Russia and South Africa. In terms of Group sales, the share of the EMEA region nevertheless decreased from 37.9% in the previous year to 37.2% in 2021. With regard to product divisions, sales revenue from Footwear recorded a currency-adjusted increase of 31.0%. Currency-adjusted sales of apparel increased by 29.2%. Currency-adjusted sales of accessories rose by 20.6%. 167 Annual Report 2021 ↗ Combined Management Report ↗ G.07 EMEA SALES (€ million) In the Americas region, sales in the reporting currency, the euro, increased by 48.5% to € 2,636.9 million, thus exceeding the € 2 billion mark for the first time in this region. Currency-adjusted sales increased by 53.9%. Latin America in particular suffered negative exchange rate effects, as the weakness of the Argentine peso against the euro had a significant negative impact on sales in Latin America denominated in the reporting currency, the euro. Due to the strong growth in sales, the Americas region's share of Group sales rose to 38.7% in 2021 (previous year: 33.9%). In terms of product divisions, both footwear (+63.8% currency-adjusted) and apparel (+52.1% currency- adjusted) recorded particularly strong year-on-year sales growth. Sales in the Accessories division saw a currency-adjusted increase of 35.1%, in particular due to an increase in sales of Cobra golf clubs, socks and bodywear. ↗ G.08 AMERICAS SALES (€ million) 168 Annual Report 2021 ↗ Combined Management Report In the Asia/Pacific region, sales rose in the reporting currency, the euro, by 10.9% to € 1,636.8 million. This corresponds to a currency-adjusted sales increase of 10.6%. While there was a single-digit percentage decline in sales in Greater China in 2021 due to the difficult market environment, India, Japan and Australia, among others, recorded double-digit percentage sales growth. The Asia/Pacific region's share of Group sales decreased from 28.2% in the previous year to 24.1% in 2021. Looking at the product divisions, currency-adjusted sales of footwear increased by 9.4%. Sales of apparel increased by 9.6% and currency-adjusted sales in the accessories division grew by 24.7%. ↗ G.09 ASIA/PACIFIC SALES (€ million) 169 Annual Report 2021 ↗ Combined Management Report RESULTS OF OPERATIONS ↗ T.01 INCOME STATEMENT 2021 2020 € million % € million % +/- % Net Sales Cost of sales Gross profit 6,805.4 100.0% 5,234.4 100.0% -3,547.6 -52.1% -2,776.4 -53.0% 3,257.8 47.9% 2,458.0 47.0% Royalty and commission income 23.9 0.4% 16.1 0.3% Other operating income and expenses -2,724.6 -40.0% -2,264.9 -43.3% 30.0% 27.8% 32.5% 48.2% 20.3% Operating result (EBIT) Financial result Earnings before taxes (EBT) Income taxes 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 € 557.1 8.2% -51.8 -0.8% 7.4% -1.9% -1.0% 4.5% 505.3 -128.5 25.4% -67.2 309.6 149.59 149.59 2.07 2.07 209.2 -46.8 162.3 -39.2 24.2% -44.2 78.9 149.56 149.56 0.53 0.53 4.0% 166.3% -0.9% 10.5% 3.1% 211.2% -0.7% 227.8% -0.8% 51.9% 1.5% 292.4% 0.0% 0.0% 292.3% 292.3% 170 Annual Report 2021 ↗ Combined Management Report ILLUSTRATION OF EARNINGS DEVELOPMENT IN 2021 COMPARED TO THE OUTLOOK In the outlook of the 2020 Combined Management Report, PUMA forecasted a significant improvement in operating result (EBIT) and consolidated net earnings for the 2021 financial year. The outlook for the operating result (EBIT) had already been raised several times during the year and, at the end of the third quarter, an operating result (EBIT) in the range of € 450 million to € 500 million was anticipated. Thanks to continued brand momentum, successful product launches and a strong focus on flexibility in business operations, PUMA was able to outperform the adjusted earnings outlook for the full-year 2021, significantly exceeding the original profitability target. More details on earnings development in the financial year under review are provided below. GROSS PROFIT MARGIN PUMA's gross profit in the financial year 2021 increased by 32.5% from € 2,458.0 million to € 3,257.8 million. The gross profit margin rose by 90 basis points from 47.0% to 47.9%. This was in particular due to better sell-through and less promotional activity. By contrast, exchange rate effects, regional and distribution channel mix effects, and cost increases for inbound freight had a negative impact on the gross profit margin development. The gross profit margin in the Footwear division increased from 45.7% in the previous year to 47.3% in 2021. The Apparel gross profit margin increased from 48.5% to 48.9%, and in Accessories it increased from 47.0% to 47.1%. ↗ G.10 GROSS PROFIT/GROSS PROFIT MARGIN 171 Annual Report 2021 ↗ Combined Management Report OTHER OPERATING INCOME AND EXPENSES Other operating income and expenses (OPEX) increased by 20.3% to € 2,724.6 million in the financial year 2021 from a total of € 2,264.9 million in the previous year. Higher expenses for marketing, a higher number of PUMA-owned retail stores, higher sales-related distribution and warehousing costs as well as operational inefficiencies due to the ongoing negative impact of the COVID-19 pandemic contributed to this development. Meanwhile, continued cost control resulted in a significantly weaker increase in other operating income and expenses compared to sales growth. The operating leverage achieved is also reflected in the decrease in the expense ratio from 43.3% in the previous year to 40.0% in 2021, which contributed significantly to the improvement in profitability in the financial year 2021. ↗ G.11 OPERATING EXPENSES (as a % of sales) Within sales expenses, marketing/retail expenses increased by 24.7% to € 1,309.1 million, while the cost ratio was 19.2% of sales in 2021, compared with a cost ratio of 20.1% in the previous year. Other sales expenses, which mainly include sales-related costs and costs for warehousing and logistics, increased by 20.8% to € 898.2 million. The cost ratio of other sales expenses decreased to 13.2% of sales in 2021 compared to a cost ratio of 14.2% in the previous year. Research and development/product management expenses increased by 11.6% to € 114.5 million compared to the previous year and the cost ratio fell slightly to 1.7%. Other operating income in the past financial year amounted to € 2.6 million and consisted primarily of income arising from the sale of fixed assets. General and administrative expenses increased by 9.9% to € 405.2 million in 2021. The cost ratio of general and administrative expenses fell to 6.0% of sales in 2021. Depreciation and amortization is included in the relevant costs and total € 287.3 million (previous year: € 275.7 million). In addition, the respective costs include impairment losses relating to right-of-use assets totaling € 18.5 million (previous year: impairment losses relating to goodwill and right-of-use assets totaling € 18.0 million). 172 Annual Report 2021 ↗ Combined Management Report RESULT BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) The result before interest (= financial result), taxes, depreciation and amortization (EBITDA) increased by 71.6%, from € 502.9 million to € 862.8 million, in the financial year 2021. The EBITDA margin improved accordingly from 9.6% in the previous year to 12.7% in 2021. OPERATING RESULT (EBIT) In the financial year 2021, the operating result increased by 166.3% from € 209.2 million in the previous year to € 557.1 million. The significant improvement in profitability in the financial year 2021 is attributable to the strong sales growth combined with the improvement in the gross profit margin and the significantly smaller increase in other operating income and expenses compared to sales growth. Accordingly, the EBIT margin increased from 4.0% in the previous year to 8.2%. ↗ G.12 OPERATING RESULT - EBIT FINANCIAL RESULT The financial result decreased in 2021 from a total of € -46.8 million in the previous year to € -51.8 million. This development is due, among other things, to higher expenses from foreign currency exchange differences totaling € -9.0 million in 2021 compared to € -3.9 million in the previous year. An increase in expenses from interest components in connection with forward exchange transactions ("swap points") to a total of € -9.0 million in 2021 compared to € -3.9 million in the previous year also contributed to this development. By contrast, the interest result (the net balance of interest income and interest expenses) increased to a total of € -1.0 million in 2021 compared with € -5.7 million in the previous year. EARNINGS BEFORE TAXES (EBT) In the financial year 2021, PUMA generated earnings before taxes of € 505.3 million. This represents a significant increase of 211.2% compared to the previous year (€ 162.3 million). Tax expenses increased to € 128.5 million compared to € 39.2 million in the previous year. The tax rate increased slightly from 24.2% to 25.4% in 2021. 173 Annual Report 2021 ↗ Combined Management Report 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 these interests increased by 51.9% to € 67.2 million in the 2021 financial year (previous year: € 44.2 million). These companies concern PUMA United North America and PUMA United Canada. The business purpose of these companies is the sale of socks, bodywear, accessories and children's apparel in the North American market. NET EARNINGS Net earnings improved by 292.4% from € 78.9 million to € 309.6 million in the 2021 financial year, representing the highest consolidated net earnings in PUMA's corporate history to date. The significant increase in consolidated net earnings was mainly the result of strong growth in sales combined with the improvement in gross profit margin and the operating leverage achieved. By contrast, the slight increase in the tax rate in 2021 resulted in a negative effect on the development of consolidated net earnings. Earnings per share and diluted earnings per share increased from € 0.53 in the previous year to € 2.07 in the financial year 2021, in line with the development of the consolidated net earnings. DIVIDENDS Based on the positive net earnings, the Management Board and the Supervisory Board propose to the Annual General Meeting on May 11, 2022, that a dividend of € 0.72 per share be paid out from retained earnings of PUMA SE for the financial year 2021. The payout ratio for financial year 2021 is 34.8% 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 according to IFRS. The payment of the dividend is to take place in the days after the Annual General Meeting at which the decision is made on the payout. In the previous year, a dividend of € 0.16 per share was paid out and the payout ratio was 30.3% of consolidated net earnings. ↗ G.13 EARNINGS/DIVIDEND PER SHARE (in €) 174 Annual Report 2021 ↗ Combined Management Report NET ASSETS AND FINANCIAL POSITION ↗ T.02 BALANCE SHEET 12/31/2021 12/31/2020 € million % € million % +/- % Cash and cash equivalents 757.5 13.2% 655.9 14.0% 3,489.8 60.9% 2,613.0 55.8% 33.6% Other non-current assets 1,018.0 17.8% Current financial liabilities 68.5 1.2% Trade payables 1,176.5 20.5% 2.6% -43.6% 5,728.3 100.0% 4,684.1 100.0% 22.3% Inventories Trade receivables Other current assets (working capital) Other current assets Current assets Deferred taxes Right-of-use assets Non-current assets Total assets 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 1,492.2 26.1% 1,138.0 24.3% 848.0 268.7 123.3 14.8% 4.7% 2.2% 621.0 174.5 23.7 13.3% 3.7% 0.5% 279.9 940.5 4.9% 16.4% 277.5 877.6 916.0 5.9% 18.7% 19.6% 2,238.4 39.1% 2,071.0 44.2% 704.6 172.4 42.6 12.3% 3.0% 0.7% 121.4 941.5 526.2 156.5 127.2 20.1% 11.2% 3.3% 2.7% 2,164.5 37.8% 1,872.8 40.0% 48.8 31.9 851.0 353.5 0.9% 0.6% 14.9% 6.2% 40.6 38.2 775.2 193.4 0.9% 0.8% 16.6% 4.1% 1,285.3 22.4% 1,047.4 22.4% 2,278.5 39.8% 1,763.9 37.7% Total liabilities and shareholders’ equity 5,728.3 100.0% 4,684.1 100.0% Working capital - in % of net sales 727.9 10.7% 465.8 8.9% 15.5% 31.1% 36.5% 54.0% 420.4% 0.9% 7.2% 11.1% 8.1% 25.0% 33.9% 10.1% -66.5% 15.6% 20.1% -16.3% 9.8% 82.8% 22.7% 29.2% 22.3% 56.3% 175 Annual Report 2021 ↗ Combined Management Report EQUITY RATIO PUMA has a very solid capital base. As of the balance sheet date, the shareholders' equity of the PUMA Group increased by 29.2%, from € 1,763.9 million in the previous year to € 2,278.5 million as of December 31, 2021. In addition to the positive consolidated net earnings, positive effects of changes in value recognized directly in equity from the fair value measurement of derivative financial instruments in connection with cash flow hedging and the currency conversion of financial statements of foreign subsidiaries that do not prepare their account in the reporting currency, the euro, also contributed to the increase in consolidated shareholders' equity. As of the balance sheet date, the balance sheet total increased by 22.3%, from € 4,684.1 million in the previous year to € 5,728.3 million. Overall, this resulted in a 2.1 percentage points increase in the equity ratio, from 37.7% in the previous year to 39.8% as of December 31, 2021. ↗ G.14 TOTAL ASSETS/EQUITY RATIO WORKING CAPITAL As of the balance sheet date, working capital increased by 56.3% from € 465.8 million in the previous year to € 727.9 million as of December 31, 2021. In relation to net sales in the respective financial year, this corresponds to an increase in the working capital ratio from 8.9% in the previous year to 10.7% at the end of 2021. This development is mainly due to the stronger increase in inventories and trade receivables compared to the increase in trade payables. Due to ongoing delivery delays, which, as of the balance sheet date, contributed to an increase in goods in transit by more than half compared to the previous year, there was an overall increase in inventories by 31.1% from € 1,138.0 million to € 1,492.2 million as of December 31, 2021. In addition, an increase in the number of PUMA-owned retail stores led to the rise in inventories. Trade receivables increased by 36.5% from € 621.0 million to € 848.0 million as a result of strong growth in sales and lower receivables factoring as of the balance sheet date. Other current assets, which are attributable to working capital, increased by 54.0% from € 174.5 million to € 268.7 million, mainly due to higher tax refund claims. 176 Annual Report 2021 ↗ Combined Management Report On the liabilities side, trade payables increased by 25.0%, from € 941.5 million to € 1,176.5 million due to higher inventories. Other current liabilities, which are included in working capital and include, among other things, customer bonus and warranty provisions, rose by 33.9% from € 526.2 million to € 704.6 million as a result of the strong increase in sales. ↗ G.15 WORKING CAPITAL 177 Annual Report 2021 ↗ Combined Management Report OTHER ASSETS AND OTHER LIABILITIES Other current assets, which exclusively include the positive market value of derivative financial instruments, increased from € 23.7 million in the previous year to € 123.3 million. This development resulted from the increase in the U.S. dollar closing rate as of December 31, 2021, compared with the respective U.S. dollar rate when the hedging transactions were concluded. Right-of-use assets increased by 7.2% year-on-year from € 877.6 million to € 940.5 million, mainly as a result of the move into new office buildings in the USA, France and Sweden and the increase in the number of PUMA-owned retail stores. The right-of-use assets referred to own retail stores totaling € 382.9 million (previous year: € 355.2 million), warehouses and offices totaling € 505.8 million (previous year: € 464.3 million) and other lease items, mainly technical equipment and machines and motor vehicles, totaling € 51.9 million as of December 31, 2021 (previous year: € 58.1 million). On the liabilities side, this led to an increase in current and non-current lease liabilities. Other non-current assets, which mainly comprise intangible assets and property, plant and equipment, increased by 11.1% from € 916.0 million to € 1,018.0 million in the past financial year. The increase is linked to the significant expansion of investment activities in 2021, following the pandemic-related reduction in investments in non-current assets in the previous year aimed at reducing cash outflows. As of 31 December 2021, current financial liabilities include the current portion of the promissory note loans in the amount of € 68.5 million. In the previous year, current liabilities to banks in the amount of € 21.4 million were also included in current financial liabilities in addition to the current portion of the promissory note loans in the amount of € 100.0 million. Other current liabilities, which include the negative market value of derivative financial instruments, fell from € 127.2 million to € 42.6 million compared to the previous year. Pension provisions decreased from € 38.2 million in the previous year to € 31.9 million. This development is primarily related to an increase in plan assets. Other non-current liabilities, which mainly include promissory note loans totaling € 311.5 million (previous year: € 145.0 million), amounted to € 353.5 million (previous year: € 193.4 million). 178 CASH FLOW ↗ T.03 CASH FLOW STATEMENT Earnings before taxes (EBT) Financial result and non-cash expenses and income Gross cash flow Change in net current assets Payments for taxes on income Net cash from operating activities Payments for acquisitions Payments for investing in fixed assets Annual Report 2021 ↗ Combined Management Report 2021 2020 € million € million +/- % 505.3 315.9 821.2 -214.3 -146.9 162.3 211.2% 360.4 -12.4% 522.8 57.1% -11.9 -89.3 - 64.4% 460.1 421.5 9.2% 0.0 0.0 - -202.4 -151.0 34.1% Other investing and divestment activities incl. interest received 18.6 5.5 - Net cash used in investing activities -183.8 -145.5 26.3% Free cash flow Free cash flow (before acquisitions) - in % of net sales Dividend payments to equity holders of the parent company Dividend payments to non-controlling interests Proceeds from borrowings Cash repayments of borrowings Repayments of lease liabilities Payments of interest Net cash used in financing activities Exchange rate-related changes in cash and cash equivalents Change 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 276.2 276.2 4.1% -23.9 -47.8 235.0 -121.9 276.0 276.0 5.3% 0.0 -45.6 0.1% 0.1% - 5.0% 94.2 149.4% 0.0 - -160.9 -135.0 19.2% -44.4 -43.0 3.3% -164.0 -129.2 26.9% -10.5 101.7 655.9 757.5 -8.9 18.4% 137.8 -26.2% 518.1 26.6% 655.9 15.5% 179 Annual Report 2021 ↗ Combined Management Report NET CASH FROM OPERATING ACTIVITIES The significant increase in profit before tax (EBT +211.2%) in the financial year 2021 was the main reason for the 57.1% increase in gross cash flow from € 522.8 million to € 821.2 million. ↗ G.16 GROSS CASH FLOW (€ million) As a result of the increase in working capital, there was a cash outflow from the change in net working capital* of € -214.3 million in the financial year 2021 compared to a cash outflow of only € -11.9 million in the previous year. The cash outflow from payments for income taxes increased from € -89.3 million in the previous year to € -146.9 million in the financial year 2021 due to the increase in profitability. Overall, this led to a 9.2% increase in cash inflow from operating activities from € 421.5 million to € 460.1 million, enabling PUMA to improve cash inflow from operating activities in the financial year 2021, despite the increase in working capital. NET CASH USED IN INVESTING ACTIVITIES In the financial year 2021, cash outflow from investment activities increased from a total of € 145.4 million to € 183.8 million. The investments in fixed assets included in this figure increased from € 151.0 million in the previous year to € 202.4 million in 2021 in line with our investment planning. The increase was primarily attributable to investments in our own retail stores, in our logistics infrastructure and in new administrative buildings. In addition, investments in the modernization of the IT infrastructure continued to be made. * Net current assets include working capital line items plus current assets and liabilities, which are not part of the working capital calculation. Current lease liabilities are not part of the net current assets. 180 Annual Report 2021 ↗ Combined Management Report FREE CASH FLOW BEFORE ACQUISITIONS The free cash flow before acquisitions is the balance of the cash inflows and outflows from operating and investing activities. In addition, an adjustment is made for incoming and outgoing payments that relate to shareholdings, where applicable. No acquisitions were made in 2020 and 2021. Free cash flow before acquisitions remained constant in the financial year 2021 at € 276.2 million compared to the previous year (€ 276.0 million). Free cash flow before acquisitions was 4.1% of net sales compared to 5.3% in the previous year. ↗ G.17 FREE CASH FLOW (BEFORE ACQUISITIONS) (€ million) NET CASH USED IN FINANCING ACTIVITIES The net cash used in financing activities increased overall from a cash outflow of € 129.2 million in the previous year to a cash outflow of € 164.0 million in 2021. The increase in cash outflow resulted mainly from the dividend payment to the shareholders of PUMA SE for the financial year 2020 in the amount of € 23.9 million, after the dividend payment was suspended in the previous year due to the COVID-19 pandemic to limit the cash outflow. The net cash used in financing activities also included payouts to non-controlling interests totaling € 47.8 million in 2021 (previous year: € 45.6 million). Cash inflows from borrowings amounted to € 235.0 million, compared with cash inflows of € 94.2 million in the previous year. In the financial year 2021, payments made for the repayment of financial liabilities totaled € 121.9 million (previous year: € 0.0 million). The cash outflows for the repayment of leasing liabilities and related interest expenses included in the cash outflow from financing activities increased from a total of € 164.2 million in the previous year to € 192.4 million in 2021. As of December 31, 2021, PUMA had cash and cash equivalents of € 757.5 million, an increase of 15.5% compared to the previous year (€ 655.9 million). The PUMA Group also had credit lines totaling € 1,322.0 million as of December 31, 2021 (previous year: € 1,639.1 million). Unutilized credit lines totaled € 942.0 million on the balance sheet date, compared to € 1,372.7 million in the previous year. 181 Annual Report 2021 ↗ Combined Management Report STATEMENT REGARDING THE BUSINESS DEVELOPMENT AND THE OVERALL SITUATION OF THE GROUP Despite the numerous operational challenges, 2021 was an excellent financial year for PUMA. Although the negative effects of the COVID-19 pandemic continued in 2021, we were able to achieve the highest sales volume to date and, at the same time, the best net earnings in PUMA's corporate history. This was only possible thanks to the extraordinary commitment of our employees, who coped admirably with this difficult time through their flexibility, determination and positive attitude. Our approach to deal with the COVID-19 pandemic was to manage the crisis in the short-term without hindering PUMA’s mid-term momentum. Accordingly, our primary goal was to survive the crisis together with our partners, to recover and then to emerge stronger from the crisis with growth. The health and safety of our employees, business partners and customers were our top priority. We have also worked hard to limit as much as possible the delays in our supply chain and the production losses at our suppliers' sites caused, for example, by the COVID-19 lockdown in South Vietnam. In addition, we had to deal with a very difficult market situation in China this year. The long-standing, close and trusting cooperation with our customers, manufacturers, logistics partners and other partners was one of the most important success factors for us in dealing with the pandemic. With regard to our organizational development, we made important progress this year. Our Central European logistics center in Geiselwind, Germany started operations this year, and we have also been working intensively on expanding the logistics centers in our main markets. Our North America and international marketing organization in the USA and our administrative functions in France and Sweden have moved to new, modern office buildings. Likewise, we continued to improve our processes and systems and invested, for example, in the modernization of our IT infrastructure and the further development of our product development and ERP systems. We were able to achieve currency-adjusted sales growth of 31.7% in the financial year 2021. All regions and all product divisions contributed to this development with double-digit growth rates. We were also able to make significant improvements in terms of profitability in 2021, achieving the best operating result (EBIT) and consolidated net earnings in PUMA's corporate history. In addition to the strong growth in sales, this development is also attributable to the improvement in the gross profit margin and to the operating leverage achieved. At € 557.1 million, operating result in the past financial year exceeded our outlook of € 450 million to € 500 million, which we had already revised upward during the year. Earnings per share almost quadrupled compared to the previous year, from € 0.53 to € 2.07. This means that we have exceeded our profitability targets in the past financial year. With regard to the balance sheet, we believe that PUMA continues to have a very solid capital base. As of the balance sheet date, the PUMA Group's equity amounted to almost € 2.3 billion, and the equity ratio was just under 40%. Our consistent focus on working capital management made a significant contribution in the past financial year to limiting the negative impact on our working capital despite the delays in the supply chain, which led to a significant increase in goods in transit. Our cash and cash equivalents increased to € 757.5 million as of the balance sheet date. In addition, the PUMA Group has unutilized credit lines totaling € 942.0 million at its disposal. Consequently, the net asset, financial and income situation of the PUMA Group is overall very solid at the time the Combined Management Report was prepared. This enables the Management Board and the Supervisory Board to propose to the Annual General Meeting on May 11, 2022, a dividend of € 0.72 per share for the financial year 2021. This corresponds to a payout ratio of 34.8% in relation to the consolidated net earnings according to IFRS and is in line with our dividend policy. 182 Annual Report 2021 ↗ Combined Management Report COMMENTS ON THE FINANCIAL STATEMENTS OF PUMA SE IN ACCORDANCE WITH THE GERMAN COMMERCIAL CODE (HGB) The annual financial statements of PUMA SE are prepared in accordance with the rules of the German Commercial Code (German GAAP, HGB), taking into account the SEAG (German SE Implementation Act) and the German Stock Corporation Act (AktG). PUMA SE is the parent company of the PUMA Group. PUMA SE’s results are to a large extent influenced by the directly and indirectly held subsidiaries and shareholdings. 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 area, consisting of the home market of Germany, Austria, and Switzerland. Furthermore, PUMA SE is also responsible for pan-European distribution for individual key accounts and for sourcing products from European production countries, as well as global licensing management. In addition, PUMA SE acts as a holding company within the PUMA Group and is as such responsible for international product development, merchandising, international marketing, the global areas of finance, operations and PUMA’s strategic direction. RESULTS OF OPERATIONS ↗ T.04 PROFIT AND LOSS STATEMENT (GERMAN GAAP, HGB) Net Sales 948.7 100.0% 709.7 100.0% 2021 2020 € million % € million % +/- % 33.7% Other operating income 31.4 3.3% 40.4 5.7% -22.3% Material expenses Personnel expenses Depreciation -270.8 -28.5% -237.2 -33.4% -120.4 -12.7% -29.4 -3.1% -94.2 -25.4 -13.3% -3.6% Other operating expenses -630.8 -66.5% -512.1 -72.2% 14.2% 27.8% 15.4% 23.2% Total expenses Financial result Income before taxes Taxes on income Net income -1,051.4 -110.8% -868.9 -122.4% 21.0% 208.6 137.3 -13.7 123.6 22.0% 14.5% -1.4% 13.0% 359.5 240.7 -11.0 229.7 50.7% 33.9% -1.6% 32.4% -42.0% -43.0% 23.7% -46.2% In the financial year 2021, net sales increased by a total of 33.7% to € 948.7 million. The increase resulted both from higher revenues from product sales and from higher commission income in the context of license management. Revenue from PUMA SE product sales increased by 17.7% to € 412.5 million. The royalty and commission income included in net sales increased by 50.4% to € 495.1 million. Other revenue, which mainly consisted of recharges of costs to affiliated companies, totaled € 41.2 million in 2021 (previous year: € 30.0 million). 183 Annual Report 2021 ↗ Combined Management Report Other operating income amounted to € 31.4 million in 2021 (previous year: € 40.4 million) and includes, in particular, realized and unrealized gains from currency conversion related to the measurement of receivables and liabilities in foreign currencies at the balance sheet date. The total expenditure from material expenses, personnel expenses, depreciation and other operating expenses increased by 21.0% to € 1,051.4 million compared to the previous year (previous year: total of € 868.9 million). The increase in material expenses compared to the previous year was mainly due to the increase in sales. The increase in personnel expenses is related in particular to the higher number of employees and increased provisions for bonuses. Other operating expenses were up compared to the previous year due, among other things, to increased marketing and sales expenses. As forecasted in our financial planning for 2021, the financial result fell by 42.0% year-on-year to € 208.6 million. The decline was mainly due to significantly lower dividends from shareholdings in affiliated companies. In addition, there were higher expenses from loss transfers from affiliated companies. By contrast, income from profit transfers from affiliated companies increased and improved net interest income, the balance of interest expense and interest income, had a positive impact on the financial result. Despite a significant increase in sales, the rise in expenses and the decline in the financial result led to a 43.0% decrease of earnings before taxes, from € 240.7 million in the previous year to € 137.3 million in 2021. Taxes on income amounted to € 13.7 million (previous year: € 11.0 million). Accordingly, PUMA SE's net income under German Commercial Code (German GAAP, HGB) decreased by 46.2% to € 123.6 million in the financial year 2021 (previous year: € 229.7 million). NET ASSETS ↗ T.05 BALANCE SHEET (GERMAN GAAP, HGB) Total fixed assets Inventories Receivables and other current assets Cash and cash equivalents Total current assets Others Total assets Shareholders’ equity Accruals/provisions Liabilities Others 12/31/2021 12/31/2020 € million % € million % 1,087.0 50.3% 1,072.0 58.5% +/- % 1.4% 53.9 607.2 398.8 1,059.9 15.1 2.5% 28.1% 18.4% 49.0% 0.7% 65.5 424.3 260.2 750.0 11.5 3.6% -17.7% 23.1% 14.2% 40.9% 0.6% 43.1% 53.3% 41.3% 31.2% 2,162.0 100.0% 1,833.5 100.0% 17.9% 916.9 117.6 42.2% 5.4% 1,127.0 52.1% 0.5 0.0% 815.1 89.0 929.4 0.0 44.5% 4.9% 50.7% 0.0% 12.5% 32.0% 21.3% - Total liabilities and shareholders’ equity 2,162.0 100.0% 1,833.5 100.0% 17.9% 184 Annual Report 2021 ↗ Combined Management Report Fixed assets increased by a total of 1.4% to € 1,087.0 million in 2021. The increase is due to further investments in the IT infrastructure and the acquisition of additional shares in the amount of € 6.0 million as part of the capital increase of Borussia Dortmund GmbH & Co. KGaA (BVB). In terms of current assets, inventories fell by 17.7% to € 53.9 million as a result of the strong growth in sales. By contrast, receivables and other assets rose by a total of 43.1% to € 607.2 million compared with the previous year. Both increased receivables from affiliated companies and higher trade receivables contributed to this development. Cash and cash equivalents increased by 53.3% to € 398.8 million compared to the previous year. On the liabilities side, equity rose by 12.5% to € 916.9 million, as a result of the net income in 2021. Despite this, an increase in total assets due to higher provisions and liabilities led to a reduction in the equity ratio at the balance sheet date from 44.5% in the previous year to 42.4% as of December 31, 2021. Provisions increased by 32.0% year-on-year to € 117.6 million. This development resulted from higher provisions for personnel, customer bonuses and for outstanding invoices. Liabilities increased from € 929.4 million in the previous year to € 1,127.0 million as of December 31, 2021. This increase was primarily due to higher liabilities to banks, as further promissory note loans were taken out, and to increased liabilities to affiliated companies. FINANCIAL POSITION ↗ T.06 CASH FLOW STATEMENT (GERMAN GAAP, HGB) Net cash from operating activities 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 the beginning of the financial year Cash and cash equivalents at the end of the financial year 2021 2020 € million € million +/- % 124.0 24.9 >100% -206.7 -194.7 6.2% -82.7 221.4 138.6 260.2 398.8 -169.9 -51.3% 382.8 213.0 -42.2% -34.9% 47.2 >100% 260.2 53.3% The cash inflow from operating activities increased from € 24.9 million to € 124.0 million in the 2021 financial year. This development resulted primarily from the improvement in the operating result (= net sales minus operating expenses and income). Furthermore, the slight decrease in the working capital of PUMA SE also had a positive effect on the cash inflow from operating activities. The net cash used in investing activities in 2021 includes investments in fixed assets and cash outflows from the granting of receivables to affiliated companies. In addition, the cash outflow from investment activities in 2021 includes the cash outflow for the acquisition of additional BVB shares as part of the capital increase. 