Shareholders. 5 reasons. Editorial by Jean-Paul Agon Investing in a share which achieves sustainable and profitable growth

Transcription

1 Shareholders 5 reasons to take part in the L Oréal adventure Registered shares section Receive a loyalty bonus +10% Editorial by Jean-Paul Agon Investing in a share which achieves sustainable and profitable growth B E A U T Y, A V A L U E F O R T H E F U T U R E

2 Editorial Choosing the world beauty leader and investing in a share which achieves sustainable, responsible and profitable growth

3 Jean-Paul agon Chairman and CEO of L Oréal Over a century, L Oréal has been passionately committed to pursuing its adventure in beauty an adventure we enjoy sharing. Beauty is an eternal quest and a market that is constantly growing. Being a L Oréal shareholder means choosing a leading company in a buoyant sector and investing in a share which achieves sustainable, responsible and profitable growth. But it is much more than that. It also means providing long-term support for the development of a company which has all the assets required to further strengthen its leadership: a clear strategic project, the richest brand portfolio in the industry, a strong commitment to Research and Innovation, high standards of governance, loyal partners and the spirit of adventure that has always guided our choices and pushed us beyond our limits. 02 Our long-term strategic vision and constant pragmatism are the foundation for our continued desire to reinvent ourselves and quickly adapt to a changing world. Offering the best in cosmetic innovations to women and men all over the world, while respecting differences is, for me, an exciting mission. At L Oréal, we carry this mission out ethically and responsibly, as we are convinced that a strong culture of integrity creates longterm value. Being a L Oréal shareholder means sharing and supporting this great project, in a relationship of trust to which we are strongly committed. Together, let s write a new chapter in the L Oréal adventure.

4 2015 ANNUAL REPORT EXPLORE THE FULL VERSION OF THE 2015 ANNUAL REPORT AT

5 L Oréal in figures 1 st cosmetics group worldwide (1) 25.3 billion euros of sales in bilion euros in operating profit in countries 04 An international portfolio of 32 complementary brands 82,900 employees 497 patents registered in 2015 Commitments for 2020 Sharing Beauty With All (1) Source: WWD, Beauty s Top 100, April 2016.

6 Strategy 5 REASONS TO TAKE PART IN THE L ORÉAL ADVENTURE Being a L Oréal shareholder means sharing and supporting a clear strategic project for a new L Oréal that is more universal, more digital and more sustainable, and investing in a profitable and high-growth share. 1 AN EXCITING MISSION, BEAUTY FOR ALL 05 2 A UNIQUE STRATEGY, Universalisation 3 AN INSPIRING AMBITION, WINNING ONE BILLION NEW CONSUMERS 4 5 A RESPONSIBLE COMMITMENT, SHARING BEAUTY WITH ALL A SOLID MODEL, CREATING VALUE

7 REASON 1 AN EXCITING MISSION, BEAUTY FOR ALL Beauty has always been present in the history of humankind. Beauty is rich in meaning, and helps everyone to build self-confidence and to open up to others. For more than a century, L Oréal has devoted itself solely to one business: beauty. Its mission is to offer all the women and men on the planet the best in cosmetics innovation in terms of quality, efficacy and safety. Created by a researcher, Eugène Schueller, L Oréal has constantly pushed back the frontiers of science to meet the infinite diversity of beauty desires. THE WORLD LEADER IN BEAUTY (1) 4 Divisions that develop a specific vision for each consumption universe and distribution channel: L Oréal Luxe in the selective channel; Consumer Products in the mass market; Professional Products in hair and beauty salons; Active Cosmetics in dermocosmetics. 06 L Oréal RESEARCH AND INNOVATION 794 million euros invested in research and innovation 3,870 Research and Innovation employees 497 patents registered in research centres worldwide (1) Source: WWD, Beauty s Top 100, April 2016.