185 Annual Report 2021 ↗ Combined Management Report Net cash from financing activities showed a total cash inflow of € 221.4 million in 2021 (previous year: € 382.8 million). The cash inflow was mainly attributable to the increase in liabilities to banks resulting from the issue of new promissory note loans and to an increase in liabilities to affiliated companies. In contrast, the dividend payment to the shareholders of PUMA SE for the financial year 2020 in the amount of € 23.9 million, after the dividend payment was suspended in the previous year due to the COVID-19 pandemic to limit the cash outflow, resulted in a cash outflow. OUTLOOK In PUMA SE's financial statements under German Commercial Code (German GAAP, HGB), we expect an increase in net sales in the low double-digit percentage range for the financial year 2022. Assuming increasing dividends from investments in affiliated companies, we expect a slight increase of income before taxes for the 2022 fiscal year. 186 Annual Report 2021 ↗ Combined Management Report INFORMATION CONCERNING TAKEOVERS The following information, valid December 31, 2021, 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. Composition of the subscribed capital (Sections 289a [1][1], 315a [1][1] HGB) 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 € 1.00 per share. As of the balance sheet date, the Company held 1,219,040 treasury shares. Shareholdings exceeding 10% of the voting rights (Sections 289a [1][3], 315a [1][3] HGB) As of December 31, 2021, 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 4.0% of the share capital according to Kering’s press release from May 27, 2021. The shareholding of Artémis S.A.S. and Kering S.A. together amounts to 32.5% of the share capital. Statutory provisions and regulations of the Articles of Association on the appointment and dismissal of the members of the Management Board and on amendments to the Articles of Association (Sections 289a [1][6], 315a [1][6] HGB) Regarding the appointment and dismissal of the members of the Management Board, reference is made to the applicable statutory requirements of § 84 German 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 AktG or if the employment agreement is terminated, for which in each case a resolution must be adopted by the Supervisory Board with a simple 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 require a majority according to Art. 59 SE Regulation and Sections 133[1], 179 [2] [1] 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. Authority of the Management Board to issue or repurchase shares (Sections 289a [1][7], 315a [1][7] HGB) 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 By resolution of the Annual General Meeting on May 5, 2021, the Management Board is authorized, with approval of the Supervisory Board, to increase the share capital of the Company by up to EUR 30,000,000.00 by issuing, once or several times, new no par-value bearer shares against contributions in cash and/or kind until May 4, 2026 (Authorized Capital 2021). 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 shareholders for subscription (indirect pre-emption right). 187 Annual Report 2021 ↗ Combined Management Report The shareholders shall generally be entitled to pre-emption rights. However, the Management Board shall be authorized with approval of the Supervisory Board, to partially or completely exclude pre-emption rights • • • • to avoid peak amounts; in case of capital increases against contributions in cash if the pro-rated amount of the share capital attributable to the new shares for which pre-emption rights have been excluded does not exceed 10% of the share capital and the issue price of the newly created shares is not significantly lower than the relevant exchange price for already listed shares of the same class, Section 186 (3) sentence 4 of the German Stock Corporation Act (Aktiengesetz, AktG). The 10% limit of the share capital shall apply at the time of the resolution on this authorization 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 Authorized Capital 2021 excluding shareholders’ pre-emption rights directly or respectively applying Section 186 (3) sentence 4 AktG or (ii) which are or can be issued to service option and convertible bonds applying Section 186 (3) sentence 4 AktG while excluding shareholders’ pre-emption rights during the term of the Authorized Capital 2021, 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 direct or indirect acquisition of companies, participation in companies or parts of companies or other assets including intellectual property rights and receivables against the Company or any companies controlled by it in the sense of Section 17 AktG. The total amount of shares issued or to be issued based upon this authorization while excluding shareholders’ pre-emption rights may neither exceed 10% 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 authorization 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 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 Supervisory Board is entitled to adjust the respective version of the Company’s Articles of Association with regard to the respective use of the Authorized Capital 2021 and after the expiration of the authorization period. The Management Board of PUMA SE did not make use of the existing Authorized Capital in the current reporting period. Conditional Capital The Annual General Meeting of April 12, 2018 has authorized the Management Board until April 11, 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 tranches bearer and/or registered option and/or convertible bonds, and participation rights and/or participating bonds or combinations thereof with or without maturity restrictions in the total nominal amount of up to € 1,000,000,000.00. The share capital is conditionally increased by up to € 30,164,920.00 by issue of up to 30,164,920 new no-par value bearer shares (Conditional Capital 2018). The conditional capital increase shall only be implemented to the extent that option/conversion rights are exercised, 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. 188 Annual Report 2021 ↗ Combined Management Report Authorization to acquire treasury shares The Annual General Meeting of May 7, 2020 resolved under agenda item 6 to authorize PUMA SE to acquire and utilize treasury shares until May 6, 2025, including the authorization to sell treasury shares while excluding shareholders' pre-emption rights. The authorization from 2020 was extended by resolution of the Annual General Meeting on May 5, 2021 to the effect that the Supervisory Board was authorized to issue treasury shares to members of the Management Board as a component of Management Board remuneration, while excluding shareholders' pre-emption rights. In all other aspects, the authorization from 2020 remained unchanged. No use has been made of the authorization to acquire treasury shares in the reporting period. Significant agreements of the Company which are subject to a change of control as a result of a takeover bid and the resulting effects (Section 289a [1][8], 315a [1][8] HGB) Material financing agreements of PUMA SE with its creditors contain the standard 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 chapter 17 of the Notes to the Consolidated Financial Statements. 189 Annual Report 2021 ↗ Combined Management Report CORPORATE GOVERNANCE STATEMENT IN ACCORDANCE WITH SECTION 289F AND SECTION 315D HGB Effective implementation of the principles of corporate governance is an important aspect of PUMA's corporate policy. Transparent and responsible corporate governance is a key prerequisite for achieving corporate targets and for increasing 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 way that will ensure sustainable added value through good corporate governance. In the following the Management Board and the Supervisory Board report on the corporate governance at PUMA SE in accordance with Principle 22 of the German Corporate Governance Code (DCGK). This section also includes the Statement of Compliance in accordance with Art. 9(1)c(ii) of the SE Regulation (SE-VO) in conjunction with Section 289f and Section 315d German Commercial Code (HGB). Pursuant to Section 317(2) Sentence 6 of the HGB, the purpose of the audit of the statements pursuant to Section 289f (2) and (5) and Section 315d of the HGB is limited to determining whether such statements have actually been provided. PUMA SE has the legal form of a European company (Societas Europaea, or SE). Being a SE headquartered in Germany, PUMA SE is subject to European and German law for SEs while remaining subject to German stock corporation law. As a company listed in Germany, PUMA SE adheres to the German Corporate Governance Code. PUMA SE has a dual management system featuring strict personal and functional 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. STATEMENT OF COMPLIANCE PURSUANT TO SECTION 161 AKTG FOR 2021 The Management Board and the Supervisory Board of PUMA SE declare that - since the last Statement of Compliance from November 9, 2020 - PUMA SE has complied, and will continue to comply, with the recommendations of the “Government Commission on the German Corporate Governance Code” in the version dated December 16, 2019 (effective as of March 20, 2020, “Code 2020”), to the extent required by the Code 2020. Herzogenaurach, November 9, 2021 PUMA SE For the Management Board Bjørn Gulden Hubert Hinterseher For the Supervisory Board Jean-François Palus The Statement of Compliance can be downloaded on the Company's homepage (http://about.PUMA.com under “INVESTOR RELATIONS / CORPORATE GOVERNANCE”). The Statements of Compliance of the past five years are also accessible on this website. 190 Annual Report 2021 ↗ Combined Management Report 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 group-wide guidelines on environmental management and on compliance with workplace and social standards as well as human rights. PUMA is convinced that only on such a foundation can a lasting and sustainable corporate success be achieved. That is why PUMA is committed to the principles of the UN Global Compact. The PUMA Code of Ethics and the PUMA Code of Conduct prescribe ethical and environmental standards with which both employees and suppliers are required to comply. Detailed information on the Company's sustainability strategy can be found in the Sustainability section of the Annual Report or on the Company's homepage (http://about.PUMA.com under “FOREVER BETTER”). COMPLIANCE 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 systematically prevent, detect and sanction violations in the areas of corruption, money laundering, conflicts of interest, antitrust law, fraud and embezzlement. Violations 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 binding 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 uniform behavioral guidelines, the Code of Ethics is supplemented by specific group-wide guidelines. Employees sign a statement that they familiarize and will comply with the Code of Ethics and other internal policies. 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 through suitable communication measures, classroom training or more comprehensive e- learnings. In 2021, the annual e-learning on the Code of Ethics covered the topics of anti-bribery and anti- corruption, conflict of interest and reporting of compliance violations (“speak up culture”). The Compliance Department developed the content of the training itself in order to achieve the greatest possible learning success with case studies that PUMA employees could relate to. The CEO of PUMA SE encouraged all PUMA employees to complete the e-learning on the Code of Ethics. The clear tone from the top resulted in 98.8% of PUMA employees (98.4% PUMA SE) across the Group successfully completing the Code of Ethics e-learning. At the beginning of 2021, the Business Partner Due Diligence Policy developed in the previous year was implemented. In it, existing processes for the identification and treatment of business partner risks were consolidated and partly redefined. The process includes a risk assessment to identify business partners with a high-risk profile and describes the due diligence steps to be applied to such business partners. The due diligence steps include, for example, a compliance screening and compliance and financial (payment method, market conformity of remuneration) health checks. A structured approval process defines when the local compliance officer can approve a high-risk business partner and when the chief compliance officer must be involved in the approval process. 684 employees were trained Group-wide on the due diligence steps. The Management Board is responsible for the proper functioning of the CMS. It is supported by a compliance organization consisting of the Chief Compliance Officer 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 local 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 Chief Compliance Officer and the local compliance officers regularly exchange information 191 Annual Report 2021 ↗ Combined Management Report on the results of their risk analyses and make any necessary adjustments to the compliance management system. The internal audit department audits the compliance controls on a yearly basis. To facilitate cooperation within the global compliance organization, regular virtual meetings are held with the local compliance officers. These provide an opportunity to exchange experience and knowledge. This informal exchange of information is supplemented by a compliance reporting process. The Chief Compliance Officer reports to the Audit Committee of the Supervisory Board of PUMA SE about the outcome of this reporting process. Thereby, the current status of the implementation of compliance structures and serious compliance violations are addressed. The Chief Compliance Officer works closely with the Legal Department and the Internal Audit. PUMA has a Group-wide electronic whistleblower platform, which is operated by an external provider and to which employees and third parties can safely and confidentially report illegal or unethical conduct in a protected manner. 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 information 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 2021, the Compliance department at headquarters received 69 reports of alleged violations. The majority of cases did not fall within the remit of the Compliance department. In addition to the whistleblower platform, there is a global hotline for whistleblowers from the supply chain. DESCRIPTION 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 responsibility 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 management 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 four members and has a CEO. Further information on the areas of responsibility of the members of the Management Board and their mandates can be found in the Notes to the Consolidated Financial Statements (last chapter). No member of the Management Board has, in aggregate, more than two Supervisory Board mandates in non-group listed companies or comparable functions. The members of the Management Board are obliged to disclose conflicts of interest to the Chair of the Supervisory Board and to the CEO without undue delay and to inform the other members of the Management Board accordingly. They may only assume sideline 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 http://about.PUMA.com under “INVESTOR RELATIONS / CORPORATE GOVERNANCE”. 192 Annual Report 2021 ↗ Combined Management Report 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 determined by the Articles of Association of PUMA SE and the Agreement on the Involvement of Employees in PUMA SE dated July 11, 2011 and its amendment dated February 7, 2018. The Supervisory Board of PUMA SE consists of six members, four of whom are shareholder representatives and two of whom are employee representatives. Shareholder representatives are being elected individually. CVs of the individual Supervisory Board members are available on the Internet and are updated annually. 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, their mandates and the term of their membership can be found in the Notes to the Consolidated Financial Statements (last chapter). Supervisory Board members who are not a member of any Management Board of a listed company have not accepted more than five Supervisory Board mandates at non-group listed companies or comparable functions. The Supervisory Board appoints the members of the Management Board and may dismiss them at any time for good cause. Initial appointments are for three years. The Supervisory Board adopts a clear and understandable remuneration system for the Management Board. In case of any significant change, at least every four years, it shall submit the remuneration system to the Annual General Meeting for approval. The Annual General Meeting on May 5, 2021 approved a further developed Management Board remuneration system submitted by the Supervisory Board, which complies with the requirements of the Act Implementing the Second Shareholders' Directive (ARUG II), follows the recommendations of the Code 2020 and is even more strongly aligned with shareholder interests. Further information on the remuneration of the Management Board is summarized in the Compensation Report (see https://about.puma.com/en/investor-relations/corporate-governance). The Supervisory Board monitors and advises the Management Board on the implementation 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 situation, risk management and compliance management system. It deals with deviations in the course of business from the established plans and targets, stating the reasons. The Supervisory Board is involved by the Management Board in decisions of paramount importance for the Company or beyond the ordinary course of business of PUMA SE and the PUMA Group and the Supervisory Board needs to approve those decisions. Together with the Management Board, the Supervisory Board ensures succession planning for future Management Board positions and key functions in the PUMA Group. On the basis of group-wide talent conferences, the Management Board develops recommendations for potential internal successor appointments, which it discusses regularly with the Supervisory Board. In making its recommendations, the Management Board takes into account the Diversity Concept adopted by the Supervisory Board for the composition of the Management Board (see below). Between the meetings, the Chair of the Supervisory Board is in regular contact with the CEO in order to discuss issues of strategy, business development, the risk situation, risk management and compliance of PUMA. Prior to Supervisory Board meetings, the CEO or the CFO speak separately to the employee representatives and the shareholder representatives, if need be. At the end of the regular meetings, the Supervisory Board always has the opportunity to discuss issues 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 efficiency review was initiated at the end of 2021. With the support of external experts, a comprehensive questionnaire has been prepared, which was answered by each of the Supervisory Board members. In early 2022, the results will be evaluated, discussed by the Supervisory Board and any improvement measures will be defined. 193 Annual Report 2021 ↗ Combined Management Report No Supervisory Board member is a member of a governing body of, or exercises advisory functions at, significant competitors of the Company; no Supervisory Board member holds any personal relationships with a significant competitor of the Company. The Company supports the Supervisory Board in its training activities, for example by having the Legal Department regularly review changes in the legal framework for the Supervisory Board and address them in the meetings. 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 overview of relevant topics of the Company. In addition, the Supervisory Board was trained on the topic of sustainability and supply chain in 2021. The principles of cooperation of the Supervisory Board of PUMA SE are set out in the Rules of Procedure for the Supervisory Board, which can be viewed at http://about.PUMA.com under “INVESTOR RELATIONS / CORPORATE GOVERNANCE”. SHAREHOLDERS AND ANNUAL GENERAL MEETING The shareholders of PUMA SE exercise their rights, in particular their information 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 information 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 analysts, shareholders' associations, the media and the interested public comprehensively and regularly about the situation of the Company and inform them without undue delay about significant business changes. The Chair of the Supervisory Board is also prepared to discuss Supervisory Board-specific issues with investors within an appropriate framework. In addition to other communication channels, we make intensive use of the Company's website for our investor relations work. At http://about.PUMA.com/en/investor-relations, all material information published in the 2021 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 Supervisory Board requests that the meeting be convened. The Supervisory Board has established four committees to perform its duties and receives regular reports 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 “INVESTOR RELATIONS / 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 Resources and personnel development. The entire Supervisory Board decides on issues involving the Management Board members’ compensation based on recommendations from the Personnel Committee. The members of the Personnel Committee are Jean-François Palus (Chair), Fiona May and Martin Koeppel. The Audit Committee consists of three members. The Chair 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 the review of the accounting 194 Annual Report 2021 ↗ Combined Management Report comprising particularly of the consolidated financial statements and the group management report (including CSR reporting), interim financial information and the single entity financial statements in accordance with the German Commercial Code (HGB). It is furthermore responsible for monitoring the accounting process, the effectiveness of the internal control system, the risk management system, the internal audit system, compliance and the statutory audit of the financial statements, with particular regard to the selection and the required independence of the statutory auditors, issuing the audit mandate to the statutory auditors, defining the audit areas of focus, the quality of the audit, 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 General Meeting has appointed the statutory auditors, and the Supervisory Board has issued 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 statutory auditors shall attend the meeting to review the annual financial statements, the consolidated financial statements as well as the consolidated interim report 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 position, 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 receive the audit reports, which must also include any actions taken. The members of the Audit Committee are Thore Ohlsson (Chair, expertise in the field of accounting/auditing), Héloïse Temple-Boyer (expertise in the field of accounting/auditing) and Bernd Illig. The Nominating Committee has three members, who are representatives 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 members of the Nominating Committee are Jean-François Palus (Chair), Héloïse Temple-Boyer and Fiona May. The Sustainability Committee consists of three members. It was established in April 2021 and meets once a year. In its area of responsibility, the Sustainability Committee advises and monitors the sustainability strategy of the Management Board. The members of the Sustainability Committee are Fiona May (Chair), Héloïse Temple-Boyer and Martin Köppel. The current composition of the committees can further be found in Appendix 2 of the Notes to the Consolidated Financial Statements. 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 experience necessary for the proper performance of their duties. The composition of the Supervisory Board is primarily determined by appropriate qualification, taking into account diversity and the appropriate involvement of women. Based on Section C.1 of the Code 2020, the Supervisory Board has set targets for its composition 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 markets 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 international origins of Jean-François Palus, Héloïse Temple-Boyer, Thore Ohlsson and Fiona May. The Supervisory Board has an appropriate number of independent members. With Jean-François Palus, Héloïse Temple-Boyer, Thore Ohlsson and Fiona May four out of six members of the Supervisory Board are considered independent. 195 Annual Report 2021 ↗ Combined Management Report The Code 2020 does not contain a conclusive definition of independence regarding the shareholder representatives in the supervisory board, but rather lists examples of circumstances that may indicate a lack of independence. It is the task of the supervisory board to assess the independence of the members of the supervisory board on the basis of these indications and evaluate whether a member has a personal or business relationship with the Company or its management board that may cause a substantial – and not merely temporary – conflict of interest. Against this backdrop, PUMA’s Supervisory Board believes that there are currently no specific indications of relevant circumstances or relationships for any member of the Supervisory Board that could constitute a material and not merely temporary conflict of interest and that would therefore interfere with their independence. With regard to Supervisory Board members Jean-François Palus and Héloïse Temple-Boyer, the Supervisory Board is of the opinion that their functions as Directeur Général Délégué of Artémis S.A.S. do not impair their independence within the meaning of the Code 2020. 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. With regard to the members of the Supervisory Board Mr. Jean-François Palus and Mr. Thore Ohlsson, the Supervisory Board believes that the length of their tenure as members of the Supervisory Board, which each exceeds 12 years, does not interfere with their independence within the meaning of the Code 2020 as it does not give rise to a material conflict of interest. This is due to the fact that Mr. Palus and Mr. Ohlsson currently hold positions in the management and supervisory boards of several other companies. They both have demonstrated a high level of professionalism during their long experience in the management of various companies and the Supervisory Board believes that both would avoid any circumstances that may give rise to conflict of interest. There are no other indications of a conflict of interest in Mr. Palus’ and Mr. Ohlsson’s person. Jean-François Palus as the Chair of the Supervisory Board, Thore Ohlsson as the Chair of the Audit Committee and Jean-François Palus as the Chair of the Personnel Committee are all considered independent from the Management Board, the Company and a controlling shareholder. No former member of the Management Board is member of the Supervisory Board. • Thore Ohlsson, the Chair of the Audit Committee has specific knowledge and experience in applying accounting principles and internal control procedures, is familiar with audits and is independent. Jean- François Palus and Héloïse Temple-Boyer also bring this specific knowledge with them. • The 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 temporary conflicts of interest of its members by regularly monitoring and critically scrutinizing its members' other activities. There were no indications of actual conflicts of interest in the 2021 financial year. If a conflict of interest would occur each member of the Supervisory Board informs the Chair of the Supervisory Board without undue delay. • According to Section 1(4) of the Rules of Procedure for the Supervisory Board, Supervisory Board members may, in principle, not be over 70 years of age and their maximum term of office may not exceed three terms. In setting this age limit, the Supervisory Board deliberately decided against a rigid maximum age limit and in favor of a flexible rule limit 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. 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 Supervisory Board members did not reach the standard age limit at the time of their election. 196 Annual Report 2021 ↗ Combined Management Report 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 distribution 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 publicly 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 interests 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. C) 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 management levels below the Management Board. Target figures 2017 In 2017, the Supervisory Board of PUMA SE had set a target figure of 30% for the proportion of women on the Supervisory Board to be achieved by October 31, 2021. This target figure was achieved as of this date. For the Management Board, the Supervisory Board had set a target in 2017 for the proportion of women of 20%, provided that PUMA SE has five or more Management Board members; the target to be achieved by October 31, 2021. This target figure was achieved as of this date. In 2017, the Management Board had set a target figure of 25% for PUMA SE and 30% at Group level for the proportion of women at the first management level below the Management Board, the targets to be achieved by October 31, 2021. These targets were not achieved. The management team at the first management level below the Management Board has remained fairly stable in recent years and no significant new positions have been created at this level. However, due to the strong development at the second management level below the Management Board, the Management Board is very confident that the new target figure for the first management level will be achieved naturally as part of internal succession appointments. 197 Annual Report 2021 ↗ Combined Management Report For the second management level below the Management Board, the proportion of women was to increase to 30% for PUMA SE and to 40% at Group level by October 31, 2021. These targets were achieved. Target figures 2021 The Supervisory Board of PUMA SE has set a target figure of at least 2 women (33%) for the proportion of women on the Supervisory Board to be achieved by October 31, 2026. For the Management Board, the Supervisory Board has set a target for the proportion of women • of at least 1 woman (25%), provided that PUMA SE has four Management Board members; • of at least 1 woman (20%), provided that PUMA SE has five Management Board members; • of at least 2 women (33%), provided that PUMA SE has six Management Board members. The implementation period for this target is October 31, 2026. For PUMA SE, the Management Board has set a target of 30% for the first management level below the Management Board and 35% for the second management level below the Management Board. At Group level, the proportion of women is to amount to 30% for the first management level below the Management Board and to 40% for the second management level. The implementation deadline here, too, is October 31, 2026. DIVERSITY CONCEPT FOR THE MANAGEMENT BOARD The Supervisory Board and the Management Board promote an agile, open corporate culture in which the advantages of diversity are consciously utilized, and everyone can freely unfold their potential for the best of the Company. PUMA strives to fill Management Board positions and senior management positions primarily with people developed within the Company. The Supervisory Board's decision regarding a particular appointment to the Management 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 knowledge, 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 reflect 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 Until October 31, 2026, PUMA aims to have 25% women on the Management Board, provided that the Board has four Management Board members; 20% women on the Management Board, provided that the Board has five Management Board members; and 33% women on the Management Board, provided that the Board has six Management Board members. In order to achieve this goal, the Supervisory Board ensures that an appropriate proportion of female candidates are included on the succession lists within the framework 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 filling of management functions. In order to involve women even more in management functions in the future, PUMA promotes the compatibility of family and career, 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 25%. 198 Annual Report 2021 ↗ Combined Management Report - Internationality PUMA is a globally operating company. An appropriate number of board members 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. - 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 Management Board are below the standard age limit. - Training and experience background With regard to the educational and professional background, the selection of Management Board members should be based on the competencies required in the PUMA Management Board in general as well as for the respective Management Board with regard to corporate management, strategy development, finance and accounting, supply chain, sales and People & Organization. The same criteria apply here as were developed for the competence profile of the Supervisory Board. These competencies 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 implements the diversity concept. 199 Annual Report 2021 ↗ Combined Management Report RISK AND OPPORTUNITY REPORT PUMA is continuously exposed to opportunities and risks in the competitive, fast-paced and international sport and lifestyle industry. The risk strategy is therefore to take business risks in a calculated manner in order to implement the corporate strategy with all its opportunities. For this purpose, effective risk and opportunity management is required so that opportunities can be recognized and utilized, and risks can be identified and managed at an early stage. We define risks as potential future developments or events that may lead to a negative deviation from targets for the company. Similarly, opportunities are potential future developments or events that may result in a positive deviation from targets. RISK MANAGEMENT SYSTEM PUMA takes a conscious and controlled approach to risks in order to achieve the company's goals. The aim of the risk management system is to identify and manage at an early stage material risks or risks that could even jeopardize the company's existence and thus support the achievement of the company's objectives. In addition, compliance with the related laws, regulations and standards must be ensured, as well as transparency in relation to the risk situation from the perspective of partners such as customers, suppliers and investors. Therefore, PUMA has established an appropriate risk management organization which is able to identify risks at an early stage and manage them in accordance with the corporate strategy and promote risk awareness within the PUMA Group to facilitate risk-based decisions. PUMA's risk management system is based on a comprehensive, interactive and management-oriented approach to risk that is integrated into the company's organization and is based on the globally recognized COSO standard (Committee of Sponsoring Organizations of the Treadway Commission). Opportunity management is not part of the risk management system and is the responsibility of operational management teams. The Management Board of PUMA SE bears overall responsibility for the risk management system. The Management Board regularly updates the Audit Committee of the Supervisory Board of PUMA SE. The Risk Management Committee, which consists of the PUMA SE Management Board and selected managers, is responsible for the design, review and adaptation of the risk management system. For the operational coordination of the risk management process and support of the risk officers, the risk management function of the Group Internal Audit, Risk Management & Internal Control department has been assigned to prepare the regular risk reporting to the Risk Management Committee. The responsibilities, tasks and processes of the risk management system are defined in guidelines. The structure and design of the risk management system are as follows: 200 Annual Report 2021 ↗ Combined Management Report ↗ G.18 RISK MANAGEMENT SYSTEM Monitoring The risk owners are mainly the managers of the functional areas and the managing directors of the subsidiaries. Risks are identified company-wide by performing a bottom-up analysis within the risk owner's area of responsibility. These risks are regularly reported to the risk management function and/or the local monitoring bodies in structured interviews that take place every six months or during the year using established internal reporting channels. The risks are evaluated and assessed in terms of probability of occurrence and extent of damage using quantitative criteria with the help of a systematic methodology. The quantitative criteria are represented in the form of risk classification ranges on a four-level scale. While the risk assessment of the probability of occurrence is measured as a percentage rate, the extent of damage is based on the planned operating income. We follow a net risk approach, addressing the risks that remain after existing control measures have been implemented. The resulting risk assessments are presented as an aggregated risk group. Thus, for the materiality assessment, the quantified risks are combined from their extent of damage and probability of occurrence and are classified in a comprehensive risk matrix with regard to their significance level (see graphic G.19), for internal monitoring. For example, a risk can be allocated within the most critical range in case its assessment reflects a combination of highest bandwidth for extent of damage and probability. The overview of the risk groups is presented in table T.7, summarized in the order of their relative importance and their change during the year. 201 Annual Report 2021 ↗ Combined Management Report ↗ G.19 RISK MATRIX Regular risk identification and assessment is carried out by the risk management function every six months with all major functional areas. The risks recorded and assessed are also reviewed with a top-down approach by the Risk Management Committee. This ensures that adequate consideration is given to interdependencies and the overall risk situation. The risk owners are responsible for the operational management of identified risks. Risks can be managed by avoiding, reducing, diversifying or transferring the risk in order to achieve the targeted and acceptable residual risk. Within the reporting process, material or even existence-threatening risks are coordinated and managed with the Risk Management Committee or the Management Board. The methodology and structure of the risk management system are continuously assessed in terms of their effectiveness, and adapted or improved when required. This is done, on the one hand, by the Internal Audit department acting as an independent review body within the PUMA Group and, on the other hand, by the PUMA SE statutory auditor, who annually assesses the early risk detection system in terms of its fundamental suitability to detect existence-threatening risks at an early stage, and the operating effectiveness of the early risk detection and monitoring system in accordance with Section 317 (4) HGB. The auditor also verifies if an early risk detection system, in line with Section 91 (2) AktG, is in place. 202 Annual Report 2021 ↗ Combined Management Report RISKS The following explanations of risk groups are presented based on their relative importance. PANDEMIC (COVID-19) PUMA first identified the COVID-19 pandemic as a new risk in the financial year 2020 and accordingly established the risk category "pandemic (COVID-19)". This risk was considered to be the most significant business risk for the PUMA Group. The impact of this pandemic (COVID-19) continued to be assessed as a significant business risk in the financial year 2021. This risk relates to the macroeconomic and social impacts of the pandemic, caused for example by lockdowns, government-ordered closures of administrative buildings, production sites and retail stores, restrictions on store opening hours, a reduction in store traffic, travel restrictions and social distancing measures, the cancelation or postponement of major sporting events, and the exclusion or limitation in the numbers of spectators. These consequences have led or may in the future lead to declines in revenue and challenges in maintaining business operations. Furthermore, we are faced with new requirements, regulations and further measures in relation to the health and safety of our employees and customers. The pandemic (COVID-19) has also had a negative impact on existing sourcing and supply chain risks, and implications on the probability of default risks from receivables. In the previous financial year, the pandemic (COVID-19) developed rapidly and dynamically, specifically in light of the rise of new virus variants, and the extent and duration of the resulting impact on our business was and remains extremely difficult to predict. However, on the basis of the progress made in the vaccination campaign, we assume that the situation created by the COVID-19 pandemic will not be long term. We are constantly reviewing information from the World Health Organization (WHO), the centers for disease control and prevention at our respective locations, the Robert Koch Institute (RKI) in Germany and other institutions to identify epidemic or pandemic risks at an early stage and to establish and initiate appropriate defense and protective measures as early as possible. Despite the ongoing challenges and uncertainties resulting from the pandemic (COVID-19), we are continuing to pursue the objective of surviving the crisis without hindering PUMA's mid-term growth. Our approach is local, as different markets are going through these phases at different times. Our main focus is on the health and safety of our employees and customers, safeguarding the liquidity of the PUMA Group by securing credit lines, maintaining close and reliable cooperation with our partners, suppliers and customers, strengthening and expanding the supply chain, digitalizing key business processes and further strengthening our e-commerce business. To that end, we strengthened the partnership with our suppliers by continuing to cancel only a very small proportion of orders and agreeing to extended payment terms in return, in particular during the temporary closure of production sites mandated by government requirements. SOURCING AND SUPPLY CHAIN BUSINESS PARTNERS The majority of PUMA products are produced in selected Asian countries, in particular in Vietnam, China, Bangladesh, Cambodia, Indonesia and India. In addition to the aforementioned challenges resulting from the pandemic (COVID-19), production in these countries continues to be associated with significant risks for us. These risks arise, for example, from changes in sourcing, wage and logistic costs, supply bottlenecks for raw materials or components, and quality issues, as well as from the possibility of overdependence on individual suppliers. 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 the required production capacities for the future. A quality control process and the direct and partnership-like collaboration with suppliers should permanently secure the quality and availability of our products. 203 Annual Report 2021 ↗ Combined Management Report Sourcing and the supply chain must also react to risks, such as changes in duties and tariffs as well as trade restrictions and government requirements. The transport of products to the distribution countries is also exposed to the risk of delays and failures by warehouse and logistics service providers. We therefore continuously analyze political, economic and legal framework conditions and have further enhanced our close cooperation with our logistics partners in order to be able to react to changes in the supply chain early on and to continuously strengthen the supply chain. The collaboration with warehouse and logistics service providers is accordingly secured by selection processes, consistent contractual terms and permanent monitoring of relevant indicators. In the financial year 2021, the pandemic (COVID-19) caused disruptions and delays in sourcing and supply chain operations, leading to an increase in individual risks. To counter this risk, we have intensified our cooperation with suppliers and logistics partners in order to be able to react to the circumstances in a flexible and solution-oriented manner. MACROECONOMIC DEVELOPMENTS As an internationally operating group, PUMA is exposed to global macroeconomic developments and the associated risks having an impact on our sales and sourcing markets. For example, economic developments in important sales markets may have an effect on consumer behavior. This can have positive or negative effects on the planned sales and consolidated net earnings. Likewise, political changes, social developments and environmental events (such as natural disasters) can also be reflected in changes in legal and macroeconomic conditions. Overall, we manage 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 and incorporated into appropriate measures. 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 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. Brand image and brand desirability are of key importance for us, as consumer behavior can have a negative effect on the brand as well as a positive one. Accordingly, we have set the guiding principle that "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 and lifestyle company, but also applies to all company processes. Media reports about PUMA also play a key role in brand image. For example, reports about the infringement of laws or internal/external requirements, product recalls and exposure on social media as well as reports about workforce diversity and tolerance can cause significant damage to brand image and ultimately result in the loss of sales and profit. 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. Brand image is particularly strengthened through cooperation with brand ambassadors who embody the core of the brand and PUMA's brand values ("brave," "confident," "determined" and "joyful") and have a large potential for influencing PUMA's target group. We additionally counter this risk through careful press, social media and public relations work as well as by monitoring the press and social media environment. This is managed from the Group headquarters in Herzogenaurach, Germany, and the subsidiary in the U.S. 204 Annual Report 2021 ↗ Combined Management Report Furthermore, 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." PROJECTS The organizational structure of PUMA, with its group headquarters in Herzogenaurach, having a central sourcing organization and globally positioned distribution companies, underlines the group’s global orientation. This results in a risk for us that the flow of goods and information are not sufficiently supported by modern warehouse, logistics and IT infrastructure. For this reason, existing business processes must be continually optimized and aligned with business needs. This is carried out systematically through targeted optimization projects, which are planned and managed centrally by the specialized departments. INFORMATION TECHNOLOGY The ongoing digitalization of the business environment exposes PUMA to risks in information technology. Key business procedures and processes have the potential to be significantly disrupted by the failure of IT systems and networks, and external attacks (cyberattacks) or incorrect conduct may result in the loss of confidential and sensitive data as well as high costs, loss of revenue and reputational damage. To mitigate these risks, we continuously carry out technical and organizational measures and invest in the renewal and security of our IT landscape. IT systems are regularly checked, maintained and undergo security tests. In addition, all employees are continuously sensitized using guidelines and performing training courses and information campaigns. DISTRIBUTION STRUCTURE PUMA utilizes various distribution channels, such as the traditional wholesale business with our retail partners and the PUMA-owned and operated retail and e-commerce business to reduce its dependency on individual distribution channels. The wholesale business is defined by strong partnerships and represents the largest revenue share overall. The company's own retail and e-commerce business is intended to ensure a higher gross profit margin, better control on distribution and presentation of PUMA products exclusively in the desired brand environment. In the wholesale business, growing 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 us. These include the necessary investments 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 in case of a business decline. In order to avoid risks, we carry out permanent monitoring of distribution channels and regular reporting by the Controlling and specialized departments. A detailed location and profitability analysis is carried out in our distribution channels before making any investment decision. 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 IT platform are made to further optimize purchase transaction settlement and further improve the shopping experience for consumers. 205 Annual Report 2021 ↗ Combined Management Report SUSTAINABILITY Sustainability topics in in sourcing as well as amongst the entire value chain are highly important. Climate change and the resulting increase in customer requirements with regard to sustainability have led to a stronger ecological focus in our product range, both at our own locations and along the production and supply chain. A more efficient use of resources, reduction in greenhouse gas emissions and compliance with environmental standards as well as the increased use of sustainable materials and environmentally friendly chemicals in production are crucial parts of our sustainability strategy. PUMA's sustainability report (the Non-financial Report) for the financial year 2021 will be available by April 30, 2022 at the latest on the following page of our website: https://about.PUMA.com/en/investor- relations/financial-reports. Furthermore, important sustainability information can always be found in the Sustainability section on PUMA's website: https://about.puma.com/en/forever-better MONITORING OF WORKING CONDITIONS An important aspect of corporate responsibility is maintaining and monitoring working conditions and human rights along the entire value chain. ILO (International Labor Organization) core labor standards form an essential part of this; however, monitoring our suppliers to ensure they do not use hazardous chemicals in production is just as important. Non-compliance by suppliers would also violate our requirements and lead to negative media reports and potentially to a loss of revenue. Adherence to applicable standards is ensured through regular audits of supplier companies. LEGAL RISKS As an internationally operating group, PUMA is exposed to various legal risks. These include contractual risks or the risk that a third party could assert claims and litigation for infringement of its trademark rights, patent rights or other rights. Counterfeit products in particular can undermine consumer confidence in the brand and damage PUMA's brand image. 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. To fight brand piracy, the PUMA team responsible for the protection of intellectual property not only ensures that we have a strong global portfolio of property 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. COMPLIANCE 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, we use various tools to manage these risks. This includes an integrated compliance management system, the internal control system, group controlling and the internal audit department. As part of the compliance management system, awareness measures are carried out regarding critical compliance topics, such as corruption prevention and cartel law, and corresponding guidelines and a global network of compliance officers are introduced in the group. PUMA employees also have access to a whistleblowing system for reporting unethical behavior. 206 Annual Report 2021 ↗ Combined Management Report TAX RISKS In an international business environment, applicable tax regulations must be met. By means of appropriate internal rules of conduct, employees are required to comply with and adhere to the relevant tax regulations. In addition to compliance with national tax regulations to which the individual group companies are subject, there are increasing risks related to 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 experts 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 prices for intra-group transactions that are customary for foreign companies, which comply with the applicable procedural rules and are binding for employees who act 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. PERSONNEL DEPARTMENT The creative potential, commitment and performance of PUMA employees are important factors for successful business development. We encourage independent thinking and action, which are key in an open corporate culture with flat hierarchies. Our 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 talent management, identifying key positions and high- potential individuals, and optimizing talent placement and succession planning. We have also instituted additional national and global regulations and guidelines to ensure compliance with legal provisions and safeguard the health and safety of our employees. We will continue to make targeted investments in the human-resource needs of particular functions or regions in order to meet the future requirements of our corporate strategy. CURRENCY RISKS As an international company, PUMA is subject to currency risks resulting from the disparity between the respective amounts of currency used on the purchasing 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 currencies. PUMA manages currency risk in accordance with internal guidelines. Currency forward contracts are used to hedge existing and future financial liabilities in foreign currencies. To hedge signed or pending contracts against currency risk, PUMA only concludes currency forward contracts on customary market terms with reputable international financial institutions. As of the end of 2021, the net requirements for the 2022 planning period were adequately hedged against currency effects. Foreign exchange risks may also arise from intra-group loans granted for financing 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 (EUR). 207 Annual Report 2021 ↗ Combined Management Report In order to disclose market risks, IFRS 7 requires sensitivity analysis 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 that are denominated in a currency which differs from the functional currency and are monetary in nature Differences resulting from the conversion of the individual financial statements to the group currency are not taken into account. All non-functional currencies in which PUMA employs financial instruments are generally considered to be relevant risk variables. Currency sensitivity analysis are based on the following assumptions: Material original monetary 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 currency forward transactions. Currency forward contracts, used to hedge against payment fluctuations caused by exchange rates, are part of an effective cash-flow hedging relationship pursuant to IAS 39. Changes in the exchange rate of the currencies underlying these contracts have an effect on the hedge reserve in equity and on the fair value of these hedging contracts. LIQUIDITY AND INTEREST RATE RISKS PUMA continually analyses short-term capital requirements by rolling cash flow planning at the level of the individual companies in coordination with the central Treasury department. In order to ensure the company's solvency, financial flexibility and a strategic liquidity buffer, PUMA maintains, for example, a liquidity reserve in the form of cash and confirmed credit facilities. In this respect, as of December 31, 2021, the PUMA Group had unused credit lines totaling € 942.0 million. 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, various promissory note loans were issued in several tranches with fixed and variable coupons and different remaining terms. The utilized promissory note loans amount to a total of € 380.0 million as of December 31, 2021 and have a remaining term of between one and five years. Changes in interest rates do not have a significant impact on PUMA’s interest rate sensitivity and therefore do not require the use of interest rate hedging instruments. DEFAULT RISKS Due to its business activities, PUMA is exposed to a default risk on receivables, which is managed by continuous monitoring of outstanding receivables and by recognizing impairment losses, where appropriate. The default risk is limited, if possible, by credit insurance. The maximum default risk is reflected by the carrying amounts of the financial assets recognized in the balance sheet. In addition, default risks also arise to a lesser extent from other contractual financial obligations of the counterparty, such as bank balances and derivative financial instruments. 208 Annual Report 2021 ↗ Combined Management Report RISK OVERVIEW TABLE The following table summarizes the risk groups described above based on their relative importance (significance level) and any changes during the year: ↗ T.07 OVERVIEW OF RISK GROUPS (Order according to relative importance) Risk groups * Classification Description Significance level Change compared to previous year Pandemic (COVID-19) Strategic e.g., store closures, supply problems, health of employees and customers Critical → Business Partners Operational Macroeconomic Developments Product and Market Environment Strategic Strategic Projects Strategic Information Technology Operational Distribution Structure Strategic Sustainability Regulatory Working Conditions Regulatory e.g., raw material bottlenecks, supply chain disruptions, sourcing and logistic costs, quality problems Critical ↗ (pandemic) e.g., economic development, political situation, legal framework conditions Critical ↗ e.g., trends, customer requirements, brand image, media reports e.g., IT infrastructure, construction projects Material Material e.g., cyberattacks, network and system failures Material e.g., change in the distribution landscape e.g., climate change, environmental standards Material Material e.g., labor law, human rights, German Supply Chain Due Diligence Act Material Legal Regulatory e.g., trademark law, patent law, counterfeit products Compliance Regulatory e.g., fraud, corruption Tax Financial e.g., transfer prices Material Material Material Personnel Department Operational e.g., key positions, employee retention, health & safety Moderate Currency Financial e.g., exchange rate fluctuations Moderate Liquidity and Interest Rate Financial e.g., cash, credit lines, custody fees, interest rate developments Moderate Default Financial e.g., payment claims against customers Moderate * Wording adjustments of individual risk groups compared to the previous year → → → → → → → → → → → → → 209 Annual Report 2021 ↗ Combined Management Report OPPORTUNITIES Opportunities should be identified by PUMA at an early stage, assessed and—where possible—used. Due to the close connection to the relevant goals, identified opportunities are incorporated into planning by Controlling. Operational management teams in the respective regions, markets and departments are responsible for opportunity management. PUMA has identified or rather defined the following key opportunity categories for the planning period and beyond. In terms of macroeconomic conditions, the ongoing effects of the COVID-19 pandemic are currently seen as a strengthening factor for the sport and lifestyle sector. If PUMA succeeds in achieving its mid-term growth potential, the company has an opportunity to increase its market share. In times of increased remote working and indoor and team sports being limited, items such as running, fitness, golf and lounge products have become more relevant. Therefore, the product range in these areas is being expanded and further developed. In addition, due to advancing vaccination campaigns and easing restrictions, an increase in attendance at national sporting competitions and international sporting events, such as the Football World Cup in Qatar, could help support growth in the sporting goods industry. In terms of the distribution structure, the COVID-19 pandemic has significantly accelerated the growth of the e-commerce business, particularly with regard to local market coverage. Stronger partnerships in the wholesale business also offer opportunities for future business development. New sales formats and improvements to the shopping experience in our own retail stores can also lead to positive business prospects. In this area, new and state-of-the-art multi-channel distribution centers in key markets will also support the further optimization of delivery capacity in the future. In information technology, improved, tailored communication with customers via digital channels and new ways of presenting products, for example, offer opportunities. In addition, new or more efficient processes may add value or result in cost optimization. Here, the COVID-19 pandemic has also accelerated the digitalization of important business processes, for example with regard to product design and the purchasing process for our wholesale customers. It has also contributed to the further development of the IT environment. With end customers paying more attention to sustainability, there is an opportunity to make further progress with existing PUMA activities and improve communication in this area, which could increase demand for sustainable products. Furthermore, in the area of finance, for example, favorable exchange rate developments offer the opportunity to positively influence the group's financial results. OVERALL ASSESSMENT OF THE RISK AND OPPORTUNITY SITUATION The assessment of the overall risk situation of the Group and PUMA SE is the result of a consolidated view of the risk and opportunity categories described above. Similar to the description in our Annual Report 2020, our assessment of PUMA's overall risk situation this year is again predominantly influenced by the impact of the COVID 19 pandemic on the economy as a whole, as described above, and is focused on the major challenges this poses. The Management Board is currently not aware of any material risks that, either individually, on an aggregated basis or in combination with other risks, could jeopardize the continued existence of the Group and PUMA SE. However, we cannot exclude the possibility that in the future influencing factors, of which we are currently unaware or which we currently do not consider to be material, could have a negative impact on the continued existence of the Group or PUMA SE or individual consolidated companies. Also due to the extremely solid balance sheet structure and equity ratio, as well as the strong liquidity position and the positive business outlook, the Management Board does not see any significant threat to the continued existence of the PUMA Group and PUMA SE. 210 Annual Report 2021 ↗ Combined Management Report MAIN 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 accuracy 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 Reporting Standards that apply in the EU, the requirements of the German Commercial 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 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 management 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 measures necessary to accomplish these, such as internal instructions, organizational and authorization guidelines, the relevant company guidelines (e.g., "Anti-Corruption/Anti-Bribery,” "Cyber Fraud"), a clear separation of functions within the Group and the dual-control principle. The adequacy and operating effectiveness of these measures are regularly reviewed by the Group Internal Audit, Risk Management & Internal Control Department. For monthly financial reporting and consolidation, PUMA has a group-wide reporting and controlling system that makes it possible to regularly and quickly detect deviations from projected figures and accounting irregularities and, where necessary, to take countermeasures. By means of established internal reporting channels, the risk management system can regularly identify events that could affect the Group's economic performance and its accounting 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 management report, it is sometimes necessary to make assumptions and estimates that are based on the information available at the time the financial statements and management report are prepared, that affect the amount, presentation and explanation of recognized assets and liabilities, income and expenses, contingent liabilities and other reportable information. The Audit Committee of the Supervisory Board meets on a regular basis with the independent statutory auditors, the Management Board and the Group Internal Audit, Risk Management & Internal Control Department to discuss the results of the internal audits and statutory audits with reference to the internal control and risk management system as it relates to the accounting process. At the annual meeting on the financial statements, the auditor reports to the Supervisory Board (including the Audit Committee) on the results of the audit of the annual and consolidated financial statements. In addition to the measures described, the Group Internal Audit, Risk Management & Internal Control Department conducts annual Internal Control Self-Assessments (ICSA) for all essential business processes across the Group. In this way, the internal control system is expanded beyond the accounting process, in line with the framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), to support the objectives of ensuring proper financial reporting, improving the efficiency and effectiveness of the processes, and ensuring compliance with legal framework conditions. The use of a standardized software system (GRC tool) is intended to ensure the systematic and uniform implementation of ICSA across the entire company. Within the GRC tool, 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 and potential for improvement in the control environment at process level in order to define appropriate recommendations for action and enable these to be implemented timely by the process owners. The results of the ICSA are 211 Annual Report 2021 ↗ Combined Management Report reported to the Audit Committee and the statutory auditors and are used specifically by the Group Internal Audit, Risk Management & Internal Control Department in risk-oriented audit planning. 