8 Strategy REASON 2 A UNIQUE STRATEGY, Universalisation 07 Universalisation is globalisation that captures, understands and respects differences. To capture every kind of beauty aspiration, L Oréal is extremely attentive to consumers views, and has profound respect for their differences in terms of needs, desires and traditions. This unique strategy is the world vision that drives L Oréal. 8 STRATEGIC REGIONS They bring together consumers around the world on the basis of their skin and hair types, climate, expectations and beauty routines. 1 STRONG CORE France 6 RESEARCH AND MARKETING HUBS United States, Japan, China, India, Brazil, South Africa Thanks to the group s Advanced Research expertise, they develop and adapt technologies as close as possible to their consumers. 44 INDUSTRIAL PLANTS They are organised by regions to ensure they are close to the different markets, so that all opportunities can be seized. WATCH THE UNIVERSALISATION VIDEO in the 2015 Annual Report at

9 REASON 3 AN INSPIRING AMBITION, WINNING ONE BILLION NEW CONSUMERS In a worldwide cosmetics market driven by the rise of the middle classes and the growth of consumer spending, L Oréal has the ambition to attract one billion new consumers. To succeed in this aim, the group draws on the vitality of its brands, their innovative power and their internationalisation potential. A strong BEAUTY MARKET Growth of the worldwide cosmetics market from 2006 to 2015 (1) (estimated annual growth rate, as %) % 5.0% 2.9% 1.0% 4.2% 4.6% 4.6% 3.8% 3.6% 3.9% BEAUTY and digital 6% e-commerce share of worldwide beauty market (1) +20% growth in worlwide online beauty sales (1) Beauty is in the 68% TOP 3 of Alibaba purchases topics (2) on Singles Day (4) in China Google search made from a mobile (3) (1) Source: L Oréal 2015 estimates of the worldwide cosmetics market in net manufacturer prices. Excluding soaps, oral hygiene, razors and blades. Excluding currency effects. (2) Source: Google data. (3) Source: Aliresearch.com. (4) November 11 th.

10 Strategy REASON 4 A RESPONSIBLE COMMITMENT, SHARING BEAUTY WITH ALL 09 Because it is not enough for a company to deliver strong economic performance, L Oréal is committed to the Sharing Beauty With All programme to ensure the group s long-term success. This programme will be the main spearhead of our citizen commitment, which goes along with our economic and financial performance over the long term. Innovating sustainably 74% of new products assessed have an improved environmental or social impact (1). Producing sustainably -56% of CO 2 emissions in factories and distribution centres (2). Consuming sustainably 67% of the brands have evaluated their environmental and social footprint and took commitments to reduce it (3). Sharing our growth 86.6% of L Oréal permanent employees have health insurance coverage in line with the best practices in each country. LEARN MORE ABOUT THE SHARING BEAUTY WITH ALL PROGRAMME S COMMITMENTS in the 2015 Annual Report at (1) New formulas developed and produced in the group s plants or whose packaging has been renovated in (2) In absolute value, (3) Calculated as a percentage of consolidated sales 2014.

11 REASON 5 A SOLID MODEL, CREATING VALUE Supported by the long-term vision of its shareholding structure, stable management and the expertise and commitment of its 82,900 employees, L Oréal has always targeted profitable and sustainable growth. The solid balance sheet, financial situation and results confirm the strength of L Oréal s business model, which creates value and generates cash flow. A balanced and solid business model The economic performances of L Oréal from 2010 to 2015 Sales +30% Operating profit +44% Net earnings per share (1) +54% 10 From ,000 4,000 Dividend per share (in euros) x89 Net profit after non-controlling interests (in millions of euros) x31 (2) 3, ,000 2,000 1, , (1) Diluted earnings per share, after non-controlling interests, excluding non-recurring items. (2) Net operating profit, excluding nonrecurring items after non-controlling interests. Synthélabo consolidated fully up to Synthélabo equity consolidated from 1999 to Including Sanofi dividend from IFRS since The announcement on February 11 th, 2014, of the disposal of 50% of Galderma leads to account for this business in accordance with IFRS 5 accounting rule on discontinued operations. In accordance with IFRS 11 accounting rule, Innéov has been consolidated under the equity method of January 1 st, All figures for earlier periods have been restated accordingly. Past performance is not necessarily a guide to future performance.