212 Annual Report 2021 ↗ Combined Management Report OUTLOOK REPORT GLOBAL ECONOMY In their winter forecast dated December 15, 2021, experts at the Kiel Institute for the World Economy (IfW Kiel) expect global gross domestic product (GDP) to increase by 4.5% in 2022, following growth of 5.7% in 2021. This development is based on the assumption that the recovery of the global economy will be temporarily dampened by the COVID-19 pandemic and persistent supply bottlenecks. However, the experts at IfW Kiel also expect the influence of these negative effects to diminish in 2022 and to be gradually overcome. There is significant uncertainty about the impact of the new Omicron variant on the economy. However, the economic impact is likely to diminish over time, as either vaccination rates are high or a significant proportion of the population has already come into contact with the virus, thus limiting the health impact. The supply bottlenecks have proven to be an increasingly strong burdening factor in recent months, but should gradually be overcome in the course of 2022 with the increasing adjustment of production capacities and value chains. SPORTING GOODS INDUSTRY Provided that the continued course of the COVID-19 pandemic does not result in a renewed significant negative impact on the macroeconomic conditions, we expect the sporting goods industry to grow in 2022. We expect demand for sporting goods to increase in 2022 as the trend toward increased sports activities and healthier lifestyles continues and becomes even more significant as a result of the COVID-19 pandemic. This applies equally to the increasing popularity of athletic footwear and leisure/athletic apparel as an integral part of everyday fashion ("athleisure"). We also assume that major sporting events in 2022, such as the Olympic Winter Games in Beijing and the World Cup in Qatar, will help to support growth in the sporting goods industry. OUTLOOK 2022 In the financial year 2021, PUMA recorded a very strong sales and operating result (EBIT) growth due to a positive general development in our sector, a continued brand momentum of PUMA and strong global demand for our products as well as our focus on operational flexibility. Both, sales and operating result (EBIT) are the highest PUMA has ever achieved in its history. Despite the very strong growth in 2021, we continue to face a high degree of uncertainty in our global business environment. The year 2022 has started with an all-time high of COVID-19 cases and consequently, several governments have implemented regional or country-wide restrictions which affect our entire value chain from manufacturing to retail store operations. Political tensions in key markets as well as supply chain constraints due to container shortages and port congestion are also unfortunately continuing in the new year. Despite the uncertainties lasting into 2022, we expect a strong currency-adjusted sales growth of at least ten percent in the financial year 2022. We anticipate our operating result (EBIT) to be in a range of € 600 million and € 700 million (2021: € 557 million) and net earnings to improve correspondingly. The development of our gross profit margin and our OPEX-ratio in 2022 will continue to depend highly on the degree and duration of the negative impact of the COVID-19 pandemic on our sales. While we will continue to focus on our growth momentum by servicing our retail partners and consumers in the best possible way, we expect inflationary pressure from higher freight rates and raw material prices, in addition to the operating inefficiencies due to COVID-19, to have a dilutive effect on our profitability in 2022. 213 Annual Report 2021 ↗ Combined Management Report The achievement of this outlook is subject to continued manufacturing operations in our key sourcing countries in Asia and no major business interruptions due to COVID-19. In line with the previous years, PUMA will continue to maneuver through these challenges by building on its brand momentum, strong partnerships with suppliers and retailers as well as operational flexibility. The strong and profitable growth in the financial year 2021, an exciting product line up as well as very good feedback from retailers and consumers make us confident for the mid-term success and growth of PUMA. INVESTMENTS Investments in fixed assets of around € 220 million are planned for 2022. The majority of these investments will be in infrastructure in order to create the operating conditions required for the planned long-term growth. The investments mainly concern own distribution and logistics centers and further investments in the expansion and modernization of the Group’s own retail stores. FOUNDATION FOR LONG-TERM GROWTH The Management Board and the Supervisory Board have set long-term strategic priorities. Action plans are being implemented in a targeted and value-oriented manner. We believe that the corporate strategy “Forever Faster” provides the basis for mid- and long-term positive development. Herzogenaurach, February 1, 2022 The Management Board Gulden Descours Freundt Hinterseher 214 Annual Report 2021 ↗ Consolidated Financial Statements CONSOLIDATED FINANCIAL STATEMENTS PUMA SE for the financial year 2021 – International Financial Reporting Standards – IFRS 216 218 219 220 222 Consolidated Statement of Financial Position Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Cash Flows Statement of Changes in Equity 224 Notes to the Consolidated Financial Statements 247 Notes to the Consolidated Balance Sheet 279 Notes to the Consolidated Income Statement 286 Additional Information 304 Declaration by the Legal Representatives 305 Independent Auditor’s Report 215 Annual Report 2021 ↗ Consolidated Financial Statements CONSOLIDATED FINANCIAL STATEMENTS ↗ T.01 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS Cash and cash equivalents Inventories Trade receivables Income tax receivables Other current financial assets Other current assets Current assets Deferred tax assets Property, plant and equipment Right-of-use assets Intangible assets Other non-current financial assets Other non-current assets Non-current assets Total assets 12/31/2021 12/31/2020 Notes € million € million 3 4 5 22 6 7 8 9 10 11 12 12 757.5 655.9 1,492.2 1,138.0 848.0 37.8 153.4 200.9 621.0 21.3 52.9 124.1 3,489.8 2,613.0 279.9 472.4 940.5 471.9 64.4 9.1 277.5 406.9 877.6 443.5 58.8 6.8 2,238.4 2,071.0 5,728.3 4,684.1 216 LIABILITIES AND SHAREHOLDERS' EQUITY Current financial liabilities Trade payables Income taxes Current lease liabilities Other current provisions Other current financial liabilities Other current liabilities Current liabilities Non-current lease liabilities Deferred tax liabilities Pension provisions Other non-current provisions Other non-current financial liabilities Other non-current liabilities Non-current liabilities Subscribed capital Capital reserve Other reserves Treasury stock Equity attributable to the shareholders of the parent Non-controlling interests Shareholders' equity Total liabilities and shareholders' equity Annual Report 2021 ↗ Consolidated Financial Statements 12/31/2021 12/31/2020 Notes € million € million 13 13 22 10 16 13 13 10 8 15 16 13 13 17 17 17 17 68.5 1,176.4 85.7 172.3 47.9 64.4 549.0 121.4 941.5 89.2 156.5 35.3 151.1 377.8 2,164.5 1,872.8 851.0 775.2 48.8 31.9 37.9 40.6 38.2 38.9 314.1 153.7 1.5 0.7 1,285.3 1,047.4 150.8 86.4 150.8 84.8 2,002.9 1,514.2 -26.9 -27.4 2,213.3 1,722.4 17, 29 65.2 41.5 2,278.5 1,763.9 5,728.3 4,684.1 217 ↗ T.02 CONSOLIDATED INCOME STATEMENT Sales Cost of sales Gross profit Royalty and commission income Other operating income and expenses thereof impairment losses on trade receivables and other financial assets Operating result (EBIT) Financial income Financial expenses Financial result Earnings before taxes (EBT) Taxes on income Consolidated net earnings for the year attributable to: Non-controlling interests 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) Annual Report 2021 ↗ Consolidated Financial Statements 2021 2020 Notes € million € million 19, 25 6,805.4 5,234.4 25 25 -3,547.6 -2,776.4 3,257.8 2,458.0 23.9 16.1 20 -2,724.6 -2,264.9 0.2 -30.7 22 -128.5 5 21 21 17, 29 23 23 23 23 557.1 29.9 -81.7 -51.8 505.3 376.8 67.2 309.6 2.07 2.07 209.2 35.4 -82.3 -46.8 162.3 -39.2 123.1 44.2 78.9 0.53 0.53 149.59 149.56 149.59 149.56 218 Annual Report 2021 ↗ Consolidated Financial Statements ↗ T.03 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Consolidated net earnings before attribution Currency changes Cash flow hedge Release to the income statement, net after tax Market value for cashflow hedges, net after tax Items expected to be reclassified to the income statement in the future Remeasurements of the net defined benefit liability, net after tax Neutral effects financial assets through other comprehensive income (FVTOCI), net after tax Items not expected to be reclassified to the income statement in the future Other result Comprehensive income attributable to: Non-controlling interests 2021 2020 € million € million 376.8 123.1 43.8 -138.9 85.8 79.8 8.1 -87.7 209.4 -218.5 4.2 -3.3 -6.2 -2.0 207.4 584.1 71.5 -14.7 -18.0 -236.5 -113.4 40.4 Equity holders of the parent 512.6 -153.8 219 Annual Report 2021 ↗ Consolidated Financial Statements ↗ T.04 CONSOLIDATED STATEMENT OF CASH FLOWS Operating activities Earnings before taxes (EBT) Adjustments for: 2021 2020 Notes € million € million 505.3 162.3 Depreciation and impairment 9, 10, 11 Non-realized currency gains/losses, net Financial income Financial expenses Changes from the sale of fixed assets Changes to pension provisions 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 Net cash from operational business activities Income taxes paid Net cash from operating activities 305.8 -29.6 -29.9 72.6 5.1 -3.7 -4.5 21 21 15 26 821.2 5, 6, 7 -283.2 293.8 26.3 -35.4 78.4 2.4 -1.0 -4.0 522.8 -50.0 4 13 22 26 -304.3 -109.7 373.2 606.9 -146.9 460.1 147.7 510.8 -89.3 421.5 220 Annual Report 2021 ↗ Consolidated Financial Statements 2021 2020 Notes € million € million Investing activities Purchase of property and equipment 9, 11 -202.4 -151.0 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 Raising 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 12 21 10 13 13 13 13 17 17, 29 21 26 Exchange rate-related changes in cash and cash equivalents 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 3, 26 18.3 -11.6 11.9 1.6 -4.5 8.4 -183.8 -145.5 -160.9 -135.0 -53.4 0.0 -68.5 235.0 -23.9 -47.8 -44.4 0.0 112.5 -18.3 0.0 0.0 -45.6 -43.0 -164.0 -129.2 -10.5 101.7 655.9 757.5 -8.9 137.8 518.1 655.9 221 Annual Report 2021 ↗ Consolidated Financial Statements ↗ T.05 STATEMENT OF CHANGES IN EQUITY (€ million) Subscribed capital Capital reserve Other reserves Revenue reserves incl. Retained Earnings Difference from currency conversion Cash flow hedges Treasury stock Equity before non- controlling interests Non- controlling interests 12/31/2019 150.8 83.0 1,900.9 -224.2 -8.8 -28.1 1,873.6 Consolidated net earnings of the year Net income directly recognized in equity Total comprehensive income Dividends paid to equity holders of the parent company / non-controlling interests 78.9 -18.0 60.9 -135.9 -135.9 -78.8 -78.8 78.9 -232.7 -153.8 46.7 44.2 -3.9 40.4 0.0 -45.6 TOTAL equity 1,920.3 123.1 -236.5 -113.4 -45.6 2.5 Utilization / Issue of treasury stock 1.8 0.8 2.5 12/31/2020 150.8 84.8 1,961.8 -360.0 -87.6 -27.4 1,722.4 41.5 1,763.9 222 Annual Report 2021 ↗ Consolidated Financial Statements Subscribed capital Capital reserve Other reserves Revenue reserves incl. Retained Earnings Difference from currency conversion Cash flow hedges Treasury stock Equity before non- controlling interests Non- controlling interests 12/31/2020 150.8 84.8 1,961.8 -360.0 -87.6 -27.4 1,722.4 Consolidated net earnings of the year Net income directly recognized in equity Total comprehensive income Dividends paid to equity holders of the parent company / non-controlling interests 309.6 -2.0 307.6 -23.9 39.4 39.4 165.6 165.6 Utilization / Issue of treasury stock 1.7 0.5 309.6 203.1 512.6 -23.9 2.2 41.5 67.2 4.3 71.5 -47.8 TOTAL equity 1,763.9 376.8 207.4 584.1 -71.8 2.2 12/31/2021 150.8 86.4 2,245.4 -320.6 78.1 -26.9 2,213.3 65.2 2,278.5 223 Annual Report 2021 ↗ Consolidated Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL Under the PUMA and Cobra Golf brand names, 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 competent registry court is in Fürth (Bavaria), the register number is HRB 13085. The consolidated financial statements of PUMA SE and its subsidiaries (hereinafter shortly referred to as the “Group” or “PUMA”) were prepared in accordance with the “International Financial Reporting Standards (IFRS)” accounting standards issued by the International Accounting Standards Board (IASB), as they are to be applied in the EU, and the supplementary accounting principles to be applied in accordance with Section 315e (1) of the German Commercial Code (HGB). The IASB standards and interpretations, as they are to be applied in the EU, which are mandatory for financial years as of January 1, 2021, have been applied. The items contained in the financial statements of the individual Group companies are measured based on the currency that corresponds to the currency of the primary economic environment in which the Company operates. The consolidated financial statements are prepared in euros (EUR or €). The presentation of amounts in millions of euros with one decimal place may lead to rounding differences since the calculation of individual items is based on figures presented in thousands. The cost of sales method is used for the consolidated income statement. The following new or 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 Amendments to IFRS 16 COVID-19 related Rent Concessions after June 30, 2021 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Amendments to IFRS 4 Interest Rate Benchmark Reform (Phase 2) Extension of the temporary exemption from the Application of IFRS 9 in IFRS 4 224 Annual Report 2021 ↗ Consolidated Financial Statements The standards and interpretations used for the first time as of January 1, 2021 had the following effects on the consolidated financial statements: AMENDMENTS TO IFRS 16 COVID-19-RELATED RENT CONCESSIONS AFTER JUNE 30, 2021 The practical expedient granted in IFRS 16 for the recognition of rent concessions due to the COVID-19 pandemic was extended. The practical expedient previously only applied to payments that would have been due on or before June 30, 2021 pursuant to the original contractual agreement. Following the latest amendment of IFRS 16, this period has now been extended to payments with an original maturity of up to June 30, 2022. The amendments to IFRS 16 in respect of COVID-19-related rent concessions enable lessees to make use of a practical recognition exemption. This means that PUMA, as a lessee, may waive the evaluation of whether COVID-19-related rent concessions – e.g., a deferral of or exemption from rent/lease payments for a specific period of time – constitute lease modifications as defined in IFRS 16. PUMA has decided to make use of this option for all rent concessions that fall within the scope of this practical expedient. This practical recognition exemption applies only to rent concessions that are a direct consequence of the COVID-19 pandemic and that meet the following requirements cumulatively: a) The change to the lease payments may only result in a change to the consideration that is substantively equal to or less than the consideration before the rent concessions were granted. Accordingly, a (net) increase to the consideration would not fall within the scope of the practical recognition exemption. b) The provision may only be exercised for payments that would have been due on or before June 30, 2022 pursuant to the original contractual agreement. c) The changes must not be accompanied by any additional material changes to the terms and conditions of the contract. For example, a three-month suspension of lease payments before June 30, 2022, combined with a three-month lease extension at the end of the agreement term under practically the same conditions, does not constitute a material change to the contractual terms or conditions. Where the above conditions are met, PUMA may account for the rent concessions as if they were variable lease payments and recognize them in the income statement in the period in which the rent concessions were granted. In the case of finally waived lease payments, it must be checked whether a derecognition of the lease liability is to be carried out in accordance with the requirements of IFRS 9 “Financial Instruments”. This represents a simplification of the accounting treatment of the rent concessions, as it is no longer necessary to check whether the conditions for a contractual modification apply and any changes do not need to be accounted for as a contractual modification. As a result of this practical recognition exemption, in the financial year 2021 PUMA recognized € 7.1 million in rent concessions (previous year: € 13.7 million) as variable lease payments in the income statement. This also led to a reversal of lease liabilities in almost the same amount. Furthermore, lease payments were deferred and, for some contracts, the underlying lease term was extended by a period of up to three months. In these cases, no adjustment was made to the amount of lease liabilities. The information regarding leases in financial year 2021 is presented in chapter 10. 225 Annual Report 2021 ↗ Consolidated Financial Statements CHANGES IN OTHER STANDARDS AND INTERPRETATIONS The amendments to the other standards and interpretations described below, which were to be initially adopted as of January 1, 2021, did not affect the PUMA consolidated financial statements. The interest rate benchmark reform (phase 2, amendments to IFRS 9, IAS 39 and IFRS 7) concerns specific requirements for the accounting of hedge relationships of interest rate hedge instruments. This change has no effect on the PUMA consolidated financial statements. The extension of the temporary exemption from the application of IFRS 9 (Financial Instruments) in IFRS 4 (Insurance Contracts) has no effect on the PUMA consolidated financial statements. 226 Annual Report 2021 ↗ Consolidated Financial Statements NEW, BUT NOT YET MANDATORY STANDARDS AND INTERPRETATIONS The following standards and interpretations have been released but will only become effective in later reporting periods and are not applied earlier by the Group: ↗ T.07 Standard Endorsed Title Date of adoption * Planned adoption Amendments to IFRS 3 Amendments to IAS 37 Amendments to IAS 16 References to the Conceptual Framework Onerous contracts: Contract performance costs Property, plant and equipment: Proceeds before intended use Annual Improvements 2018 – 2020 Improvements to IFRS 1, IFRS 9, IFRS 16 and IAS 41 1/1/2022 1/1/2022 1/1/2022 1/1/2022 1/1/2022 1/1/2022 1/1/2022 1/1/2022 IFRS 17 (including amendment IFRS 17) Endorsement pending Amendments to IAS 1 Amendments to IAS 1 Amendments to IAS 8 Amendments to IAS 12 Insurance contracts 1/1/2023 1/1/2023 Classification of liabilities as current or non-current Disclosure of accounting policies Definition of accounting estimates Deferred taxes relating to assets and liabilities from a single transaction 1/1/2023 1/1/2023 1/1/2023 1/1/2023 1/1/2023 1/1/2023 1/1/2023 1/1/2023 Amendments to IFRS 10 and IAS 28 Sale or contribution of assets postponed indefinitely * Adjusted by EU endorsement, if applicable PUMA does not expect any significant effects on the consolidated financial statements from these amendments. 227 Annual Report 2021 ↗ Consolidated Financial Statements 2. SIGNIFICANT CONSOLIDATION, ACCOUNTING AND VALUATION PRINCIPLES CONSOLIDATION PRINCIPLES The consolidated financial statements were prepared as of December 31, 2021, 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. 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 therefore considered to exist if the Group is exposed to variable returns from its relationship 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. For each acquisition, there is a separately exercisable option whether the non-controlling interests are measured at fair value or at the proportionate share of net assets. The surplus of the consideration transferred that exceeds the Group’s share in the net assets stated at fair value is recognized as goodwill. If the consideration transferred is lower than the amount of the net assets stated at fair value, the difference is recognized directly in the income statement. In individual cases, PUMA is the economic owner of shareholdings when it has a majority stake due to the contractual arrangements with shareholders who hold non-controlling interests in individual companies in the Group. These companies are included in the consolidated financial statements at 100% and without disclosure of non-controlling interests (the respective companies are marked in table T09). The present value of the capital shares attributable to the non-controlling interests 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 in 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. Intra-group receivables and liabilities are offset against each other. Offsetting differences resulting from exchange rate effects are generally recognized in the income statement to the extent that they arose in the reporting period. Insofar as receivables and liabilities are of a long-term nature and have a capital- replacing character, the currency difference is recognized directly in equity and in other comprehensive 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 income are eliminated. 228 Annual Report 2021 ↗ Consolidated Financial Statements GROUP OF CONSOLIDATED COMPANIES In addition to PUMA SE, the consolidated financial statements include all subsidiaries 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, 2021, the Group does not hold any investments in associated companies. The changes in the number of Group companies (including the parent company PUMA SE) in the financial year 2021 were as follows: ↗ T.08 As of Formation of companies Disposal of companies As of 12/31/2020 102 4 5 12/31/2021 101 The additions to the group of consolidated companies are due to the foundation of: • PUMA Sports Philippines Inc., Philippines • PUMA Sports (Thailand) Co., Ltd., Thailand • STICHD SOUTHEAST ASIA SDN. BHD., Malaysia • PT PUMA SPORTS INDONESIA, Indonesia The disposals from the group of consolidated companies are due to mergers of the following companies within the group of consolidated companies: • PUMA Logistik-Verwaltungs GmbH, Germany • PUMA Retail Peru S.A.C., Peru • Servicios Profesionales RDS, S.A. de C.V., Mexico In addition, during the financial year, PUMA Teamwear Benelux B.V., Netherlands and PUMA Slovakia s.r.o. v likvidácii, Slovakia were liquidated. The changes in the group of consolidated companies did not have a significant effect on the net assets, financial position and results of operations. 229 Annual Report 2021 ↗ Consolidated Financial Statements The Group companies are allocated to regions as follows: ↗ T.09 as of Dec. 31, 2021 No. Companies/Legal Entities Country City Shareholder Share in Capital - parent company - PUMA SE EMEA Austria Puma Dassler Gesellschaft 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 germany gmbh PUMA UNITED KINGDOM LTD PUMA PREMIER LTD STICHD UK LTD STICHD SPORTMERCHANDISING UK LTD 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Germany Herzogenaurach Austria Austria Salzburg Salzburg Czech Republic Prague Denmark Estonia Finland France France Germany Germany Germany Germany Germany Great Britain Great Britain Arhus Tallinn Helsinki Strasbourg Düsseldorf London London Boulogne Billancourt indirect Herzogenaurach Herzogenaurach Herzogenaurach direct direct direct Herzogenaurach indirect direct indirect indirect indirect indirect indirect indirect indirect indirect indirect indirect indirect Great Britain Mansfield Great Britain London 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 230 as of Dec. 31, 2021 Annual Report 2021 ↗ Consolidated Financial Statements Companies/Legal Entities Country City Shareholder Share in Capital GENESIS GROUP INTERNATIONAL LIMITED Great Britain Manchester Sport Equipment Hellas S. A. of Footwear, Apparel and Sportswear u.Li. Greece PUMA ITALIA S.R.L. STICHD ITALY SRL Puma Sport Israel Ltd. In Liq PUMA MALTA LIMITED Puma Benelux B.V. PUMA International Sports Marketing B.V. stichd group B.V. stichd international B.V. Italy Italy Israel Malta Netherlands Netherlands Athens Assago Assago Hertzeliya St.Julians Leusden Leusden direct direct indirect indirect indirect indirect direct direct Netherlands 's-Hertogenbosch direct Netherlands 's-Hertogenbosch indirect stichd sportmerchandising B.V. Netherlands 's-Hertogenbosch indirect 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 SPORTS DISTRIBUTORS (PTY) LTD PUMA SPORTS S A (PTY) LTD PUMA IBERIA SLU STICHDIBERIA S.L. Nrotert AB Netherlands 's-Hertogenbosch indirect Netherlands 's-Hertogenbosch indirect Netherlands 's-Hertogenbosch indirect Norway Poland Romania Russia South Africa South Africa Spain Spain Sweden Fornebu Warsaw Voluntari Moscow Cape Town Cape Town Madrid indirect indirect indirect indirect indirect indirect direct Cornella de Llobregat indirect Helsingborg direct * subsidiaries which are assigned to be economically 100% PUMA Group No. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 100% 100%* 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 231 No. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. as of Dec. 31, 2021 Companies/Legal Entities PUMA Nordic AB Nrotert Sweden AB stichd nordic AB MOUNT PUMA AG Puma Retail AG stichd switzerland ag PUMA Spor Giyim Sanayi ve Ticaret A.S. PUMA UKRAINE LIMITED LIABILITY COMPANY PUMA Middle East FZ-LLC PUMA UAE (L.L.C) Americas Country Sweden Sweden Sweden Switzerland Switzerland Switzerland Turkey Ukraine Helsingborg Helsingborg Helsingborg Oensingen Oensingen Egerkingen Istanbul Kiew United Arab Emirates Dubai United Arab Emirates Dubai PUMA Sports Argentina S.A. (former Unisol S.A.) Argentina Buenos Aires PUMA Sports Ltda. PUMA Canada, Inc. PUMA United Canada ULC PUMA CHILE SpA PUMA SERVICIOS SpA PUMA México Sport, 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. Brazil Canada Canada Chile Chile Mexico Mexico Mexico Mexico Sao Paulo Toronto Vancouver Santiago Santiago Mexico City Mexico City Mexico City Mexico City * subsidiaries which are assigned to be economically 100% PUMA Group Annual Report 2021 ↗ Consolidated Financial Statements City Shareholder Share in Capital indirect indirect indirect direct indirect indirect indirect indirect indirect indirect indirect indirect indirect indirect direct indirect direct direct indirect indirect 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%* 100% 100% 100% 51% 100% 100% 100% 100% 100% 100% 232 as of Dec. 31, 2021 No. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. Companies/Legal Entities Distribuidora Deportiva PUMA S.A.C. Distribuidora Deportiva PUMA Tacna 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 stichd NA, Inc. Asia/ Pacific PUMA Australia Pty. Ltd. White Diamond Australia Pty. Ltd. White Diamond Properties Pty. Ltd. PUMA China Ltd. (彪马（上海）商贸有限公司) stichd Trading (Shanghai) Co., Ltd. (斯梯起特贸易（上海）有限公司) Guangzhou World Cat Information Consulting Services Company Ltd. (广州寰彪信息咨询服务有限公司) World Cat Ltd. (寰彪有限公司) Development Services Ltd. PUMA International Trading Services Ltd. PUMA ASIA PACIFIC LTD (彪馬亞太區有限公司) PUMA Hong Kong Ltd. (彪馬香港有限公司) stichd Limited Country Peru Peru Uruguay USA USA USA USA USA USA USA Australia Australia Australia China China China China China China China China China City Lima Tacna Montevideo Wilmington Wilmington Wilmington Wilmington Dover Dover Wilmington Melbourne Melbourne Melbourne Shanghai Shanghai indirect indirect direct indirect indirect indirect indirect indirect indirect indirect indirect indirect indirect indirect indirect Guangzhou indirect Hongkong Hongkong Hongkong Hongkong Hongkong Hongkong direct direct indirect direct indirect indirect Annual Report 2021 ↗ Consolidated Financial Statements Shareholder Share in Capital 100% 100% 100% 100% 100% 100% 100% 51% 51% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 233 as of Dec. 31, 2021 No. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. Companies/Legal Entities PUMA Sports India Private Ltd. PUMA India Corporate Services Private Ltd. World Cat Sourcing India Private Ltd. PT. PUMA Cat Indonesia PT PUMA Sports Indonesia PUMA Japan K.K. (プーマ ジャパン株式会社) PUMA Korea Ltd. (푸마코리아 유한회사) Stichd Korea Ltd PUMA Sports Goods Sdn. Bhd. STICHD SOUTHEAST ASIA SDN. BHD. PUMA New Zealand Ltd. PUMANILA IT SERVICES INC. PUMA Sports Philippines Inc. PUMA Sports SEA Trading Pte. Ltd. PUMA SEA Holding Pte. Ltd. Annual Report 2021 ↗ Consolidated Financial Statements Country City Shareholder Share in Capital India India India Indonesia Indonesia Japan Korea (South) Bangalore Bangalore Bangalore Jakarta Jakarta Tokyo Seoul Korea (South) Incheon Malaysia Malaysia Petaling Jaya Kuala Lumpur New Zealand Auckland City of Makati City of Makati Philippines Philippines Singapore Singapore indirect indirect indirect indirect indirect indirect direct 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% PUMA Taiwan Sports Ltd. (台灣彪馬股份有限公司） China (Taiwan) Taipei 100. PUMA Sports (Thailand) Co., Ltd. Thailand Bangkok World Cat Vietnam Sourcing & Development Services Company Limited (CÔNG TY TNHH DỊCH VỤ PHÁT TRIỂN & NGUỒN CUNG ỨNG WORLD CAT VIỆT NAM) 101. Vietnam Ho Chi Minh City indirect 100% PUMA Mostro GmbH, PUMA Sprint GmbH, PUMA International Trading GmbH and PUMA Europe GmbH have made use of the exemption provision under Section 264 (3) of the German Commercial Code (HGB). 234 Annual Report 2021 ↗ Consolidated Financial Statements 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 recognized in the income statement. Non-monetary items are converted at historical 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 exchange rates valid on the balance sheet date. Expenses and income have been converted at the annual average exchange rates. Any differences resulting from the currency conversion 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: ↗ T.10 Currency USD CNY JPY GBP 2021 2020 Reporting date exchange rate Average exchange rate Reporting date exchange rate Average exchange rate 1.1326 7.1947 130.3800 0.8403 1.1827 7.6282 129.8767 0.8596 1.2271 8.0225 126.4900 0.8990 1.1422 7.8747 121.8458 0.8897 The currency area Argentina has been in a hyperinflationary environment since 2018. The effects on the consolidated financial statements were analyzed in accordance with IAS 29 and IAS 21.42. The application of the aforementioned standards to the PUMA SE consolidated financial statements as of December 31, 2021 would have resulted in an increase in assets of € 17.5 million (previous year: € 14.7 million) (mainly property, plant and equipment, intangible assets and inventories), a decrease in liabilities of € 3.1 million (previous year: € 0.0 million) and an adjustment of equity of € 20.6 million (previous year: € 14.7 million). Furthermore, the operating result (EBIT) would have decreased by € 1.2 million (previous year: € 4.4 million). The effects on the consolidated financial statements were considered insignificant and did not lead to an adjustment in the context of the group accounting. 