12 Performance L ORÉAL S SHARE Return on an investment in L Oréal shares Initial capital multiplied by in 20 years (1) that is a TSR of % per year A dividend at 3.10 (2), multiplied by 3.1 in 10 years, which has never declined in over 50 years Over 5 years the L Oréal share has outperformed the CAC 40 index: % L Oréal share variation (3) % CAC 40 variation (3) L ORÉAL share VERSUS CAC 40 L'Oréal CAC 40 (reindexed on L'Oréal) , pts 4, pts 09/30/11 09/28/12 09/30/13 09/30/14 09/30/15 09/30/16 (1) Purchase of 75 shares on December 31 th, 1995: 14, euros. Valuation at December 31 th, 2015, including reinvestment of dividends (1,122 shares at euros): 174, euros. (2) Dividend approved at the AGM of April 20 th, (3) Period from 09/30/2011 to 09/30/2016.

13 Interviews MEET THE INDIVIDUAL SHAREHOLDER RELATIONS TEAM Jean Régis Carof Director of Individual Shareholder and Market Authority Relations How would you define the relationship between L Oréal and its shareholders? With all those who share in the L Oréal adventure individual shareholders, investors, stakeholders we want to maintain a close relationship of trust. The Financial Communications teams are committed to building a relationship based on listening and dialogue in order to best meet their expectations. Being a L Oréal shareholder means investing in a solid growth share and taking part in an ambition project that of Universalisation and Beauty for All. 12 Could you tell us more about the meetings with L Oréal shareholders? We make a point of organising a number of events as a way for L Oréal to come into close contact with its shareholders. Major events include the Annual General Meeting followed by shareholder meetings all over France, without forgetting our presence at the Actionaria Shareholder Fair. And since 2013, we have organised visits exclusively for registered shareholders to our laboratories, our boutiques, our hairdressing academies and our factories! Valerie Boas Individual Shareholder Relations Manager vboas@loreal-finance.com

14 Brands overview A UNIQUE AND INTERNATIONAL PORTFOLIO OF 32 COMPLEMENTARY BRANDS Consumer Products The Consumer Products Division offers the best in cosmetics innovation to the greatest number of people. Its brands are available in mass-market channels (hypermarkets, supermarkets, drugstores, traditional stores and e-commerce). 13 L Oréal s brand portfolio is organised by Division, which develop a specific vision for each consumption universe and distribution channel. The strength and diversity of each brand whether international or regional in scope enable the group to meet the diversity of beauty aspirations around the world. Professional Products Thanks to education and advanced innovations, the Professional Products Division makes sure that with each passing day more and more people can take advantage of the highest standards of quality and expertise from beauty salon professionals all over the world. (1) Source: Panels and L Oréal 2015 estimates.

15 L Oréal Luxe L Oréal Luxe offers an array of prestigious and modern international brands with a unique heritage, which strive to offer high-quality products through a selective distribution channel, and provide excellent service that respects the diversity of its consumers. Active Cosmetics The Active Cosmetics Division s mission is to help everyone improve the quality and health of their skin, in all healthcare channels worldwide, including pharmacies, drugstores, medi-spas, dermacenters and online sales. Thanks to its close links with health professionals, the Division is world No.1 in dermocosmetics (1). 14 The Body Shop The Body Shop has a unique positioning that complements the L Oréal portfolio.

16 KEEP UP-TO-DATE ON L ORÉAL S LATEST FINANCIAL NEWS & EVENTS DOWNLOAD THE L ORÉAL FINANCE MOBILE APP TODAY!

17 Registered Shares Section BECOME A REGISTERED SHAREHOLDER AND RECEIVE A LOYALTY BONUS +10% WHAT ARE REGISTERED SHARES? Holding registered shares means that your shares are registered in your name, making it easier for you to receive information from L Oréal. YOUR LOYALTY IS REWARDED 16 if you register your shares prior, L Oréal offers you +10% on your dividend (1). Before the end of / 2018 From 2019 You transfer your shares to registered form. You keep your shares in registered form for two full calendar years. You receive the first pay-out of the 10% loyalty bonus for your shares held in registered form since You receive the 10% loyalty bonus in the following years if you continue to hold your shares in registered form. (1) Up to a maximum of 0.5% of the capital for the same shareholder, at the closing date of the last fiscal year.