235 Annual Report 2021 ↗ Consolidated Financial Statements ACCOUNTING 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 “amortized 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 interest” toward the outstanding principal amount. For investments (equity instruments), IFRS 9 allows a measurement at fair value through other comprehensive income (FVOCI) under certain conditions. If these interests, however, are disposed of or written off, 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. DERIVATIVE FINANCIAL INSTRUMENTS/HEDGE ACCOUNTING In relation to the accounting of hedge relationships, PUMA made use of the option to continue applying the rules of IAS 39 for hedge accounting. 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 concluded, 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, assessments as to whether the derivatives used in the hedge accounting compensate effectively for a change in the fair value or the cash flow of the underlying transaction are documented at the beginning of the hedge accounting and continuously thereafter. 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 measurement 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, together 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. 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 short-term and long-term financial assets or liabilities. 236 Annual Report 2021 ↗ Consolidated Financial Statements LEASES PUMA has concluded leases exclusively as lessee. The leases are respectively identified on an individual contract level. PUMA recognizes 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 an acquisition value of the assets of less than € 5,000). In the case of a short-term lease or low-value lease, the Group recognizes 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 option and decided not to apply IFRS 16 with regard to leases for intangible assets. The 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 present 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 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 result, future adjustments after changes in the index or interest 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 sufficiently certain that it will exercise this termination option and if this is taken 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 exercise 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 balance sheet. As described in chapter 1 above, PUMA applies the practical recognition exemption for COVID-19-related rent concessions to all rent concessions falling within the scope of this measure. Where the conditions are met, the rent concessions will be represented on the balance sheet as if they were variable lease payments. Consequently, the rent concessions will be recognized in the income statement in the period in which they were granted. The subsequent measurement of the lease liability is done by increasing the carrying amount by adding the accrued interest of the lease liability (using the effective interest method) and by reducing the carrying amount of the lease liability by the lease payments made. Where COVID-19-related rent concessions involve exemption from lease payments, the carrying amount of the lease liability is reduced by the exempted lease payments. If the term of the lease has changed and this is not a COVID-19-related rent concession, or if a material event has led to a change in the assessment relating to the exercise of a purchase option, PUMA will remeasure the lease liability by discounting the adjusted lease payments using an updated interest rate and will adjust the corresponding right-of-use asset accordingly. 237 Annual Report 2021 ↗ Consolidated Financial Statements 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 payments using an unchanged discount rate. The corresponding right-of-use asset is adjusted accordingly. If a lease is changed and this is not a COVID-19-related rent concession, and the change in the lease is not recognized as a separate lease, PUMA will remeasure the lease liability based on the lease term for the new lease. 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 deducted 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 acquisition 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 depreciation period accordingly. Depreciation starts with the commencement of the lease. Variable lease payments that are not dependent on an index or interest rate are not included in the valuation of the lease liabilities and the right-of-use. These payments are recognized 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 allows to dispense with a separation between non-lease components and lease components. With regard to land and buildings, 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 & machines and motor vehicles), the practical expedient is generally applied, the result of which is that the leasing components and non-leasing components are both recognized. The right-of-use assets are recognized as a separate line item in the consolidated balance sheet. The right-of-use assets are subject to impairment of assets in accordance with IAS 36. As a general rule, the right-of-use assets are tested for impairment (impairment test) if there is any indication that the value of the asset could be impaired. The right-of-use assets, in particular in connection with the Group’s own retail stores, are subjected to an impairment test if there are indicators or changes in planning assumptions that suggest that the carrying amount of the assets may not be recoverable. For this purpose, a so-called “triggering event test” is carried out after the annual budget planning has been prepared or on an occasional basis. The value in use is determined for each retail store using the discounted cash flow method. The value in use is determined on the basis of the planned cash flows for the retail stores according to the budget, which is prepared on a bottom-up basis and approved by management. The forecast period is derived from the expected useful lives of the respective retail store and is reviewed annually. With reference to the bottom- up budget, country- and CGU-specific sales and cost developments are used as a basis for the remaining useful life. The growth rates used are based on the expected nominal retail growth in the respective market for the respective planning year. All retail stores are experiencing growth rates in a single-digit to low double-digit percentage range. Cash flows were discounted at a weighted average cost of capital rate of between 4.7% and 19.7% (previous year: between 3.7% and 18.9%) when determining the value in use of retail stores. This was based on a risk-free interest rate on equivalent term structures of 0.1% (previous 238 Annual Report 2021 ↗ Consolidated Financial Statements year: 0.4%) and a market risk premium of 7.8% (previous year: 7.8%). The value in use is compared with the carrying amount of the net assets allocated to the retail store (in particular, right-of-use assets from the lease, tenant fixtures, net working capital and proportionate corporate assets allocated to the central areas). If the carrying amount of the assets of the retail stores exceeds the determined value in use, the fair value of the cash-generating unit is also calculated. If an impairment occurs, the fair value of the right-of- use asset is determined separately, taking into account materiality aspects, using internal or external data sources. If there are indications that stores that have previously been written down have achieved a turnaround and are again recoverable, an additional triggering event test is carried out and, where applicable, a reversal of impairment loss is recorded up to the amount of the amortized costs. 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 fixed-term deposits 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 amortized 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 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 subsequently at amortized cost with deduction of value adjustments, in the form of a provision for risks. 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. When determining the provision for risks for trade receivables, PUMA uniformly applies 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 into 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 objective 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 provision for risks is established for the trade receivables with respect to this customer. If a credit insurance is in place, it is taken into account when determining the amount of the risk provision. 239 Annual Report 2021 ↗ Consolidated Financial Statements OTHER FINANCIAL ASSETS 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 generally held under a business model that provides for “holding” the asset until maturity, in order to collect the contractual cash flows. The subsequent measurement of the other financial assets is therefore always carried out at amortized cost, taking into account the respective impairment losses. The business model “trading” is 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. INVESTMENTS The investments recognized under non-current financial assets belong to the category “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 investments are recorded on the trade date. Investments are initially recognized at fair value plus transaction 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 investments is transferred to retained earnings. The category “measured at fair value through profit or loss” (FVPL) is not used with regard to investments. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are measured at acquisition costs, net of accumulated depreciation. The depreciation period depends on the expected useful life of the respective item. The straight-line method of depreciation is applied. The useful life depends on the type of the assets involved. Buildings are subject to a useful life of between ten and fifty years, and a useful life of between three to ten years 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 capitalized 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 difference between the transferred consideration and the Group’s share in the fair value of the acquired assets and liabilities. Goodwill amounts are allocated to the Group’s cash-generating units that are expected 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 impairment 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. 240 Annual Report 2021 ↗ Consolidated Financial Statements OTHER INTANGIBLE ASSETS Acquired intangible assets largely consist of concessions, intellectual property rights and similar rights. These are measured at acquisition costs, net of accumulated amortization. The useful life of intangible assets is between three and ten years. Scheduled depreciation is done on a straight-line basis. If the capitalization requirements of IAS 38.57 “Intangible Assets” are met cumulatively, 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, internally generated intangible assets are 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 amortized 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 lives 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 asset (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 lower 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- generating 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 application scope of IAS 36. If the reason for the recorded impairment no longer applies, a reversal of impairment loss is recorded to the maximum amount of the amortized costs. There is no reversal of an impairment loss for goodwill. Impairment tests are performed using the discounted cash flow method. For determining 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 determination 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 taken into account. Trademarks with an indefinite useful life are subjected to an impairment test based on the relief-from- royalty method during the financial year or when the occasion 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. See chapter 11 for further details, in particular regarding the assumptions used for the calculation. 241 Annual Report 2021 ↗ Consolidated Financial Statements FINANCIAL DEBT, OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES In general, these items are recognized at their acquisition cost, taking into account transaction costs and subsequently recognized at amortized cost. Non-interest or low-interest-bearing liabilities with a term of at least one year are recognized at present value, taking into account an interest rate in line with market conditions, and are compounded until their maturity at their repayment amount. The category “measured at fair value through profit or loss” (FVPL) is not used with regard to financial liabilities. Current financial liabilities also include those long-term loans that have a maximum residual term of up to one year. PUMA offers its suppliers a supplier financing program. This is a kind of reverse factoring, the financing conditions of which are also linked to the achievement of sustainability targets by the suppliers. Participation in the program is voluntary for the suppliers and helps the suppliers to pre-finance the supplier invoices to PUMA from one of the partner banks against an interest discount already considerably before the customary payment date. PUMA is not affected by the participation of the suppliers in the supplier financing program (in particular no changes to the payment terms, no changes to the payment methods and/or no changes to the original contractual conditions). There are therefore also no discretionary decisions to be made with regard to the balance sheet and cash flow statement. 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 generally calculated using the projected unit credit method. This method takes into account not only known pension benefits and pension rights accrued as of the reporting date, but also expected future salary and pension increases. The defined benefit obligation (DBO) is calculated by discounting expected future cash outflows 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 revaluations 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. Details regarding the assumed life expectancy and the mortality tables used are shown in chapter 15. 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. 242 Annual Report 2021 ↗ Consolidated Financial Statements 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 restructuring 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 STOCK Treasury stock is deducted from equity at its market price as of the date of acquisition, plus incidental acquisition costs. Pursuant to the authorization of the Annual General Meeting, treasury stock can be repurchased for any authorized purpose, including the flexible management of the Company’s capital requirements. MANAGEMENT INCENTIVE PROGRAMS PUMA uses cash-settled share-based payments and key performance indicator-based long-term incentive programs. For cash-settled share-based payments, 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 on the settlement date and all changes to the fair value are recognized in the income statement. During the three-year term of the respective programs, the medium-term targets of the PUMA Group with regard to sales growth, 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 expects to be entitled from the contract with customers, taking into account returns, discounts and rebates. Amounts collected on behalf of third parties (such as VAT) are not included in the sales revenues. The Group records sales revenues at the time when PUMA fulfills its performance obligation to customers and has transferred the right of disposal over the product to customers. The Group sells footwear, apparel and accessories both to wholesalers and directly to customers through its own retail activities. 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 conformity 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 customers, in other words, when the products have been shipped to the specific location of the wholesaler (delivery). After delivery, the wholesaler bears the inventory risk and has full right of disposal over the manner and means of distribution and the selling price of the products. In the case of sales to end customers 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 retail shop. The payment of the purchase price is due as soon as the customers purchase the products. Under certain conditions and according to the contractual stipulations, customers have the option to exchange products or return them for a credit. The amount of the expected returns is estimated on the 243 Annual Report 2021 ↗ Consolidated Financial Statements basis of past experience and is deducted 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 trademark 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 accrual basis. Commission income is invoiced if the underlying purchase transaction is classified as realized. ADVERTISING AND PROMOTIONAL EXPENSES Advertising expenses are recognized in the income statement at the time they are incurred. In general, promotional expenses stretching over several years are recognized as an expense over the contractual term on an accrual basis. Any expenditure 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 requirements 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”. GOVERNMENT GRANTS Starting in the financial year 2020, PUMA has received government grants related to income on a global level as a result of the COVID-19 pandemic; these have then been deducted from the corresponding expenses in the income statement. Grants are received via country-specific, one-off emergency aid schemes relating to the global COVID-19 pandemic and via country-specific short-time work programs, provided that they meet the requirements of IAS 20 and other comparable measures. Pursuant to IAS 20.7, government grants related to income are recognized when there is reasonable assurance that the entity will comply with the conditions attached to them and the grants will be received. Grants related to income are deducted from the corresponding expenses in the income statement (net presentation). FINANCIAL RESULT The financial result includes interest income from financial investments and interest expenses from loans, along with interest income and expenses in connection with derivative financial instruments. Financial results also include interest expenses from lease liabilities as well as discounted, non-current liabilities associated with acquisitions and those arising 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. 244 Annual Report 2021 ↗ Consolidated Financial Statements INCOME TAXES Current income taxes are determined in accordance with the tax regulations of the respective countries where the individual Group companies conduct their 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 allocated 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 statement. 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 balance sheet date. Deferred tax assets are recognized only to the extent that the respective tax advantage 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 assumptions 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 values may deviate from the assumptions and estimates made. Consequently, future 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 liabilities 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 circumstances. PUMA applies scenarios that assume that the situation created by the COVID-19 pandemic will not be long term. Accordingly, PUMA does not expect that the impact on the consolidated financial statements will be significant or serious. Assumptions and estimates are made in particular with regard to evaluating the control of companies with non-controlling interests, the measurement of goodwill and brands, pension obligations, derivative financial instruments, leases 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. As it is currently difficult to predict what the global consequences of the COVID-19 pandemic will be in the short and medium term, these assumptions and estimates are generally 245 Annual Report 2021 ↗ Consolidated Financial Statements subject to increased uncertainty. However, it is assumed that the global economy will gradually return to normal in 2022 due to the availability of vaccines against COVID-19 and the progress made with immunizing large parts of the population in PUMA’s key markets. Another key assumption concerns the determination of an appropriate interest rate for discounting the cash flow to present value (discounted cash flow method). The “relief from royalty method” is used to value brands. See chapter 11 for further details, in particular regarding the assumptions used for the calculation. Pension Obligations Pension obligations are determined using an actuarial calculation. This calculation 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 significant 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 payments. 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 benefits are paid and the maturity of which corresponds to that of the pension obligations. 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 management’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. Due to the currently difficult to predict short- and medium-term consequences of the global COVID-19 pandemic, these assumptions and estimates are generally subject to increased uncertainty. Deferred tax assets on losses 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 offset against these tax losses carried forward in the next 5 years. See chapter 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 24 for further information. Leases The measurement of the lease liabilities is based on assumptions for the discount rates used, the lease term and the determination of fixed lease 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 extension options in the determination of the lease 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. 246 Annual Report 2021 ↗ Consolidated Financial Statements NOTES TO THE CONSOLIDATED BALANCE SHEET 3. CASH AND CASH EQUIVALENTS As of December 31, 2021, the Group has € 757.5 million (previous year: € 655.9 million) in cash and cash equivalents. This includes bank balances, including short-term financial investments with an original term of up to three months. The average effective interest rate of financial investments was 1.5% (previous year: 1.5%). There are no restrictions on disposition. 4. INVENTORIES Inventories are allocated to the following main groups: ↗ T.11 (€ million) Raw materials, consumables and supplies Finished goods and merchandise/inventory Footwear Apparel Accessories/Other Prepayments made Goods in transit Inventory adjustments related to returns Total 2021 30.2 356.2 325.5 154.9 25.9 535.6 64.0 2020 15.4 324.7 273.9 128.3 0.0 351.7 43.9 1,492.2 1,138.0 The table shows the carrying amounts of the inventories net of value adjustments. Of the value adjustments in the amount of € 169.3 million (previous year: € 115.7 million), approx. 58.1% (previous year approx. 69.6%) were recognized as an expense under cost of sales in the financial year 2021. The volume of inventories recorded as an expense during the period mainly includes the cost of sales shown in the consolidated income statement. The right to return goods represents the merchandise value of the products where a return is expected. 247 5. TRADE RECEIVABLES This item consists of: ↗ T.12 (€ million) Trade receivables, gross Less provision for risks Trade receivables, net Annual Report 2021 ↗ Consolidated Financial Statements 2021 906.7 -58.7 848.0 2020 682.9 -61.9 621.0 The change of the provision for risks for financial assets in the “trade receivables” class measured at amortized cost relates to receivables in connection with sales revenues from contracts with customers and has developed as follows: ↗ T.13 (€ million) Status of provision for risks as of January 1 Exchange rate differences Additions Utilization Reversals Status of provision for risks as of December 31 2021 61.9 1.5 11.8 -4.9 -11.5 58.7 2020 36.8 -2.7 33.9 -3.1 -2.9 61.9 The age structure of the trade receivables is as follows: ↗ T.14 (€ million) 2021 Total Not due Gross carrying amount – Trade receivables Provision for risks Net carrying amount – Trade receivables Expected loss rate 906.7 58.7 848.0 771.5 18.6 752.9 2.4% 0-30 days 63.6 3.2 60.6 5.0% 31-90 days 19.0 1.2 17.9 6.1% 91-180 days Over 180 days 14.5 4.4 10.1 38.0 31.4 6.6 30.5% 82.6% Receivables due for more than 60 days are allocated to Level 3 as “objectively impaired,” the remaining receivables are allocated to Level 2. 248 Annual Report 2021 ↗ Consolidated Financial Statements ↗ T.15 (€ million) 2020 Total Not due Gross carrying amount – Trade receivables Provision for risks Net carrying amount – Trade receivables Expected loss rate 682.9 61.9 621.0 551.5 15.2 536.3 2.8% 0-30 days 56.7 4.1 52.6 7.3% 31-90 days 91-180 days Over 180 days 15.9 2.6 13.3 11.7 2.8 47.1 37.2 8.9 9.9 16.4% 23.9% 78.9% With respect to the net carrying amount of trade receivables, PUMA assumes that the debtors will satisfy their payment obligations or that, in the event of a default, the net carrying amount will be covered by existing credit insurance. There are no significant risk concentrations as the customer base is very broad and there are no correlations. 6. OTHER CURRENT FINANCIAL ASSETS This item consists of: ↗ T.16 (€ million) Fair value of derivative financial instruments Other financial assets Total 2021 123.2 30.2 153.4 2020 23.6 29.3 52.9 The amount shown is due within one year. The fair value corresponds to the carrying amount. The increase in derivative financial instruments is mainly attributable to a rise in the US dollar exchange rate. 249 7. OTHER CURRENT ASSETS This item consists of: ↗ T.17 (€ million) Prepaid expense relating to the subsequent period Other receivables Total Annual Report 2021 ↗ Consolidated Financial Statements 2021 90.2 110.7 200.9 2020 50.4 73.6 124.1 The amount shown is due within one year. The fair value corresponds to the carrying amount. The increase in prepaid expense relating to the subsequent period is primarily due to prepaid advertising and promotional expenses. Other receivables mainly comprise receivables relating to VAT of € 55.4 million (previous year: € 38.9 million) and other taxes of € 21.3 million (previous year: € 16.2 million). 8. DEFERRED TAXES Deferred taxes relate to the items shown below: ↗ T.18 (€ million) Tax loss carryforwards Non-current assets Current assets Provisions and other liabilities Deferred tax assets (before netting) Non-current assets Current assets Provisions and other liabilities Deferred tax liabilities (before netting) Deferred tax assets, net 2021 74.1 51.4 76.8 109.5 311.8 62.6 11.9 6.3 80.7 231.1 2020 103.4 39.2 60.1 97.5 300.3 49.8 8.2 5.4 63.4 236.9 Of the deferred tax assets, € 174.4 million (previous year: € 141.6 million) are current, and of the deferred tax liabilities € 13.2 million (previous year: € 9.7 million) are current. As of December 31, 2021, tax losses carried forward amounted to a total of € 489.4 million (previous year: € 571.7 million). This results in a deferred tax asset of € 117.9 million (previous year: € 145.4 million). Deferred tax assets were recognized for these items in the amount at which the associated tax advantages are likely to be realized in the form of future profits for income tax purposes. Accordingly, deferred tax assets for tax loss carryforwards in the amount of € 43.8 million (previous year: € 41.9 million) were not 250 Annual Report 2021 ↗ Consolidated Financial Statements recognized; of these, € 42.2 million (previous year: € 39.9 million) cannot expire, of which, however, € 11.5 million (previous year: € 11.3 million) will never be usable due to a lack of future profits. The remaining unrecognized deferred tax assets of € 1.6 million (previous year: € 2.1 million) will expire within the next six years. In addition, no deferred taxes were recognized for deductible temporary differences amounting to € 7.2 million (previous year: € 6.3 million) because their realization 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 company were not accumulated, since it is most likely that such temporary differences 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: ↗ T.19 (€ million) Deferred tax assets Deferred tax liabilities Deferred tax assets, net The changes in deferred tax assets (net) were as follows: ↗ T.20 (€ million) Deferred tax assets, net as of January 1 Recognition in the income statement Adjustment related to remeasurements of the net defined benefit liability, recognized in other comprehensive income Adjustment related to the market value of currency hedging contracts, recognized in other comprehensive income thereof released to profit and loss for the period thereof fair value measurement of cash flow hedges Exchange rate differences Deferred tax assets, net as of December 31 2021 279.9 48.8 231.1 2020 277.5 40.6 236.9 2021 236.9 -2.7 2020 184.8 56.7 0.3 1.1 -4.7 -4.5 5.8 231.1 0.1 5.1 -11.0 236.9 251 Annual Report 2021 ↗ Consolidated Financial Statements 9. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at their carrying amounts consist of: ↗ T.21 (€ million) Land and buildings, including buildings on third-party land Technical equipment and machinery Other equipment, factory and office equipment Assets under construction Total 2021 121.6 125.7 183.0 42.1 472.4 2020 131.9 8.4 154.6 112.0 406.9 The carrying amount of property, plant and equipment is derived from the acquisition costs. Accumulated depreciation of property, plant and equipment amounted to € 457.6 million (previous year: € 411.4 million). The changes in property, plant and equipment in the financial year 2021 are shown in “Changes in Fixed Assets” in Appendix 1 to the notes of the consolidated financial statements. 10. LEASES The Group rents and leases offices, warehouses, facilities, technical equipment and machinery, motor vehicles and sales rooms for its own retail business. As a rule, the lease agreements have a term of between one and fifteen years. Some agreements include options to renew and price adjustment clauses. The carrying amounts for right-of-use assets recognized on the balance sheet relate to the following asset classes: ↗ T.22 (€ million) Land and buildings – Retail stores Land and buildings – Warehouses & Offices Others (Technical equipment & machines and motor vehicles) Total 2021 382.9 505.8 51.9 940.5 2020 355.2 464.3 58.1 877.6 The changes in right-of-use assets in the financial year 2021 are shown in “Changes in Fixed Assets” in Appendix 1 to the notes to the consolidated financial statements. 252 Annual Report 2021 ↗ Consolidated Financial Statements The following lease liabilities result: ↗ T.23 (€ million) Current lease liabilities Non-current lease liabilities Total The amounts recognized in the income statement are as follows: ↗ T.24 (€ million) Depreciation of right-of-use assets (incl. impairment losses) (included in operating expenses) Profit (-)/loss (+) from disposal/revaluation 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 2021 172.3 851.0 1,023.4 2020 156.5 775.2 931.7 2021 2020 194.7 186.4 -1.0 31.5 6.3 0.7 24.5 256.7 0.0 29.3 5.6 0.6 11.5 233.4 Variable lease payments are incurred in connection with the Group’s own retail stores. These are based on the sales revenue amount and are therefore dependent on the overall economic development. As a result of the COVID-19 pandemic, PUMA was exempted – by agreement with the lessors – from rent payments of € 7.1 million (previous year: € 13.7 million), which were recognized as variable lease payments in the income statement. Due to reduced earnings prospects, impairment expenses totaling € 18.5 million were incurred in the financial year 2021 (previous year: € 16.1 million) relating to right-of-use assets in connection with the Group’s own retail stores. There were no impairments to the other categories of right-of-use assets. Total cash outflows from lease liabilities in 2021 amounted to € 192.4 million (previous year: € 164.2 million). In 2021, 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, 2021. Future lease payments in connection with these agreements amount to € 2.4 million (previous year: € 4.7 million) for the next year, € 14.3 million for years two to five (previous year: € 24.1 million) and € 6.4 million for the subsequent period (previous year: € 9.0 million). The lease terms for these are up to 10 years. 253 Annual Report 2021 ↗ Consolidated Financial Statements The maturity analysis of lease liabilities is as follows: ↗ T.25 (€ million) Residual term of: 1 to 2 years 2 to 5 years more than 5 years Total (undiscounted) Interests Total 2021 2020 197.3 545.7 432.4 180.5 463.3 435.6 1,175.4 1,079.4 -152.0 -147.7 1,023.4 931.7 11. INTANGIBLE ASSETS Intangible Assets mainly include goodwill, intangible assets with indefinite useful lives (e.g. brands), assets associated with the Company’s own retail activities and software licenses. Goodwill and intangible assets with indefinite useful lives are not amortized according 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-generating units was used as a basis for this. Planning on the level of the cash-generating units was thereby derived from the PUMA Group’s three-year plan. The central assumptions applied in Group-level planning are that the global economy will gradually return to normal in 2022 due to the availability of vaccines against COVID-19 and the progress made with immunizing large parts of the population in PUMA’s key markets. On this basis, and assuming that COVID-19 will not have a long-term negative impact on the global economy, further sales growth and a further improved EBIT margin are expected in subsequent financial years. Alongside the normalization of business activities, planned sales growth is based on the good future growth prospects in the sporting goods industry and on gains of market shares by PUMA. This is to be achieved, in particular, via the continued consistent implementation of the Forever Faster corporate strategy and the increase in PUMA’s brand heat. The improvement in EBIT margin in the planning period is the result of a slight increase in gross profit margin due to, for example, a higher share of own retail sales as a result of above-average growth of the e-commerce distribution channel. Furthermore, the slightly weaker percentage increase of other operating income and expenses compared to sales growth is also expected to contribute to the improvement of the EBIT margin; for example, the operating requirements for planned sales growth over the coming years have essentially been met, meaning that economies of scale can be realized. The planning of investments and working capital is based on historical experience and is carried out in accordance with strategic objectives. The future tax payments are based on current tax rates. For periods beyond the three-year plan, an annual growth rate is determined and used to forecast future cash flows beyond the three-year period. The assumed growth rate is based on long-term expectations on inflation rate and may not exceed the long-term average growth rates for the business area in which the respective cash-generating unit, or group of cash-generating units, operates. 254 Annual Report 2021 ↗ Consolidated Financial Statements 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 impairment losses for any cash- generating units. 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 € 125.6 million (previous year: € 115.9 million). The carrying amount of the Cobra brand is significant in comparison to the overall carrying amount of the intangible assets with an indefinite useful life. It was assigned to the North America business segment, where the headquarters of Cobra PUMA Golf is located. The recoverable amount of the Cobra brand was determined using the relief-from-royalty method (level 3 – see explanation in chapter 14). A discount rate of 7.4% p.a. (previous year: 6.4% p.a.), a royalty rate of 8.0% (previous year: 8.0%) and a 1.7% growth rate (previous year: 1.7%) was used. 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, but the recoverable amount of the group of cash- generating units to which the trademark is to be allocated is also determined. In 2021, there were no indications of an impairment. In the financial year, development costs in connection with Cobra brand golf clubs amounting to € 1.7 million (previous year: € 1.8 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 € 1.1 million in the financial year (previous year: € 2.3 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 € 5.7 million (previous year: € 22.8 million). The current amortization of intangible assets in the amount of € 27.8 million (previous year: € 24.4 million) is included in the other operating expenses. Of this, € 5.8 million relate to sales and distribution expenses (previous year: € 3.8 million), € 0.1 million to expenses for product management/ merchandising (previous year: € 0.1 million), € 1.1 million to development expenses (previous year: € 2.3 million), and € 20.8 million to administrative and general expenses (previous year: € 18.3 million). There were no impairment expenses exceeding current depreciation (previous year: € 1.9 million). Goodwill is allocated to the Group’s identifiable groups of cash-generating units (CGUs) according to the countries where the activities are carried out. Summarized by regions, goodwill is allocated as follows: 255 Annual Report 2021 ↗ Consolidated Financial Statements ↗ T.26 (€ million) PUMA UK Genesis Subtotal Europe PUMA Canada PUMA United Subtotal North America PUMA Argentina PUMA Chile PUMA Mexico Subtotal Latin America PUMA China PUMA Taiwan Subtotal Greater China PUMA Japan Subtotal Asia/ Pacific (without Greater China) stichd Total Assumptions used in conducting the impairment tests in 2021: 2021 2020 1.7 7.3 9.0 9.9 1.9 11.8 15.4 0.5 9.8 25.7 2.5 14.3 16.8 42.0 42.0 1.6 6.8 8.4 9.1 1.8 10.9 14.2 0.5 9.3 24.1 2.5 13.0 15.5 43.3 43.3 139.4 244.7 139.4 241.5 ↗ T.27 Europe North America* Latin America Greater China Asia/ Pacific (without Greater China)* stichd* Tax rate (range) WACC before tax (range) WACC after tax (range) 19.0% 26.7% 8.9%-9-0% 9.4% 7.6% 7.3% 27.0%-30.0% 11.5%-40.9% 8.8%-54.4% 20.0%-25.0% 7.8%-10.3% 6.4%-8.1% 31.8% 25.0% 9.8% 9.0% 7.1% 7.1% * The information for North America, Asia/ Pacific (without Greater China) and stichd relates in each case to only one cash- generating unit (CGU) 256 Annual Report 2021 ↗ Consolidated Financial Statements The tax rates used for the impairment test correspond to the actual tax rates in the respective countries. The weighted average cost of capital (WACC) was derived on the basis of the weighted average cost of total capital, taking into account a standard market capital structure (ratio of debt to equity) and including the most important listed competitors (peer group). In addition, a growth rate of 1.7% (previous year: 1.7%) is generally assumed. A growth rate of less than 1.7% (previous year: less than 1.7%) was applied only in justified exceptional cases, where the long-term expectations on inflation rate for the country in which the cash-generating unit operates were lower than the assumed growth rate; this applies, in particular, to Japan and Taiwan. The cash-generating unit stichd includes goodwill of € 139.4 million (previous year: € 139.4 million), which is significant in comparison to the overall carrying amount of goodwill. The recoverable amount was determined by a value-in-use calculation with a discount rate of 7.1% p.a. (previous year: 6.1% p.a.) and a growth rate of 1.7% (previous year: 1.7%). Sensitivity analyses with regard to the impairment tests carried out as of the balance sheet date show that neither an increase in discount rates by one percentage point, respectively, nor a reduction in growth rates by one percentage point, respectively, results in any indication of impairment. Due to the ongoing increased uncertainty as a result of the COVID-19 pandemic, in the financial year 2021 additional sensitivity analyses were also carried out with regard to the impairment tests. Alongside an increase in discount rates by one percentage point, respectively, and a simultaneous reduction in growth rates by one percentage point, respectively, these analyses also assume a reduction in operating result (EBIT) of 10% respectively in the underlying three-year plan. This resulted in an overall indication of impairment in the amount of € 8.1 million (previous year: € 1.6 million). The following table contains the assumptions for the performance of the impairment test in the previous year: ↗ T.28 Europe EEMEA* North America* Latin America Greater China Asia/ Pacific (without Greater China)* stichd* Tax rate (range) WACC before tax (range) WACC after tax (range) 19.0% 28.0% 26.3% 8.0%-8.1% 16.3% 8.0% 6.8% 12.4% 6.3% 27.0%-30.0% 10.7%-51.3% 8.2%-60.3% 20.0%-25.0% 7.0%-9.5% 5.7%-7.5% 31.8% 25.0% 8.7% 7.6% 6.3% 6.1% * The information for EEMEA, North America, Asia/ Pacific (without Greater China) and stichd relates in each case to only one cash-generating unit (CGU) 257 Annual Report 2021 ↗ Consolidated Financial Statements 12. OTHER NON-CURRENT ASSETS Other non-current financial and non-financial assets consist of: ↗ T.29 (€ million) 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 2021 25.2 6.8 32.6 64.6 9.1 73.7 2020 25.3 2.5 30.9 58.8 6.8 65.6 The investments relate to the 5.32% shareholding in Borussia Dortmund GmbH & Co. Kommandit- gesellschaft auf Aktien (BVB) with registered office in Dortmund, Germany. The other financial assets mainly include rental deposits of € 30.5 million (previous year: € 26.8 million). The other non-current non-financial assets mainly include accruals and deferrals in connection with promotional and advertising agreements. 258 Annual Report 2021 ↗ Consolidated Financial Statements 13. LIABILITIES The residual terms of liabilities are as follows: ↗ T.30 (€ million) Financial liabilities Trade payables Other liabilities* Liabilities from other taxes Liabilities relating to social security Payables to employees Refund liabilities Liabilities from derivative financial instruments Other liabilities Total * The maturity analysis on lease liabilities is presented in chapter 10. 2021 Residual term of 2020 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 380.0 68.5 311.5 1,176.4 1,176.4 54.0 8.5 127.4 351.2 44.5 31.5 54.0 8.5 127.4 351.2 42.4 29.9 2.1 1.1 2,173.7 1,858.4 314.8 266.4 941.5 50.5 9.9 79.0 227.4 135.2 36.0 121.4 941.5 50.5 9.9 79.0 227.4 126.9 35.1 145.0 8.3 0.8 1,745.9 1,591.8 154.1 0.5 0.5 PUMA has confirmed credit lines amounting to a total of € 1,322.0 million (previous year: € 1,639.1 million). The syndicated credit line of € 200.0 million from 11 commercial banks and the Kreditanstalt für Wiederaufbau (KfW) existing as of December 31, 2020, which was concluded as “bridge financing” against possible cash shortfalls due to the COVID-19 pandemic, was terminated on February 1, 2021. The termination took place because PUMA was already able to refinance itself in the 2020 financial year through a new promissory note loan (€ 250.0 million) with a term of 3 respectively 5 years and an increase in the syndicated credit facility previously 259 Annual Report 2021 ↗ Consolidated Financial Statements amounting to € 350.0 million to a new € 800.0 million. Moreover, the first tranche of € 100.0 million from the promissory note issued in 2018, which matured in July 2021, was repaid. No financial liabilities were utilized from credit lines granted only until further notice. Unutilized credit lines totaled € 942.0 million as of December 31, 2021, compared to € 1,372.7 million in the previous year. The effective interest rate of the financial liabilities ranged between 0.0% and 0.9% (previous year: 0.1% to 14.8%). The liabilities from refund obligations result from contracts with customers and include obligations from customer return rights as well as obligations linked to 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: ↗ T.31 CASH FLOWS FROM NON-DERIVATIVE AND DERIVATIVE FINANCIAL LIABILITIES (€ million) Non-derivative financial liabilities Financial liabilities Trade payables Other liabilities Derivative financial liabilities and assets Cash-Inflow from derivative financial instruments Cash-Outflow from derivative financial instruments Carrying amount 2021 380.0 1,176.4 22.5 Cashflow 2022 Cashflow 2023 Cashflow 2024 et seq. Interest Repayment Interest Repayment Interest Repayment 2.4 68.5 2.1 60.0 2.8 251.5 1,176.4 22.1 3,730.6 3,658.9 0.2 674.1 665.3 0.2 260 Annual Report 2021 ↗ Consolidated Financial Statements The following values were determined in the previous year: ↗ T.32 CASH FLOWS FROM NON-DERIVATIVE AND DERIVATIVE FINANCIAL LIABILITIES (€ million) Non-derivative financial liabilities Financial liabilities Trade payables Other liabilities Derivative financial liabilities and assets Cash-Inflow from derivative financial instruments Cash-Outflow from derivative financial instruments Carrying amount 2020 266.4 941.5 24.6 Cashflow 2021 Cashflow 2022 Cashflow 2023 et seq. Interest Repayment Interest Repayment Interest Repayment 0.8 121.4 941.5 24.2 2,893.7 2,999.4 0.7 1.6 145.0 0.3 0.1 495.3 502.0 261 Annual Report 2021 ↗ Consolidated Financial Statements 14. ADDITIONAL DISCLOSURES ON FINANCIAL INSTRUMENTS ↗ T.33 (€ 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 Investments Liabilities Financial liabilities (current and non-current) Trade payables Other financial liabilities (current and non- current) Derivatives with hedging relationship (fair value) (current and non-current) Derivatives without hedging relationship (fair value) Measurement categories under IFRS 9 Carrying amount 2021 Fair value 2021 Carrying amount 2020 Fair value 2020 1) AC AC AC 757.5 848.0 30.2 757.5 848.0 30.2 655.9 621.0 29.3 655.9 621.0 29.3 n.a. 127.2 127.2 25.7 25.7 2) FVPL AC 3) FVOCI 2.9 32.6 25.2 2.9 32.6 25.2 0.4 30.9 25.3 266.4 941.5 0.4 30.9 25.3 266.4 941.5 380.0 380.0 1,176.4 1,176.4 AC AC AC 22.5 22.5 24.6 24.6 n.a. 39.1 39.1 134.9 134.9 2) FVPL 5.4 5.4 0.3 0.3 Total financial assets at amortised cost 1,668.3 1,668.3 1,337.1 1,337.1 Total financial liabilities at amortised cost 1,579.0 1,579.0 1,232.5 1,232.5 Total financial assets at FVOCI 25.2 25.2 25.3 25.3 1) AC = at amortised cost 2) FVPL = fair value through PL 3) FVOCI = fair value through OCI Financial instruments that are measured at fair value in the balance sheet were determined using the following hierarchy: Level 1: Use of prices quoted on active markets for identical assets or liabilities. Level 2: 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). Level 3: Use of factors for the valuation of the asset or liability that are based on non-observable market data. 262 Annual Report 2021 ↗ Consolidated Financial Statements The fair value of the investments held for strategic reasons only refers 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 liabilities 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 approximates fair value. Receivables are stated at nominal value, taking into account deductions 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 balance sheet date. Other (current and non-current) financial assets include € 36.7 million (previous year: € 34.2 million) that were pledged as rental deposits at usual market rates. In December 2021, due to the good liquidity situation, PUMA decided to repay € 68.5 million in variable- interest promissory note loan tranches early on the next interest-rate assessment date of January 12, 2022, and these are therefore reported as current financing instruments as of the reporting date. As of the reporting date, the carrying amount approximates fair value. The non-current bank liabilities consist of fixed-interest and variable-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. The remaining financial liabilities have short residual maturities; the recognized amounts therefore approximate fair value. The fair values of derivative financial instruments 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 discounts. The discounted result of the comparison of the forward price on the reporting date with the forward price on the valuation date is included in the measurement. The fair values are also checked for the counterparty’s non-performance 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. Net result by measurement categories: ↗ T.34 (€ million) Financial assets at amortised cost Financial liabilities at amortised cost Derivatives without hedging relationship Financial assets at FVOCI Total 2021 -3.9 -6.5 -4.0 -6.2 -20.5 The net result was determined by taking into account interest income and expense, currency exchange effects, changes in provisions for risks as well as gains and losses from sales. General administrative expenses include changes in risk provisions for receivables. 2020 -21.0 -8.5 1.6 -14.7 -42.6 263 Annual Report 2021 ↗ Consolidated Financial Statements 15. PENSION PROVISIONS Pension provisions result from employees’ claims and, if applicable, their survivors 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 reached. Pension commitments in the PUMA Group include both benefit- and contribution-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 discount rate and, to a minor degree, inflation trends and recipient longevity. In order to limit the risks of changed capital market conditions and demographic developments, 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 obligations. The UK plan is therefore classified as a non-salary obligation. ↗ T.35 (€ million) Present Value of Pension Claims 12/31/2021 Salary-based obligations Annuity One-off payment Non-salary-based obligations Annuity One-off payment Total Germany UK Other Companies PUMA Group 0.0 0.0 43.5 7.7 51.2 0.0 0.0 51.4 0.0 51.4 10.0 9.7 0.0 0.0 10.0 9.7 94.9 7.7 19.7 122.3 264 Annual Report 2021 ↗ Consolidated Financial Statements The following values were determined in the previous year: ↗ T.36 (€ million) Present Value of Pension Claims 12/31/2020 Salary-based obligations Annuity One-off payment Non-salary-based obligations Annuity One-off payment Total Germany UK Other Companies PUMA Group 0.0 0.0 35.0 7.5 42.5 0.0 0.0 49.0 0.0 49.0 10.2 10.0 0.0 0.0 10.2 10.0 84.0 7.5 20.2 111.7 The main pension arrangements are described below: The general pension scheme of PUMA SE generally provides for pension payments 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 contribution-based individual commitments (in part from salary conversion). The contribution-based commitments are insured plans. There are no statutory minimum funding requirements. The scope of obligation for domestic pension claims amounts to € 51.2 million at the end of 2021 (previous year: € 42.5 million) and thus comprises 42.0% of the total obligation. The fair value of the plan assets relative to domestic obligations amounts to € 40.7 million. The corresponding pension provision amounts to € 10.5 million. The defined benefit plan in the United Kingdom has not been available to new hires since 2006. This defined benefit plan includes salary and length of service-based commitments to provide old age, invalidity and surviving dependents’ retirement benefits. In 2016, a growth cap of 1% p.a. was introduced on the pensionable 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 € 51.4 million at the end of 2021 (previous year: € 49.0 million) and thus accounts for 42.0% of the total obligation. The obligation is covered by assets amounting to € 45.5 million. The provision amounts to € 5.9 million. 265 Annual Report 2021 ↗ Consolidated Financial Statements The changes in the present value of pension claims are as follows: ↗ T.37 (€ 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 2021 111.7 2.6 0.0 0.0 1.4 8.3 -3.3 0.1 -2.0 3.5 2020 98.7 2.7 0.0 0.0 1.5 6.7 -3.4 0.9 7.4 -2.8 Present Value of Pension Claims December 31 122.3 111.7 The changes in the plan assets are as follows: ↗ T.38 (€ 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 2021 73.5 0.9 1.9 5.6 8.3 -2.3 0.0 2.8 90.7 2020 64.6 1.0 3.0 1.9 6.7 -1.6 0.0 -2.2 73.5 266 Annual Report 2021 ↗ Consolidated Financial Statements The pension provision for the Group is derived as follows: ↗ T.39 (€ 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 of which assets of which liabilities 2021 122.3 -90.7 31.6 0.0 31.6 0.3 31.9 2020 111.7 -73.5 38.2 0.0 38.2 0.0 38.2 In 2021, benefits paid amounted to € 3.3 million (previous year: € 3.4 million). Contributions in 2022 are expected to amount to € 2.5 million. Of this, € 0.9 million is expected to be paid directly by the employer. Employer contributions to external plan assets amounted to € 5.6 million in 2021 (previous year: € 1.9 million). Employer contributions in 2022 are expected to amount to € 0.6 million. The changes in pension provisions are as follows: ↗ T.40 (€ 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 Transfer values Currency exchange differences Pension Provision December 31 of which assets of which liabilities 2021 38.2 3.1 -3.9 -5.6 -1.0 0.1 0.7 31.6 0.3 31.9 2020 34.1 3.2 4.4 -1.9 -1.8 0.9 -0.7 38.2 0.0 38.2 267 Annual Report 2021 ↗ Consolidated Financial Statements The expenses in the 2021 financial year are structured as follows: ↗ T.41 (€ million) 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 2021 2020 2.6 0.0 0.0 1.4 2.7 0.0 0.0 1.5 -0.9 -1.0 0.0 3.1 2.6 0.5 0.0 3.2 2.7 0.5 In addition to the defined benefit pension plans, PUMA also makes contributions to defined contribution plans. Payments for the financial year 2021 amounted to € 15.0 million (previous year: € 13.6 million). Actuarial gains and losses recorded in Other Comprehensive Income: ↗ T.42 (€ million) 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 2021 -2.0 0.5 -2.7 0.2 -1.9 0.0 0.0 -3.9 2020 7.4 0.2 6.8 0.4 -3.0 0.0 0.0 4.4 268 Annual Report 2021 ↗ Consolidated Financial Statements Plan assets investment classes: ↗ T.43 (€ 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.44 (€ million) Cash and cash equivalents Equity instruments Bonds Investment funds Derivatives Real estate Insurance Others 2021 2020 6.6 0.8 7.1 14.0 9.2 4.8 40.8 7.4 90.7 3.0 0.8 7.3 12.4 8.0 3.7 31.6 6.5 73.5 2021 2020 6.6 0.8 7.1 3.2 0.8 7.3 14.0 12.4 9.2 4.3 0.0 7.3 8.0 3.1 0.0 6.4 Plan Assets with a quoted Market Price 49.3 41.2 Plan assets still do not include the Group’s own financial instruments or real estate used by Group companies. The plan assets are used exclusively to fulfill defined pension commitments. Legal requirements exist in some countries for the type and amount of financial resources 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 representatives and employees is in charge of asset management. Its investment strategy is aimed at long- term profits and tolerable volatility. It was last revised in 2020 to reduce the risk profile. 269 Annual Report 2021 ↗ Consolidated Financial Statements The following assumptions were used to determine pension obligations and pension expenses: ↗ T.45 Discount rate Future pension increases Future salary increases 2021 1.62% 2.28% 1.66% 2020 1.28% 2.08% 1.65% The indicated values are weighted average values. A standard interest rate of 1.10% was applied for the eurozone (previous year: 1.00%). The 2018 G Heubeck guideline tables were used as mortality tables for Germany. For the UK, the mortality was assumed based on basic table series S2 taking into account life expectancy projections in accordance with CMI2019 with a long-term trend of 1%. The following overview shows how the present value of pension claims from benefit plans would have been affected by changes to significant actuarial assumptions. ↗ T.46 (€ 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 2021 2020 -7.1 8.1 -7.3 8.4 Salary and pension trends have only a negligible effect on the present value of pension claims due to the structure of the benefit plans. The weighted average duration of pension commitments is around 16 years (previous year: around 18 years). 270 16. OTHER PROVISIONS ↗ T.47 (€ million) Provisions for: Warranties Purchasing risks Litigation risks Personnel Others Total Annual Report 2021 ↗ Consolidated Financial Statements 2020 1.3 5.6 28.3 18.7 20.3 74.2 Currency adjustments, retransfers 0.0 3.0 -0.1 0.0 5.5 8.4 2021 2021 2020 Addition Utilization Reversal Thereof non-current Thereof non-current 1.3 3.8 9.1 9.0 5.3 -0.8 -3.3 -2.1 -8.9 -2.2 28.5 -17.4 -0.1 -2.2 -4.2 0.0 -1.3 -7.8 1.7 6.8 31.0 18.7 27.6 85.9 0.0 0.0 9.1 18.7 10.1 37.9 0.0 0.0 10.5 18.7 9.7 38.9 The 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. Other provisions comprise in particular provisions in relation with dismantling obligations and other risks. 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 preparation of the consolidated financial statements are taken into account here. 271 Annual Report 2021 ↗ Consolidated Financial Statements 17. SHAREHOLDERS’ EQUITY SUBSCRIBED CAPITAL The subscribed capital corresponds to the subscribed capital of PUMA SE. As of the balance sheet date, the subscribed capital in accordance with the Articles of Association corresponds to € 150,824,640.00 and is divided into 150,824,640 no-par value voting shares. This corresponds to a proportional amount of € 1.00 per share. Changes in the circulating shares: ↗ T.48 Circulating shares as of January 1, share Issue of Treasury Stock Circulating shares as of December 31, share 2021 2020 149,583,859 149,547,801 21,741 36,058 149,605,600 149,583,859 The issue of treasury stock relates to compensation payments in connection with promotional and advertising agreements. CAPITAL RESERVE The capital reserve includes the premium from issuing shares, as well as amounts from the grant, conversion and expiration of share options. REVENUE RESERVES INCL. RETAINED EARNINGS The revenue reserves incl. retained earnings include the net income of the financial year as well as the income achieved in the past by the companies included in the consolidated financial statements to the extent that it was not distributed. DIFFERENCE FROM CURRENCY CONVERSION The equity item for currency conversion serves to record the foreign exchange differences from the conversion of the financial statements of subsidiaries with non-euro accounting. CASH FLOW HEDGES The “cash flow hedges” item includes the market valuation of derivative financial instruments. The item amounting to € 78.1 million (previous year: € -87.6 million) is offset by deferred taxes of € -4.1 million (previous year: € 5.1 million). 272 Annual Report 2021 ↗ Consolidated Financial Statements TREASURY STOCK The resolution adopted by the Annual General Meeting on May 7, 2020 authorized the Company to purchase treasury shares up to a value of 10% of the share capital until May 6, 2025. By resolution of the Annual General Meeting of May 5, 2021 the Supervisory Board was authorized to issue the acquired shares to the members of the Management Board of the Company, also excluding the shareholders' subscription rights. If purchased through the stock exchange, the purchase price per share may not exceed 10% or fall below 20% of the closing price for the Company’s shares with the same attributes in the XETRA trading system (or a comparable 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 1,219,040 PUMA shares in its own portfolio, which corresponds to 0.81% of the subscribed capital. AUTHORIZED CAPITAL As of December 31, 2021, the Company’s Articles of Association provide for authorized capital totaling € 30,000,000.00: 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 May 4, 2026 by up to € 30,000,000.00 (Authorized Capital 2021) by issuing new no-par value bearer shares against cash and/or non-cash contributions 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 shareholders for subscription (indirect subscription right). The shareholders shall generally be entitled to subscription rights. However, the Management Board is authorized with the consent of the Supervisory Board to exclude shareholders’ subscription rights in whole or in part in the cases specified in Section 4.2. of the Articles of Association. The Management Board of PUMA SE did not make use of the existing authorized capital in the current reporting period. CONDITIONAL CAPITAL 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, through one or more issues, altogether or in parts and in various tranches 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 instruments with or without a term limitation in a total nominal amount of up to € 1,000,000,000.00. 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 (Conditional Capital 2018). The conditional capital increase will be performed only insofar as use is made of options 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 servicing. No use has been made of the authorization to date. 273 Annual Report 2021 ↗ Consolidated Financial Statements DIVIDENDS The amounts eligible for distribution relate to the retained earnings of PUMA SE, which is determined in accordance with German Commercial Law. The Management Board and the Supervisory Board will propose to the Annual General Meeting that a dividend of € 0.72 per circulating share, or a total of € 107.7 million (with respect to the circulating shares as of December 31, 2021), be distributed to the shareholders from the retained earnings of PUMA SE for the financial year 2021. Proposed appropriation of the retained earnings of PUMA SE: ↗ T.49 Retained earnings of PUMA SE as of December 31, € million Retained earnings available for distribution, € million Dividend per share, € Number of circulating shares* Total dividend*, € million Carried forward to the new accounting period*, € million * Previous year's values adjusted to the outcome of the Annual General Meeting 2021 490.1 490.1 0.72 2020 390.4 390.4 0.16 149,605,600 149,583,859 107.7 382.4 23.9 366.5 NON-CONTROLLING INTERESTS This item comprises non-controlling interests. The composition is shown in chapter 29. CAPITAL MANAGEMENT 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. Capital management relates to the consolidated equity of PUMA. This is shown in the consolidated balance sheet as well as the reconciliation statement concerning “Changes in Equity”. 274 Annual Report 2021 ↗ Consolidated Financial Statements 18. MANAGEMENT INCENTIVE PROGRAMS In order to bind the management to the company by a long-term incentive, virtual 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” (FULL TERM: MONETARY UNITS PLAN – MUP) 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. The maximum increase in value (cap) is limited to 300% of the amount allocated. Monetary units are subject to a vesting period 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 relationship with PUMA for all or part of the vesting period. Virtual shares are reduced on a “pro rata” basis in the event of withdrawal during the vesting period. EXPLANATION OF “VIRTUAL SHARES” (FULL TERM: PERFORMANCE SHARE PLAN – PSP) Virtual shares were granted on an annual basis beginning in 2021 as part of a management incentive program. The virtual shares are based on the PUMA share performance. Each of these virtual shares entitles the holder to a cash payment at the end of the term. However, the Supervisory Board reserves the right to make the payment in PUMA shares instead of cash. 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 and the total shareholder return (TSR) relative to the MDAX index. The PUMA and MDAX index TSRs are calculated using the arithmetic means of each of the TSR values on the 30 trading days before the start and end of the performance period. These mean values calculated for PUMA and for the MDAX index are then positioned in relation to each other in order to calculate the percentage TSR performance over the four- year performance period of each tranche. The difference in percentage points between the PUMA TSR and the MDAX index TSR is then calculated (= TSR outperformance in percentage points). The maximum increase in value (cap) is limited to 300% of the amount allocated. Virtual shares are subject to a vesting period of four years. They are generally paid out within the first quarter of the fifth year after their issue. The fundamental exercise condition after the vesting period is the existence of an active employment relationship with PUMA for all or part of the vesting period. Virtual shares are reduced on a “pro rata” basis in the event of withdrawal during the vesting period. In the financial year 2021, an expense of € 8.7 million was recorded for this purpose on the basis of the employment contract commitments to the Management Board members. 275 ↗ T.50 VIRTUAL SHARES Plan Issue date Term Vesting period Base price PUMA share at issue Reference value PUMA-share at the end of the financial year Participants in year of issue Participants at the end of the financial year Annual Report 2021 ↗ Consolidated Financial Statements MUP MUP MUP MUP PSP 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2021 5 3 5 3 37.10 44.40 106.93 106.93 3 1 3 3 5 3 67.69 71.29 3 3 5 3 86.23 35.64 3 3 4.25 4 Years Years 86.23 EUR/share 26.73 EUR/share 2 2 Persons Persons Number of monetary units/virtual shares as of 1/1/2021 102,630 97,320 65,993 47,351 7,070 Shares Number of monetary units/virtual shares exercised in the FY Number of monetary units/virtual shares expired in the FY -100,630 0 0 0 0 -3,250 0 0 0 0 Shares Shares Final number of monetary units as of 12/31/2021 2,000 97,320 62,743 47,351 7,070 Shares 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 monetary 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 expenses are recorded over the vesting period. Based on the prorated average share price of the last thirty trading days in 2021 and taking into account the intra-year exercise date in 2021, the provisions for this program amounted to € 17.0 million at the end of the financial year. 276 Annual Report 2021 ↗ Consolidated Financial Statements EXPLANATION OF THE “GAME CHANGER 2.0” PROGRAM In 2018, the Long-Term Incentive Program (LTIP) “Game Changer 2.0” was launched. Participants in this program consist mainly of top executives reporting to the Management Board and individual key positions in the PUMA Group. The objective 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 Performance 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 based on the average medium- term targets of the PUMA Group for EBIT, cash flow or working capital as a percentage of net sales, and net sales. 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 subsequent, 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 after 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% or 300% of the granted prorated target amount (cap) and is only performed if an exercise hurdle of +10% share-price appreciation was exceeded once during the performance period. EXPLANATION OF THE “GAME CHANGER 2.0 – 2021” PROGRAM In 2018, the global “Game Changer 2.0 – 2021” program, as outlined above, was launched. The Performance Cash Plan is based on the following targets: EBIT (70%), cash flow (15%) and net sales (15%). As part of the Performance Share component, payment is limited to a maximum of 200% of the granted proportionate target amount (cap). In the year under review, an amount of € 3.7 million was paid out to the participants. 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 December 31, 2020. No further expenses were incurred and no amounts released for this program in the year under review. No further provision exists for this program. EXPLANATION OF THE “GAME CHANGER 2.0 – 2022” PROGRAM In 2019, the global “Game Changer 2.0 – 2022” program, as outlined above, was launched. The Performance Cash Plan is based on the following targets: EBIT (70%), cash flow (15%) and net sales (15%). As part of the Performance Share component, payment is limited to a maximum of 200% of the granted proportionate target amount (cap). It requires employment up to December 31, 2021. In the reporting year, a prorated amount of € 2.2 million was set aside as a provision for this program and € 0.1 million was released. EXPLANATION OF THE “GAME CHANGER 2.0 – 2023” PROGRAM In 2020, the global “Game Changer 2.0 – 2023” program, as outlined above, was launched. The Performance Cash Plan is based on the following targets: EBIT (70%), cash flow (15%) and net sales (15%). As part of the Performance Share component, payment is limited to a maximum of 300% of the granted proportionate target amount (cap). It requires employment up to December 31, 2022. In the reporting year, a prorated amount of € 2.2 million was set aside as a provision for this program and € 0.1 million was released. 277 Annual Report 2021 ↗ Consolidated Financial Statements EXPLANATION OF THE “GAME CHANGER 2.0 – 2024” PROGRAM In 2021, the global “Game Changer 2.0 – 2024” program, as outlined above, was launched. The Performance Cash Plan is based on the following targets: EBIT (45%), working capital as a percentage of net sales (15%) and net sales (40%). As part of the Performance Share component, payment is limited to a maximum of 300% of the granted proportionate target amount (cap). It requires employment up to December 31, 2023. In the reporting year, a prorated amount of € 2.0 million was set aside as a provision for this program. ↗ T.51 GAME CHANGER 2.0 (PERFORMANCE SHARE PLAN) Program addendum 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 Number of “virtual shares” as of 1/1/2021 Number of “virtual shares” expired in the FY Number of “virtual shares” exercised in the FY Final number of “virtual shares” as of 12/31/2021 2021 2022 2023 2024 1/1/2018 1/1/2019 1/1/2020 1/1/2021 5 3 37.10 74.20 48 39 36,250 0 -36,250 0 5 3 44.40 88.80 64 55 39,240 -1,715 0 37,525 5 3 67.69 71.29 60 59 28,201 -1,249 0 26,952 5 3 86.23 35.64 76 76 24,809 0 0 24,809 Years Years EUR/share EUR/share Persons Persons Shares Shares Shares Shares 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. 278 Annual Report 2021 ↗ Consolidated Financial Statements NOTES TO THE CONSOLIDATED INCOME STATEMENT 19. SALES The net sales of the Group are broken down by product divisions and distribution channels as follows: ↗ T.52 BREAKDOWN BY DISTRIBUTION CHANNELS (€ million) Wholesale Retail Total ↗ T.53 BREAKDOWN BY PRODUCT DIVISIONS (€ million) Footwear Apparel Accessories Total 2021 2020 5,080.6 3,809.9 1,724.8 1,424.5 6,805.4 5,234.4 2021 2020 3,163.6 2,367.6 2,517.3 1,974.1 1,124.5 892.7 6,805.4 5,234.4 20. OTHER OPERATING INCOME AND EXPENSES According to the respective functions, other operating income and expenses include 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 expenses was offset. Rental and lease expenses associated with the Group’s own retail stores include turnover-based rental components. 279 Annual Report 2021 ↗ Consolidated Financial Statements Other operating income and expenses are allocated based on functional areas as follows: ↗ T.54 (€ million) Sales and distribution expenses Product management / merchandising Research and development Administrative and general expenses Other operating expenses Other operating income Total Of which personnel expenses Of which scheduled depreciation Of which impairment expenses 2021 2020 2,207.4 1,794.0 52.8 61.7 46.0 56.6 405.2 368.7 2,727.2 2,265.3 2.6 0.4 2,724.6 2,264.9 704.3 287.3 18.5 578.5 275.7 18.0 Within 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 logistics expenses and other variable sales and distribution expenses. Impairment expenses in the reporting year amounted to € 18.5 million and related exclusively to right-of-use assets. In the previous year, impairment expenses for right-of-use assets amounted to € 16.1 million and impairment expenses of € 1.9 million were related to intangible assets. In the consolidated financial statements of PUMA SE, fees of € 0.9 million (previous year: € 0.8 million) are recorded as operating expenses for the auditor of the consolidated financial statements. The fees are broken down into costs for audit services of € 0.8 million (previous year: € 0.7 million) and 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 consultancy services of less than € 0.1 million (previous year: less than € 0.1 million). Other operating income comprises income from the sale of fixed assets in the amount of € 2.6 million (previous year: € 0.4 million). 280 Annual Report 2021 ↗ Consolidated Financial Statements Overall, other operating expenses include personnel costs, which consist of: ↗ T.55 (€ million) Wages and salaries Social security contributions Expenses from share-based remuneration with cash compensation Expenses for retirement pension and other personnel expenses Total 2021 542.0 78.6 15.1 68.6 2020 441.9 63.2 14.1 59.3 704.3 578.5 In the financial year 2021, the personnel costs presented above include government grants amounting to a figure in the mid-single-digit millions (previous year: low double-digit millions) granted in connection with the global COVID-19 pandemic; this amount was deducted from the corresponding expenses. In addition, cost of sales includes personnel costs in the amount of € 8.1 million (previous year: € 5.2 million). The average number of employees for the year was as follows: ↗ T.56 EMPLOYEES Marketing/ retail/ sales Research & development/ product management Administrative and general units Total annual average 2021 10,945 1,097 2,804 2020 9,654 1,002 2,361 14,846 13,016 As of the end of the year, a total of 16,125 individuals were employed (previous year: 14,374). 281 21. FINANCIAL RESULT The financial result consists of: ↗ T.57 (€ million) Interest income Others Financial income Interest expense Interest expense – Leasing liability Valuation of pension plans Expenses from currency-conversion differences, net Others Financial expenses Financial result Annual Report 2021 ↗ Consolidated Financial Statements 2021 11.9 18.0 29.9 -12.9 -31.5 -0.5 -9.0 -27.7 -81.7 -51.8 2020 8.4 27.0 35.4 -14.1 -29.3 -0.5 -3.9 -34.5 -82.3 -46.8 The item “Others” in financial income exclusively comprises interest components (SWAP points) of € 18.0 million (previous year: € 27.0 million) from financial instruments in connection with currency derivatives. In addition, expenses from currency conversion differences of € 9.0 million (previous year: € 3.9 million) are included, which are to be allocated to the financing area. The item “Others” in financial expenses includes interest components (SWAP points) of € 27.7 million (previous year: € 34.5 million) from financial instruments in connection with currency derivatives. 282 22. INCOME TAXES ↗ T.58 (€ million) Current income taxes Germany Other countries Total current income taxes Deferred taxes Total Annual Report 2021 ↗ Consolidated Financial Statements 2021 2020 13.6 112.3 125.9 2.7 128.5 11.0 84.9 95.9 -56.7 39.2 In general, PUMA SE and its German subsidiaries are subject to corporate income tax, plus a solidarity surcharge and trade tax. Thus, a weighted mixed tax rate of 27.22% continued to apply for the financial year. Reconciliation of the theoretical tax expense with the effective tax expense: ↗ T.59 (€ 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 2021 505.3 137.5 -15.8 0.5 2.2 -2.4 6.5 128.5 25.4% The tax effect resulting from items that are directly credited or debited to equity is shown in chapter 8. 2020 162.3 44.2 -7.1 -4.7 6.8 -0.4 0.4 39.2 24.2% 283 Annual Report 2021 ↗ Consolidated Financial Statements 23. 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. The calculation is shown in the table below: ↗ T.60 Consolidated net earnings € million Average number of circulating shares Average number of circulating shares, diluted Earnings per share in € Earnings per share, diluted in € 2021 309.6 2020 78.9 149,588,684 149,561,440 149,591,763 149,561,440 2.07 2.07 0.53 0.53 24. MANAGEMENT OF THE CURRENCY RISK In the financial year 2021, PUMA designated currency hedges as cash flow hedges in order to hedge the amount payable of purchases denominated in USD, which is converted to euros, as well as for other currency risks resulting from internal resale to PUMA subsidiaries. Furthermore, currency swaps and currency forward transactions are used to hedge foreign exchange risks when measuring intra-group loans denominated in foreign currencies. The nominal amounts of open exchange rate-hedging transactions, which relate mainly to cash flow hedges, refer primarily to currency forward transactions in a total amount of € 3,730.4 million (previous year: € 3,026.5 million). These underlying transactions are expected to generate cash flows in 2022 and 2023. For further information, please refer to the explanations in chapter 13. The market values of open exchange rate-hedging transactions on the balance sheet date consist of: ↗ T.61 (€ million) Currency hedging contracts, assets (see chapters 6 and 12) Currency hedging contracts, liabilities (see chapters 13 and 14) Net 2021 130.1 -44.5 85.5 2020 26.1 -135.2 -109.1 The changes in effective cash flow hedges are shown in the schedule of changes in shareholders’ equity and the statement of comprehensive income. 284 Annual Report 2021 ↗ Consolidated Financial Statements 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 that are denominated in a currency that is not the functional currency and are monetary in nature. Differences resulting from the conversion of the individual financial statements to the group currency are not taken into account. All non- functional currencies in which PUMA employs financial instruments are generally considered to be relevant risk variables. Currency sensitivity analyses are based on the following assumptions: Material non-derivative monetary financial instruments (cash and cash equivalents, receivables, interest- bearing debt, lease liabilities, non-interest-bearing liabilities) are either denominated directly in the functional currency or transferred into the functional currency through the use of currency hedging contracts. Currency hedging contracts used to hedge against payment fluctuations caused by exchange rates are part of an effective cash-flow hedging relationship pursuant 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, 2021, 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 € 208.6 million higher (lower) (December 31, 2020: € 151.9 million higher (lower)). Currency risks and other risk and opportunity categories are discussed in greater detail in the Combined Management Report in the Risk and Opportunity Report as well as in chapters 2 and 13 of the Notes to the consolidated financial statements. 285 Annual Report 2021 ↗ Consolidated Financial Statements ADDITIONAL INFORMATION 25. SEGMENT REPORTING Segment reporting is based on geographical areas of responsibility in accordance with the PUMA internal reporting structure, with the exception of stichd. The geographical area of responsibility corresponds to the business segment. Sales revenue, the operating result (EBIT) and other segment information are allocated to the corresponding geographical areas of responsibility 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, Africa, India and Southeast Asia), North America, Latin America, Greater China, Rest of Asia/Pacific (excluding Greater China and Southeast Asia) and stichd. These are reported as reportable business segments in accordance with the criteria of IFRS 8. The reconciliation includes information on assets, liabilities, expenses and income 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. The Company’s main decision-maker is defined as the entire Management Board of PUMA SE. With the exception of sales of goods by stichd amounting to € 39.2 million (previous year: € 30.0 million), there are no significant internal sales 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 income and other operating income, but not considering the costs of the central 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. Amounts recognized by the Group from the intra-group profit elimination on inventories in connection with intra-group sales are not allocated to the business segments in the way that they are reported to the main decision-maker. Investments, depreciation and non- current assets at the level of the business segments are not reported to the main decision-maker. Intangible assets are allocated to the business segments in the manner described in chapter 11. Segment liabilities, the financial result and income taxes are not allocated to the business segments and are therefore not reported to the main decision-maker at the business segment level. Non-current assets and depreciation comprise the carrying amounts and depreciation of property, plant and equipment, right-of-use assets and intangible assets during the past financial year. The investments comprise additions to property, plant and equipment and intangible assets. Since PUMA is active in only one business area, the sporting goods industry, products are additionally allocated according to the footwear, apparel and accessories product segments in accordance with the internal reporting structure. 286 Annual Report 2021 ↗ Consolidated Financial Statements SEGMENT REPORTING 1-12/ 2021 ↗ T.62 BUSINESS SEGMENTS (€ million) Europe EEMEA North America Latin America Greater China Asia/ Pacific (without Greater China) stichd External Sales EBIT Investments 1-12/2021 1-12/2020 1-12/2021 1-12/2020 1-12/2021 1-12/2020 1,523.6 1,229.3 975.1 688.0 1,969.2 1,349.5 630.9 766.9 533.4 406.2 403.2 788.9 460.0 315.5 146.1 214.6 394.8 151.6 137.8 61.2 101.7 104.4 129.1 160.6 59.2 209.6 33.3 79.0 58.5 34.8 20.1 14.1 15.9 7.3 20.9 44.7 11.8 23.3 3.3 17.0 7.4 3.3 Total business segments 6,805.4 5,234.4 1,207.7 775.2 171.6 110.8 Depreciation Inventories Trade Receivables (3rd) 1-12/2021 1-12/2020 12/31/2021 12/31/2020 12/31/2021 12/31/2020 Europe EEMEA North America Latin America Greater China Asia/ Pacific (without Greater China) stichd 54.4 43.7 56.0 14.8 39.4 32.2 7.8 48.3 42.5 52.1 14.1 41.6 32.6 8.0 364.6 221.0 469.9 140.3 200.5 84.5 79.1 343.0 176.9 260.5 96.8 156.3 89.7 75.4 Total business segments 248.4 239.2 1,559.8 1,198.7 164.3 126.2 187.1 120.4 65.9 119.5 61.7 845.1 117.4 85.6 112.2 101.5 56.8 83.9 47.0 604.5 287 Annual Report 2021 ↗ Consolidated Financial Statements ↗ T.62 CONTINUATION T.62 BUSINESS SEGMENTS (€ million) Europe EEMEA North America Latin America Greater China Asia/Pacific (without Greater China) stichd Total business segments Long-term Assets 12/31/2021 12/31/2020 474.6 164.8 534.4 75.0 79.1 158.3 194.1 421.5 114.6 495.1 63.7 86.1 162.2 176.8 1,680.4 1,520.1 ↗ T.63 PRODUCT External Sales (€ million) Gross Profit Margin (in %) Footwear Apparel Accessories Total External Sales Gross Profit Margin 1-12/2021 1-12/2020 1-12/2021 1-12/2020 3,163.6 2,367.6 2,517.3 1,974.1 1,124.5 892.7 47.3% 48.9% 47.1% 45.7% 48.5% 47.0% 6,805.4 5,234.4 47.9% 47.0% 288 RECONCILIATIONS ↗ T.64 RECONCILIATIONS (€ million) Total business segments Central areas Central expenses Marketing Consolidation EBIT Financial result EBT Annual Report 2021 ↗ Consolidated Financial Statements EBIT 1-12/2021 1-12/2020 1,207.7 -280.4 -370.2 0.0 557.1 -51.8 505.3 775.2 -262.3 -303.8 0.0 209.2 -46.8 162.3 Investments Depreciation 1-12/2021 1-12/2020 1-12/2021 1-12/2020 Total business segments 171.6 110.8 248.4 239.2 Central areas Consolidation Total 35.9 0.0 36.9 0.0 39.0 0.0 36.5 0.0 207.5 147.7 287.3 275.7 Inventories Trade Receivables (3rd) Long-term assets 12/31/2021 12/31/2020 12/31/2021 12/31/2020 12/31/2021 12/31/2020 Total business segments 1,559.8 1,198.7 845.1 604.5 1,680.4 1,520.1 Not allocated to the business segments -67.6 -60.7 2.9 16.5 204.4 207.9 Total 1,492.2 1,138.0 848.0 621.0 1,884.8 1,728.0 289 Annual Report 2021 ↗ Consolidated Financial Statements 26. 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, investing and financing activities. The indirect method is used to determine the cash outflow/inflow from operating 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 operating activities. Cash outflow/inflow from operating activities, reduced by investments in property, plant and equipment as well as intangible assets is referred to as free cash flow. The cash and cash equivalents reported in the cash flow statement include all cash and cash equivalents shown in the balance sheet under the item "Cash and cash equivalents", i.e. cash on hand, cheques and current bank balances including short-term financial investments. The following table shows the cash and non-cash changes in financial liabilities in accordance with IAS 7.44A: ↗ T.65 RECONCILIATION OF FINANCIAL LIABILITIES TO THE CASH INFLOW/ OUTFLOW FROM FINANCING ACTIVITIES 2021 (€ million) Financial liabilities Lease liabilities Current financial liabilities Non-current financial liabilities Total Non-cash changes Notes As of Jan. 1, 2021 Currency changes Others Cash changes As of Dec. 31, 2021 10 13 13 931.7 121.4 145.0 1,198.1 38.9 0.5 0.0 39.4 213.7 -160.9 1,023.4 0.0 0.0 213.7 -53.4 68.5 166.5 -47.8 311.5 1,403.4 ↗ T.66 RECONCILIATION OF FINANCIAL LIABILITIES TO THE CASH INFLOW/ OUTFLOW FROM FINANCING ACTIVITIES 2020 (€ million) Financial liabilities Lease liabilities Current financial liabilities Non-current financial liabilities Total Non-cash changes Notes As of Jan. 1, 2020 Currency changes Others Cash changes As of Dec. 31, 2020 10 13 13 745.3 10.2 163.3 918.8 -60.5 -1.3 0.0 -61.7 381.8 -135.0 0.0 0.0 381.8 112.5 -18.3 -40.7 931.7 121.4 145.0 1,198.1 290 Annual Report 2021 ↗ Consolidated Financial Statements The lease liabilities of € 1,023.4 million (previous year: € 931.7 million) are broken down into current lease liabilities of € 172.3 million (previous year: € 156.5 million) and non-current lease liabilities of € 851.0 million (previous year: € 775.2 million). The non-current financial liabilities of € 311.5 million (previous year: € 145.0 million) are part of the other non-current financial liabilities. 27. CONTINGENCIES CONTINGENCIES As in the previous year, there were no reportable contingencies. 28. OTHER FINANCIAL OBLIGATIONS The Company has other financial obligations associated with license, promotional and advertising agreements, which give rise to the following financial obligations as of the balance sheet date: ↗ T.67 (€ million) From license, promotional and advertising agreements: 2022 (2021) 2023 – 2026 (2022 – 2025) from 2027 (from 2026) Total 2021 2020 301.3 650.4 205.4 286.1 617.6 244.4 1,157.1 1,148.1 As is customary in the industry, the promotional and advertising agreements provide for additional payments on reaching pre-defined goals (e.g., medals, championships). These are contractually agreed, but by their nature cannot be predicted exactly in terms of their timing and amount. In addition, there are other financial obligations totaling € 160.8 million, of which € 129.5 million relate to the years from 2023. These include service agreements of € 157.9 million as well as other obligations of € 2.8 million. 291 Annual Report 2021 ↗ Consolidated Financial Statements 29. COMPENSATION OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD Disclosures pursuant to Section 314 (1) No. 6 HGB (German Commercial Code [Handelsgesetzbuch]) COMPENSATION OF THE MEMBERS OF THE MANAGEMENT BOARD The total compensation paid to the members of the Management Board in the financial year 2021 was € 10.5 million (previous year: € 6.5 million). For other share-based payments, please refer to chapter 18. TOTAL COMPENSATION PAID TO FORMER MEMBERS OF THE MANAGEMENT BOARD The total remuneration of former members of the Management Board and their surviving dependents amounted to € 1.1 million in the financial year 2021 (previous year: € 0.2 million). In addition, there were defined benefit pension obligations to former members of the Management Board and their widows/widowers amounting to € 2.8 million (previous year: € 3.2 million) as well as defined contribution-based pension obligations from deferred compensation of former members of the Management Board and Managing Directors amounting to € 17.2 million (previous year: € 11.3 million). Both items were recognized as liabilities within pension provisions to the extent they were not offset against asset values of an equal amount. SUPERVISORY BOARD COMPENSATION The compensation paid to the Supervisory Board comprised fixed compensation and additional compensation for committee activities, and amounted to a total of € 0.2 million (previous year: € 0.1 million). 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 relates to all companies with non-controlling interests in which the identical non-controlling shareholder holds an interest. The figures represent the amounts before 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 companies, there are profit-sharing arrangements in place which differ from the capital share for the benefit of the respective identical non-controlling shareholder. PUMA receives higher license fees in exchange. 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 non-controlling interests. The non-controlling interests existing on the balance sheet date relate to PUMA United North America LLC, PUMA United Canada ULC and Janed Canada, LLC (inactive) with € 65.2 million (previous year: € 41.5 million). 292 Annual Report 2021 ↗ Consolidated Financial Statements The following tables show a summary of the financial information for subsidiaries with non-controlling interests: ↗ T.68 ASSETS AND LIABILITIES (€ million) Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net assets attributable to non-controlling interests ↗ T.69 INCOME STATEMENT (€ 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.70 CASH (€ million) Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Changes in cash and cash equivalents 12/31/2021 12/31/2020 105.1 3.8 39.5 0.0 69.5 65.2 2021 422.9 67.9 67.2 4.3 71.5 47.8 2021 52.8 0.0 -52.4 0.4 51.9 3.5 14.6 0.0 40.8 41.5 2020 258.0 40.1 44.2 -3.9 40.4 45.6 2020 48.4 0.0 -49.2 -0.8 293 Annual Report 2021 ↗ Consolidated Financial Statements 31. RELATED PARTY RELATIONSHIPS In accordance with IAS 24, relationships to related companies and persons that control 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 control over the PUMA Group or that are under the relevant control of another related party of the PUMA Group are considered as related companies or persons within the meaning of IAS 24. As of December 31, 2021, 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 Pinault S.C.A., Artémis S.A.S. and Kering S.A.). The shareholding of Kering S.A. in PUMA SE amounts to approximately 4.0% of share capital according to Kering S.A.’s press release from May 27, 2021. Together, Artémis S.A.S. and Kering S.A. hold 32.5% of the share capital. Since Artémis S.A.S. and Kering S.A. hold more than 20% of the voting rights in PUMA SE, they are presumed to have significant influence according to IAS 28.5 and IAS 28.6. They and all other companies directly or indirectly controlled by Artémis S.A.S. that are not included in the consolidated financial statements of PUMA SE are considered as related parties in the following. In addition, the disclosure obligation pursuant to IAS 24 extends to transactions with associated companies as well as transactions with other related companies and persons. These include non-controlling interests in particular. Transactions with related companies and persons 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.71 (€ million) Companies included in the Artémis Group Companies included in the Kering Group Other related companies and persons Total ↗ T.72 (€ million) Deliveries and services rendered Deliveries and services received 2021 2020 2021 0.0 1.8 0.0 1.8 0.0 1.7 0.0 1.7 0.0 0.1 23.0 23.1 2020 0.0 0.2 17.1 17.3 Net receivables from Liabilities to 2021 2020 2021 2020 Companies included in the Artémis Group Companies included in the Kering Group Other related companies and persons Total 0.0 0.4 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 15.0 15.0 0.0 0.0 5.5 5.5 294 Annual Report 2021 ↗ Consolidated Financial Statements In addition, dividend payments of € 47.8 million were made to non-controlling interests in the financial year 2021 (previous year: € 45.6 million). Receivables from related companies and persons 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, 2021 (previous year: € 52.2 million). As in the previous year, no expenses were recorded in this respect in the financial year 2021. 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 2021, the remuneration of the members of the Management Board of PUMA SE for short-term benefits amounted to € 5.4 million (previous year: € 1.8 million), for post-employment benefits to € 0.4 million (previous year: € 0.4 million) and the share-based remuneration to € 4.7 million (previous year: € 4.3 million). Furthermore, no remuneration was granted in the form of other long-term benefits or in the form of termination benefits in the reporting year (previous year: € 0.0 million). Accordingly, the total expense for the financial year 2021 amounts to € 10.5 million (previous year: € 6.5 million). In the financial year 2021, the remuneration of the members of the Supervisory Board of PUMA SE for short-term benefits amounted to € 0.2 million (previous year: € 0.1 million). 32. CORPORATE GOVERNANCE In November 2021, 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 published it on the Company’s website (www.PUMA.com). Please also refer to the corporate governance statement in accordance with section 289f and section 315d HGB (Handelsgesetzbuch, German Commercial Code) in the Combined Management Report. 33. EVENTS AFTER THE BALANCE SHEET DATE No events with any significant effect on the net assets, financial position and results of operations of the PUMA Group occurred after the balance sheet date. 295 Annual Report 2021 ↗ Consolidated Financial Statements 34. DATE OF RELEASE The Management Board of PUMA SE released the consolidated financial statements on February 1, 2022 for distribution to the Supervisory Board. The task of the Supervisory Board is to review the consolidated financial statements and state whether it approves them. Herzogenaurach, February 1, 2022 The Management Board Gulden Descours Freundt Hinterseher This is a translation of the German version. In case of doubt, the German version shall apply. 296 Annual Report 2021 ↗ Consolidated Financial Statements APPENDIX 1 OF THE CONSOLIDATED FINANCIAL STATEMENTS ↗ T.73 CHANGES IN FIXED ASSETS 2020 (€ million) Purchase costs Accumulated depreciation Carrying amounts Currency changes and other changes Changes in group of consolidated companies Additions/ retransfers Balance 1/1/2020 Disposals Balance 12/31/2020 Balance 1/1/2020 Currency changes and other changes Changes in group of consolidated companies Additions/ retransfers1) Disposals Balance 12/31/2020 Balance 12/31/2020 Balance 12/31/2019 PROPERTY, PLANT AND EQUIPMENT Land, land rights and buildings including buildings on third party land Technical equipment and machines Other equipment, factory and office equipment Payments on account and assets under construction 171.3 13.2 6.4 -0.6 190.3 -53.4 0.9 -6.5 0.5 -58.3 131.9 117.9 21.3 -1.0 0.9 -0.1 21.1 -11.5 0.6 -2.0 0.1 -12.8 8.4 9.8 488.7 -18.5 51.8 -27.1 494.9 -313.4 20.1 -72.4 25.3 -340.4 154.6 175.3 91.7 -31.8 53.6 -1.5 112.0 112.0 91.7 773.1 -38.1 112.7 -29.3 818.3 -378.3 21.7 -80.9 25.9 -411.4 406.9 394.8 297 Purchase costs Accumulated depreciation Carrying amounts Currency changes and other changes Changes in group of consolidated companies Additions/ retransfers Balance 1/1/2020 Disposals Balance 12/31/2020 Balance 1/1/2020 Currency changes and other changes Changes in group of consolidated companies Additions/ retransfers1) Disposals Balance 12/31/2020 Balance 12/31/2020 Balance 12/31/2019 Annual Report 2021 ↗ Consolidated Financial Statements 509.0 -42.7 84.1 -13.2 537.2 -89.3 10.8 -114.4 10.9 -182.0 355.2 419.6 332.0 -76.2 321.1 -10.4 566.5 -50.3 8.8 -64.3 3.6 -102.2 464.3 281.7 24.8 45.4 6.0 -2.7 73.4 -7.0 -3.2 -7.7 2.6 -15.3 58.1 17.7 865.7 -73.4 411.2 -26.3 1,177.2 -146.7 16.5 -186.4 17.1 -299.6 877.6 719.0 294.6 -6.3 288.3 -44.9 -1.9 -46.8 241.4 249.7 144.2 -10.6 133.6 -17.7 -17.7 115.9 126.5 216.1 -3.9 654.9 -20.8 34.8 34.8 -6.4 -6.4 240.6 -137.8 662.5 -200.4 3.0 3.0 -24.4 -26.3 4.7 4.7 -154.6 86.1 78.3 -219.1 443.4 454.5 RIGHT-OF-USE ASSETS Real Estate – Retail stores Real Estate – Warehouses & offices Others (technical equipment and machines and vehicles) INTANGIBLE ASSETS Goodwill Intangible assets with an indefinite useful life Other intangible assets 1) In the financial year 2020 there was no impairment on property, plant and equipment (previous year: € 0.0 million, see chapter 9), impairment on right-of-use assets of € 16.1 million (previous year: € 0.0 million, see chapter 10) and impairment on intangible assets of € 1.9 million (previous year: € 0.0 million, see chapter 11). 298 ↗ T.74 CHANGES IN FIXED ASSETS 2021 (€ million) Purchase costs Accumulated depreciation Carrying amounts Currency changes and other changes Changes in group of consolidated companies Additions/ retransfers Balance 1/1/2021 Disposals Balance 12/31/2021 Balance 1/1/2021 Currency changes and other changes Changes in group of consolidated companies Additions/ retransfers1) Disposals Balance 12/31/2021 Balance 12/31/2021 Balance 12/31/2020 Annual Report 2021 ↗ Consolidated Financial Statements PROPERTY, PLANT AND EQUIPMENT Land, land rights and buildings including buildings on third party land Technical equipment and machines Other equipment, factory and office equipment Payments on account and assets under construction 190.3 5.8 6.3 -33.8 168.6 -58.3 -0.3 -6.4 18.0 -47.0 121.6 131.9 21.1 89.5 35.3 -0.8 145.2 -12.8 -1.2 -6.1 0.6 -19.5 125.7 8.4 494.9 36.6 78.5 -35.9 574.1 -340.3 -14.7 -70.7 34.6 -391.1 183.0 154.6 112.0 -108.3 40.5 -2.1 42.1 42.1 112.0 818.3 23.7 160.6 -72.6 930.0 -411.4 -16.2 -83.2 53.3 -457.6 472.4 406.9 299 Purchase costs Accumulated depreciation Carrying amounts Currency changes and other changes Changes in group of consolidated companies Additions/ retransfers Balance 1/1/2021 Disposals Balance 12/31/2021 Balance 1/1/2021 Currency changes and other changes Changes in group of consolidated companies Additions/ retransfers1) Disposals Balance 12/31/2021 Balance 12/31/2021 Balance 12/31/2020 Annual Report 2021 ↗ Consolidated Financial Statements 537.2 26.5 130.9 -41.1 653.5 -182.0 -8.6 -115.1 35.1 -270.6 382.9 355.2 566.5 18.6 100.7 -18.8 667.0 -102.2 -4.1 -70.3 15.4 -161.2 505.8 464.3 73.4 4.1 10.3 -18.8 69.1 -15.3 -0.5 -9.3 7.9 -17.2 51.9 58.1 1,177.2 49.2 241.9 -78.7 1,389.5 -299.6 -13.2 -194.7 58.5 -449.0 940.5 877.6 288.3 3.2 291.5 -46.8 -46.8 244.7 241.4 133.6 9.7 143.3 -17.7 -17.7 125.6 115.9 240.6 662.5 4.0 16.9 46.9 46.9 -15.0 276.5 -154.6 -15.0 711.4 -219.1 -0.8 -0.8 -27.8 -27.8 8.1 8.1 -175.1 101.6 86.1 -239.6 471.9 443.4 RIGHT-OF-USE ASSETS Real Estate – Retail stores Real Estate – Warehouses & offices Others (technical equipment and machines and vehicles) INTANGIBLE ASSETS Goodwill Intangible assets with an indefinite useful life Other intangible assets 1) In the financial year 2021 there was no impairment on property, plant and equipment (previous year: € 0.0 million, see chapter 9), impairment on right-of-use assets of € 18.5 million (previous year: € 16.1 million, see chapter 10) and impairment on intangible assets of € 0.0 million (previous year: € 1.9 million, see chapter 11). 300 Annual Report 2021 ↗ Consolidated Financial Statements APPENDIX 2 OF THE CONSOLIDATED FINANCIAL STATEMENTS MEMBERS OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD AND THEIR MANDATES STATUS: DECEMBER 31, 2021 MEMBERS OF THE MANAGEMENT BOARD AND THEIR MANDATES Bjørn Gulden Chief Executive Officer (CEO) Membership of other supervisory boards and controlling bodies: • Salling Group A/S, Brabrand/Denmark (Chair) • Borussia Dortmund GmbH & Co. KGaA, Dortmund • Tchibo GmbH, Hamburg Michael Lämmermann (member until May 31, 2021) Chief Financial Officer (CFO) Hubert Hinterseher (member since June 1, 2021) Chief Financial Officer (CFO) Anne-Laure Descours Chief Sourcing Officer (CSO) Arne Freundt (member since June 1, 2021) Chief Commercial Officer (CCO) MEMBERS OF THE SUPERVISORY BOARD AND THEIR MANDATES Jean-François Palus (member since June 16, 2007) (Chair) Paris, France Group Managing Director and member of the Board of Directors of Kering S.A., Paris/France, responsible for Strategy, Operations and Organization Membership of other supervisory boards and controlling bodies:1) • Kering Americas, Inc., New York/USA • Kering Tokyo Investment Ltd., Tokyo/Japan • Sowind Group S.A., La Chaux-de-Fonds/Switzerland • Guccio Gucci S.p.A., Florence/Italy • Gucci America, Inc., New York/USA • Kering Eyewear S.p.A., Padua/Italy • Yugen Kaisha Gucci LLC, Tokyo/Japan • Birdswan Solutions Ltd., Haywards Heath/West Sussex/United Kingdom • Paintgate Ltd., Haywards Heath/West Sussex/United Kingdom • Kering Asia Pacific Ltd., Hong-Kong/China 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. 301 Annual Report 2021 ↗ Consolidated Financial Statements • Kering South East Asia Pte Ltd., Singapore • Boucheron S.A.S., Paris/France • Kering Beauté SAS, Paris/France • Kering Canada Services Inc, Vancouver/Canada • Vestiaire Collective SA, Paris/France Thore Ohlsson (member since May 21, 1993) (Deputy Chair) Falsterbo, Sweden President of Elimexo AB, Falsterbo/Sweden Membership of other supervisory boards and controlling bodies: • Elite Hotels AB, Stockholm/Sweden • Tomas Frick AB, Vellinge/Sweden • Dofab AB, Malmö/Sweden • Orrefors Kosta Boda AB, Kosta/Sweden • Infinitive AB, Malmö/Sweden Héloïse Temple-Boyer (member since April 18, 2019) Paris, France Deputy CEO of ARTÉMIS S.A.S., Paris/France Membership of other supervisory boards and controlling bodies 2): • 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 S.p.A., Venice/Italy • Compagnie du Ponant S.A.S., Marseille/France Fiona May (member since April 18, 2019) Calenzano, Italy Independent Management Consultant Membership of other supervisory boards and controlling bodies: • R.C.S. Media Group Active Team Srl, Milano/Italy Martin Köppel (member since July 25, 2011) (Employees’ Representative) Weisendorf, Germany Chair of the Works Counsel of PUMA SE 2) All mandates are mandates within the ARTÈMIS-Group. Kering S.A. is a listed company. 302 Annual Report 2021 ↗ Consolidated Financial Statements Bernd Illig (member since July 9, 2018) (Employees’ Representative) Bechhofen, Germany Senior Administrator IT Systems of PUMA SE SUPERVISORY BOARD COMMITTEES Personnel Committee • Jean-François Palus (Chair) • Fiona May • Martin Köppel Audit Committee • Thore Ohlsson (Chair) • Héloïse Temple-Boyer • Bernd Illig Nominating Committee • Jean-François Palus (Chair) • Héloïse Temple-Boyer • Fiona May Sustainability Committee (since October 26, 2021) • Fiona May (Chair) • Héloïse Temple-Boyer • Martin Köppel 303 DECLARATION BY THE LEGAL REPRESENTATIVES Annual Report 2021 ↗ Consolidated Financial Statements We state to the best of our knowledge that the consolidated financial statements 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 principles, and that the Group management report, which is combined with the Management report of PUMA SE for the financial year 2021, 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, February 1, 2022 The Management Board Gulden Descours Freundt Hinterseher 304 Annual Report 2021 ↗ Consolidated Financial Statements INDEPENDENT AUDITOR’S REPORT To PUMA SE, Herzogenaurach/Germany 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, Herzogenaurach/Germany, and its subsidiaries (“PUMA” or “the Group”) which comprise the consolidated statement of financial position as at December 31, 2021, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the financial year from January 1 to December 31, 2021, and the notes to the consolidated financial statements, including the presentation of the recognition and measurement policies. In addition, we have audited the combined management report on the parent and the group (“combined management report”) of PUMA SE, Herzogenaurach/Germany, for the financial year from January 1 to December 31, 2021. In accordance with the German legal requirements, we have not audited the content of the consolidated corporate governance statement included in the section “Corporate Governance Statement in accordance with Section 289f and Section 315d HGB” of the combined management report. In our opinion, on the basis of the knowledge obtained in the audit, • the accompanying consolidated financial statements comply, in all material 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 December 31, 2021 and of its financial performance for the financial year from January 1 to December 31, 2021, 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 financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development. Our audit opinion on the combined management report does not cover the content of the consolidated corporate governance statement included in the section “Corporate Governance Statement in accordance with Section 289f and Section 315d HGB” of the combined management report. Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the consolidated financial statements and of the combined management report. BASIS FOR THE AUDIT OPINIONS We conducted our audit of the consolidated financial statements and of the combined management report in accordance with Section 317 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 Wirtschaftsprüfer (IDW). Our responsibilities under those requirements and principles 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 accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional 305 Annual Report 2021 ↗ Consolidated Financial Statements responsibilities in accordance with these requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we have not provided 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 financial year from January 1 to December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole 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 Our presentation of these key audit matters has been structured as follows: a) description (including reference to corresponding information in the consolidated financial statements) b) auditor’s response 1. RECOVERABILITY OF GOODWILL a) The consolidated financial statements of PUMA SE show goodwill in the amount of mEUR 244.7 corresponding to approximately 4.3% of total assets or 10.7% of the group equity. Each financial year or in case of signs of impairment, goodwill is subject to impairment tests. The impairment tests are performed by PUMA SE applying the “discounted cash flow method”. The valuations are based on the present values of the future cash flows which are in turn based on the three-year plan (detailed planning horizon) valid at the date of the impairment test. This detailed planning horizon is subsequently extended assuming long-term growth rates. Discounting is performed using the weighted average cost of capital (WACC). Here, the recoverable amount is determined 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 executive directors’ assessment of future cash inflows, the long-term growth rates as well as the WACC rates applied for discounting 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 executive directors, is disclosed in note 2 “Significant Consolidation, Accounting and Valuation Principles” and in note 11 “Intangible Assets” of the notes to the consolidated financial statements. b) Within the scope of our risk-based audit approach, we particularly gained an understanding of the systematic approach applied when performing the impairment tests. We satisfied ourselves, that the valuation model used adequately presents the requirements of the relevant standards, whether the necessary input data are completely and accurately determined and taken over and whether the 306 Annual Report 2021 ↗ Consolidated Financial Statements calculations within the model are performed correctly. We assured ourselves of the appropriateness of the future cash inflows used for the computation by particularly reconciling these cash flows with the current three-year plan, as well as by interviewing the executive directors or persons appointed by them with regard to the material assumptions underlying this plan. In addition, we performed a critical assessment of the planning assumptions under consideration of general and industry-specific market expectations. Since a material portion of the respective value in use results from the forecast cash inflows for the period after the three-year planning horizon (phase of perpetuity), we in particular performed a critical assessment of the sustainable growth rate used within the perpetuity phase by means of general and industry-specific market expectations. Since relatively low changes of the discount rate used may already have a material effect on the amount of the recoverable amount, we also validated the parameters used for determining the discount rate (WACC = weighted average cost of capital) involving internal experts from the financial advisory sector and reproduced the computation scheme. Due to the possibly material significance and taking into account the fact that the valuation of the goodwill also depends on the economic framework conditions that cannot be influenced by the Group, we additionally performed a critical assessment of the sensitivity analyses performed by PUMA SE for the cash-generating units (CGUs) with low headroom (present values compared to the carrying 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) For the Cobra brand, the consolidated financial statements of PUMA SE disclose a brand value in the amount of mEUR 125.6 with an indefinite useful life, which corresponds to approximately 2.2% of total assets or 5.5% 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 a brand results from future royalties that a company would have to pay for the use of the brand if they had to license it. The approach uses forecast revenue generated from the Cobra brand based on the effective three-year plan (detailed planning horizon) valid at the time the impairment test is conducted. This detailed planning horizon is subsequently extended assuming long- term growth rates. Discounting is performed using the weighted average cost of capital (WACC). Here, the recoverable amount is determined 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. If there are indications of impairment of the brand used by the Group itself, the recoverability of the brand is evaluated by reference to the recoverable amount of the cash-generating unit to which the brand is allocated. The outcome of this valuation highly depends on the executive directors’ assessment of the future revenue generated from the Cobra brand, the royalty rate, the long-term growth rate as well as the WACC rate applied for discounting and therefore involves uncertainties and discretion. Thus, 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 executive directors, 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) Using our risk-based audit approach, we firstly examined the executive board’s system for measuring the Cobra brand value on the basis of the information available to us and in discussions with the executive directors and with persons appointed by them, assessing that there are no indications of impairment of the brand used by the Group itself and that the recoverability of the brand can be evaluated separately by use of the relief-from-royalty method as part of the impairment test. We have 307 Annual Report 2021 ↗ Consolidated Financial Statements followed the methodological procedure for performing the impairment test using the relief-from-royalty method. In this regard, we analyzed whether the valuation model adequately 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 (Cobra branded sales) on which the computation is based by reconciling these sales particularly with the effective three-year plan as well as by interviewing the executive directors and persons appointed by them with regard to the plausibility of material assumptions underlying this plan. In addition, we performed a critical assessment of the plan under consideration of general and industry-specific market expectations. Since a material portion of the value in use results from the forecast revenue for the period following the three-year plan (phase of perpetuity), we particularly reviewed the sustainable growth rate applied to the perpetuity phase for plausibility 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 material 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 computation scheme. Additionally, we critically assessed the used royalty rate using average industry rates based on generally available industry information. Due to the potential material significance and as the measurement of the brand also depends on general economic conditions that are beyond the Group’s control, we additionally critically assessed the sensitivity analyses concerning the Cobra brand conducted by PUMA SE in order to be able to determine a potential impairment risk in case a material assumption underlying the measurement changes. OTHER INFORMATION The executive directors and/or the supervisory board are responsible for the other information. The other information comprises • the report of the supervisory board, • the consolidated corporate governance statement included in the section “Corporate governance statement in accordance with Section 289f and Section 315d HGB” of the combined management report, • the separate combined non-financial report to which reference is made in the combined management report and which is expected to be presented to us after the date of this auditor’s report, • the executive directors’ confirmation regarding the consolidated financial statements and the combined management report pursuant to Section 297 (2) sentence 4 and Section 315 (1) sentence 5 HGB, and • all other parts of the annual report which will be published after the issuance of this auditor’s report, • but not the consolidated financial statements, not the audited content of the group management report and not our auditor’s report thereon. The supervisory board is responsible for the report of the supervisory board. The executive directors and the supervisory board are responsible for the statement according to Section 161 German Stock Corporation Act (AktG) concerning the German Corporate Governance Code, which is part of the consolidated corporate governance statement in section “Corporate Governance Statement in accordance with Section 289f and Section 315d HGB” of the combined management report. Otherwise, the executive directors are responsible for the other information. 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 identified above and, in doing so, to consider whether the other information • is materially inconsistent with the consolidated financial statements, with the audited content of the combined management report or our knowledge obtained in the audit, or 308 Annual Report 2021 ↗ Consolidated Financial Statements • otherwise appears to be materially misstated. RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND THE SUPERVISORY BOARD FOR THE CONSOLIDATED FINANCIAL STATEMENTS AND THE COMBINED MANAGEMENT REPORT The executive directors are responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRS as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e (1) 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 executive directors are responsible for such internal control as they have determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the executive directors 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 going 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 executive directors 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 consolidated financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (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. The supervisory board is responsible for overseeing the Group’s financial reporting process for the preparation of the consolidated financial statements and of the combined management report. AUDITOR’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 consolidated financial statements as a whole are free from material misstatement, whether 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 knowledge 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 consolidated 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 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (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 decisions of users taken on the basis of these consolidated financial statements and this combined management report. We exercise professional judgment and maintain professional skepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the consolidated financial statements and of the combined management report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from fraud is higher 309 Annual Report 2021 ↗ Consolidated Financial Statements than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. • 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 design 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 executive directors and the reasonableness of estimates made by the executive directors and related disclosures. • conclude on the appropriateness of the executive directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions 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 disclosures 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 continue as a going concern. • evaluate the overall presentation, structure and content of the consolidated 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 financial performance of the Group in compliance with IFRS as adopted by the EU and with the additional requirements of German commercial law pursuant to Section 315e (1) HGB. • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express 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 responsible 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. • perform audit procedures on the prospective information presented by the executive directors in the combined management report. On the basis 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 assumptions 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. We 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. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the current period and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter. 310 Annual Report 2021 ↗ Consolidated Financial Statements OTHER LEGAL AND REGULATORY REQUIREMENTS REPORT ON THE AUDIT OF THE ELECTRONIC REPRODUCTIONS OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE COMBINED MANAGEMENT REPORT PREPARED FOR PUBLICATION PURSUANT TO SECTION 317 (3A) HGB AUDIT OPINION We have performed an audit in accordance with Section 317 (3a) HGB to obtain reasonable assurance whether the electronic reproductions of the consolidated financial statements and of the combined management report (hereinafter referred to as “ESEF documents”) prepared for publication, contained in the provided file, which has the SHA-256 value 6682208690E515B6958422383E9C78A7F585F6F7D64E36E2C2DCC02B864AC646, meet, in all material respects, the requirements for the electronic reporting format pursuant to Section 328 (1) HGB (“ESEF format”). In accordance with the German legal requirements, this audit only covers the conversion of the information contained in the consolidated financial statements and the combined management report into the ESEF format, and therefore covers neither the information contained in these electronic reproductions nor any other information contained in the file identified above. In our opinion, the electronic reproductions of the consolidated financial statements and of the combined management report prepared for publication contained in the provided file identified above meet, in all material respects, the requirements for the electronic reporting format pursuant to Section 328 (1) HGB. Beyond this audit opinion and our audit opinions on the accompanying consolidated financial statements and on the accompanying combined management report for the financial year from January 1 to December 31, 2021 contained in the “Report on the Audit of the Consolidated Financial Statements and of the Combined Management Report” above, we do not express any assurance opinion on the information contained within these electronic reproductions or on any other information contained in the file identified above. BASIS FOR THE AUDIT OPINION We conducted our audit of the electronic reproductions of the consolidated financial statements and of the combined management report contained in the provided file identified above in accordance with Section 317 (3a) HGB and on the basis of the IDW Auditing Standard: Audit of the Electronic Reproductions of Financial Statements and Management Reports Prepared for Publication Purposes Pursuant to Section 317 (3a) HGB (IDW AuS 410 (10.2021)). Our responsibilities in this context are further described in the “Group Auditor’s Responsibilities for the Audit of the ESEF Documents” section. Our audit firm has applied the IDW Standard on Quality Management: Requirements for Quality Management in the Audit Firm (IDW QS 1). RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND THE SUPERVISORY BOARD FOR THE ESEF DOCUMENTS The executive directors of the parent are responsible for the preparation of the ESEF documents based on the electronic files of the consolidated financial statements and of the combined management report according to Section 328 (1) sentence 4 no. 1 HGB and for the tagging of the consolidated financial statements according to Section 328 (1) sentence 4 no. 2 HGB. In addition, the executive directors of the parent are responsible for such internal controls that they have considered necessary to enable the preparation of ESEF documents that are free from material intentional or unintentional non-compliance with the requirements for the electronic reporting format pursuant to Section 328 (1) HGB. The supervisory board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process. 311 Annual Report 2021 ↗ Consolidated Financial Statements GROUP AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE ESEF DOCUMENTS Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional non-compliance with the requirements of Section 328 (1) HGB. We exercise professional judgment and maintain professional skepticism throughout the audit. We also: • identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Section 328 (1) HGB, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinion. • obtain an understanding of internal control relevant to the audit on the ESEF documents in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these controls. • evaluate the technical validity of the ESEF documents, i.e. whether the provided file containing the ESEF documents meets the requirements of the Delegated Regulation (EU) 2019/815, in the version in force at the reporting date, on the technical specification for this electronic file. • evaluate whether the ESEF documents enable a XHTML reproduction with content equivalent to the audited consolidated financial statements and to the audited combined management report. • evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Articles 4 and 6 of the Delegated Regulation (EU) 2019/815, in the version in force at the reporting date, enables an appropriate and complete machine-readable XBRL copy of the XHTML reproduction. FURTHER INFORMATION PURSUANT TO ARTICLE 10 OF THE EU AUDIT REGULATION We were elected as Group auditor by the annual general meeting on May 5, 2021. We were engaged by the supervisory board on May 26, 2021. We have been the Group auditor of PUMA SE, Herzogenaurach/Germany, without interruption since the financial year 2012. We declare that the audit opinions expressed in this auditor’s report are consistent with the additional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report). 312 Annual Report 2021 ↗ Consolidated Financial Statements OTHER MATTER – USE OF THE AUDITOR’S REPORT Our auditor’s report must always be read together with the audited consolidated financial statements and the audited combined management report as well as with the audited ESEF documents. The consolidated financial statements and the combined management report converted into the ESEF format – including the versions to be published in the Federal Gazette – are merely electronic reproductions of the audited consolidated financial statements and the audited combined management report and do not take their place. In particular, the ESEF report and our audit opinion contained therein are to be used solely together with the audited ESEF documents made available in electronic form. GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE ENGAGEMENT The German Public Auditor responsible for the engagement is Dr Thomas Reitmayr. Munich/Germany, February 2, 2022 Deloitte GmbH Wirtschaftsprüfungsgesellschaft (Dr. Thomas Reitmayr) (Stefan Otto) Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German Public Auditor) 313 Annual Report 2021 ↗ Additional Information ADDITIONAL INFORMATION 315 317 319 322 The PUMA Share PUMA Year-on-Year Comparison PUMA Group Development Imprint 314 Annual Report 2021 ↗ Additional Information THE PUMA SHARE The PUMA share had a very positive performance in the financial year 2021. The closing price of PUMA shares on the last trading day in the financial year 2021 (December 30) was € 107.50, which was 16.5% higher than the closing price of the previous year. The market capitalization of the PUMA Group rose accordingly from € 13.8 billion at the end of the financial year 2020 to € 16.1 billion at the end of the financial year 2021. PUMA shares started into 2021 at a price of € 92.28. In the following twelve months, the price ranged between € 80.42 (January 27, 2021 / -12.8%) and € 114.70 (November 19, 2020 / +24.3%). The daily trading volume of PUMA shares decreased from an average of 423 thousand shares in the previous year to an average of 281 thousand shares in the financial year 2021. Compared to the MDAX, which rose 13.5% in the financial year 2021, the PUMA share performed better. In the course of the expansion of the DAX from 30 to 40 members, PUMA’s shares have been included in the stock market index of the largest companies on the German stock market since September 2021. ↗ T.01 KEY DATA PER SHARE* End of year price Highest price listed Lowest price listed Daily trading volume (Ø) Earnings per share Gross cashflow per share Free cashflow (before acquisitions) per share Shareholders' equity per share Dividend per share € € € amount in thousands € € € € € 2021 2020 2019 2018 2017 2016 2015 107.50 114.70 80.42 281 2.07 5.49 1.85 92.28 92.28 42.14 423 0.53 3.50 1.85 68.35 72.95 43.00 387 1.76 4.71 2.22 42.70 52.50 31.70 444 1.25 2.66 1.00 36.30 39.14 24.35 67 9.09 2.21 0.86 24.97 24.97 16.82 34 4.17 1.22 0.38 19.87 21.29 14.19 94 2.48 0.90 -0.66 15.23 11.79 12.84 11.52 11.09 11.53 10.84 0.72 0.16 0.50 0.35 1.25** 0.08 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 315 Annual Report 2021 ↗ Additional Information ↗ G.01 PUMA SHARE PERFORMANCE / TRADING VOLUME ↗ G.02 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 Large-Cap Index DAX of the German Stock Exchange (Deutsche Börse). Moreover, membership in the FTSE4Good index was once again confirmed. 316 Annual Report 2021 ↗ Additional Information PUMA YEAR-ON-YEAR COMPARISON ↗ T.02 PUMA YEAR-ON-YEAR COMPARISON (in € million) 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) Balance sheet information Shareholders' equity – Equity ratio Working capital – in % of consolidated sales Cash flow and investments Gross cash flow Free cash flow Investments (before acquisition) Acquisition investments 2021 2020 Deviation 6,805.4 5,234.4 30.0% 3,163.6 2,367.6 33.6% 2,517.3 1,974.1 27.5% 1,124.5 892.7 26.0% 3,257.8 2,458.0 32.5% 557.1 209.2 166.3% 505.3 162.3 211.2% 309.6 78.9 292.4% 47.9% 47.0% 0.9%pt 7.4% 4.5% 3.1% 4.3%pt 1.5% 3.0%pt 31.9% 15.1% 16.8%pt 13.6% 4.5% 9.1%pt 2,278.5 1,763.9 29.2% 39.8% 37.7% 2.1%pt 727.9 465.8 56.3% 10.7% 8.9% 1.8%pt 821.2 522.8 57.1% 276.2 276.0 0.1% 202.4 151.0 34.1% 0.0 0.0 - 317 Employees Number of employees (annual average) Sales per employee (k€) PUMA share Share price (in €) Average outstanding shares (in million) Number of shares outstanding as of Dec, 31 (in million) Earnings per share (in €) Market capitalization Annual Report 2021 ↗ Additional Information 2021 2020 Deviation 14,846 13,016 14.1% 458.4 402.2 14.0% 107.50 92.28 16.5% 149.59 149.56 149.61 149.58 0.0% 0.0% 2.07 0.53 292.3% 16,083 13,804 16.5% Average trading volume (amount/day) 281,047 422,629 -33.5% 318 Annual Report 2021 ↗ Additional Information PUMA GROUP DEVELOPMENT ↗ T.03 PUMA GROUP DEVELOPMENT (in € million) Sales Consolidated sales – Change in % – Footwear – Apparel – Accessories Result of operations Gross profit 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 6,805.4 5,234.4 5,502.2 4,648.3 4,135.9 3,626.7 3,387.4 2,972.0 2,985.3 3,270.7 30.0% -4.9% 18.4% 12.4% 14.0% 7.1% 14.0% -0.4% -8.7% 8.7% 3,163.6 2,367.6 2,552.5 2,184.7 1,974.5 1,627.0 1,506.1 1,282.7 1,372.1 1,595.2 2,517.3 1,974.1 2,068.7 1,687.5 1,441.4 1,333.2 1,244.8 1,103.1 1,063.8 1,151.9 1,124.5 892.7 881.1 776.1 719.9 666.5 636.4 586.3 549.4 523.6 3,257.8 2,458.0 2,686.4 2,249.4 1,954.3 1,656.4 1,540.2 1,385.4 1,387.5 1,579.0 – Gross profit margin 47.9% 47.0% 48.8% 48.4% 47.3% 45.7% 45.5% 46.6% 46.5% 48.3% Royalty and commission income EBIT1) – EBIT margin EBT – EBT margin Net earnings – Net margin 23.9 557.1 8.2% 505.3 7.4% 309.6 4.5% 16.1 209.2 4.0% 162.3 3.1% 78.9 1.5% 25.1 440.2 8.0% 417.6 7.6% 262.4 4.8% 16.3 337.4 7.3% 313.4 6.7% 187.4 4.0% 15.8 244.6 5.9% 231.2 5.6% 135.8 3.3% 15.7 127.6 3.5% 118.9 3.3% 62.4 1.7% 16.5 96.3 2.8% 85.0 2.5% 37.1 1.1% 19.4 128.0 4.3% 121.8 4.1% 64.1 2.2% 20.8 191.4 6.4% 53.7 1.8% 5.3 0.2% 19.2 290.7 8.9% 112.3 3.4% 70.2 2.1% 319 Expenses Marketing/retail Personnel Balance sheet Total assets Annual Report 2021 ↗ Additional Information 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 1,309.1 1,050.2 1,112.1 712.4 583.7 640.5 931.2 553.8 822.9 549.1 732.3 493.1 697.6 483.8 599.7 425.3 544.1 415.7 609.3 438.8 5,728.3 4,684.1 4,378.2 3,207.2 2,853.8 2,765.1 2,620.3 2,549.9 2,308.5 2,530.3 Shareholders' equity 2,278.5 1,763.9 1,902.3 1,722.2 1,656.7 1,722.2 1,619.3 1,618.3 1,497.3 1,597.4 – thereof: inventories 1,492.2 1,138.0 1,110.2 727.9 465.8 549.4 503.9 915.1 493.9 778.5 536.6 718.9 532.9 657.0 455.7 571.5 528.4 521.3 623.7 552.5 39.8% 37.7% 43.4% 53.7% 58.1% 62.3% 61.8% 63.5% 64.9% 63.1% 276.2 202.4 276.0 151.0 330.0 218.4 172.9 130.2 128.5 122.9 49.7 91.1 -98.9 79.5 39.3 96.4 29.2 76.3 -8.2 172.9 Return on capital employed (ROCE) 31.9% 15.1% 29.6% 25.8% 20.7% 10.3% 13.6% 4.5% 13.8% 10.9% 8.2% 3.6% 2.3% 7.9% 4.0% 11.5% 0.4% 5.6% 4.4% 8.6% Additional information Number of employees (year-end) 16,125 14,374 14,332 12,894 11,787 11,495 11,351 11,267 10,982 11,290 Number of employees (annual average) 14,846 13,016 13,348 12,192 11,389 11,128 10,988 10,830 10,750 10,935 320 – Equity ratio Working capital Cash flow Free cash flow Investments (incl. acquisitions) Profitability Return on equity (ROE) Annual Report 2021 ↗ Additional Information 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 PUMA share* Share price (in €) 107.50 92.28 68.35 42.70 36.30 24.97 19.87 17.26 23.50 Earnings per share (in €) 2.07 0.53 1.76 1.25 0.91 0.42 0.25 0.43 0.04 22.49 0.47 Average outstanding shares (in million) 149.59 149.56 149.52 149.47 149.43 149.40 149.40 149.40 149.40 149.67 Number of shares outstanding as of Dec, 31 (in million) 149.61 149.58 149.55 149.51 149.46 149.40 149.40 149.40 149.40 149.39 Market capitalization 16,083 13,804 10,222 6,384 5,426 3,730 2,968 2,578 3,511 3,359 1) EBIT before special items * Disclosures for the prior periods were adjusted retroactively to the 1:10 stock split carried out in the second quarter of 2019 321 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 Gottfried Hoppe Teamhead Investor Relations & Finance Strategy gottfried.hoppe@puma.com PEOPLE & ORGANIZATION Dietmar Knoess Global Director People & Organization dietmar.knoess@puma.com Annual Report 2021 ↗ Imprint SUSTAINABILITY Stefan Seidel Head of Corporate Sustainability stefan.seidel@puma.com DESIGN AND REALISATION 3st kommunikation GmbH www.3st.de 322 

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