18 CHOOSE BETWEEN MANAGED REGISTERED SHARES AND DIRECTLY REGISTERED SHARES i REGISTERED SHARES AND A SHARE SAVINGS PLAN If you hold your L Oréal shares in a share savings plan (PEA) and you would like to benefit from the advantages of holding registered shares, in particular the loyalty bonus, while keeping the tax advantages offered by the PEA, you should choose to hold managed registered shares. i ADVANTAGES OF DIRECTLY REGISTERED SHARES If you would also like to benefit from free management and custody fees, as well as preferential brokerage and bank fees, you should choose to hold directly registered shares. However this is only possible outside a share savings plan (PEA). SHAREHOLDER VIEWS Watch the video testimonials of shareholders who have chosen registered form

19 REGISTER OR TRANSFER YOUR SHARES TO REGISTERED FORM EXCLUSIVE EVENTS When registering or transferring your shares to registered form, make sure to indicate your address so that you can be invited to attend events organised especially for you! i TAXATION Registering your shares will not have any tax impact. The tax treatment of registered shares is identical to that applicable to bearer shares. i IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US! VISIT THE LOYALTY BONUS ANS REGISTERED SHARES SECTION ON OUR WEBSITE In this section, you will find all the information you need and the forms for REGISTERING OR TRANSFERRING YOUR SHARES, OR OPENING YOUR ACCOUNT. a dedicated shareholder line is available on from France or from outside France

20 ? Your QUESTIONS WITH REGARD TO REGISTERED SHARES HOW TO CHOOSE THE METH Identify the advantages that interest you the most If I register my shares, can I sell them just as easily? Yes, your registered shares can be disposed of at any time, just like bearer shares. You retain complete freedom to manage your shares. How long does it take to register my shares or to transfer them to registered form? Time may vary depending on the financial institution. Remember that to qualify for the loyalty bonus from 2019, your shares have to be registered as managed registered shares or transferred to directly registered shares by December 31 st, 2016 at the latest! To make sure that this is the case, we recommend that you transmit your order for registration by December 9 th, 2016 at the latest. How can I obtain a reimbursement of the cost of transferring my L Oréal shares to directly registered form? Some financial intermediaries charge fees to transfer shares to directly registered form, we therefore recommend that you ask your bank for information. We remind you that L Oréal will reimburse you any transfer fees up to a maximum of 50. You simply have to send your request for reimbursement together with proof of the transfer fees and full bank account details to the following address: BNP Paribas Securities Services C.T.S. Émetteurs Service Mouvements Titres Grands Moulins de Pantin 9 rue du Débarcadère PANTIN CEDEX France Custody of your shares Management of your shares Management and custody fees Trade order Brokerage and bank fees Annual tax declaration Entitlement to loyalty bonus of +10% Notice to attend the Annual General Meeting L Oréal and you (1) Upon registration and within the limit of available places. DIRECTLY REGISTERED SHARES BNP Paribas Securities Services Grands Moulins de Pantin Relations Actionnaires L Oréal 9 rue du Débarcadère PANTIN CEDEX France Call from outside France or use the BNP Paribas Securities Services secure website Free To be sent to BNP Paribas Securities Services or placed online on the secure website Preferential fees: - Brokerage fee of 0.15% with a minimum fee of 6.10 excluding tax - Bank fee of 7.62 excluding tax A single tax declaration form (IFU in French) concerning trading in L Oréal shares only is sent to you by BNP Paribas Securities Services Yes, for shares that have been hel for 2 full calendar years and until th Automatic sending of paper or elect - Automatic sending of th - Invitations to shareholde - Participation in event for registered shareholde

21 OD OF HOLDING YOUR SHARES?! MANAGED REGISTERED SHARES BEARER SHARES In the custody of your financial institution Managed by your financial institution Depending on your financial institution s fees To be sent to your financial institution Depending on your financial institution s fees A single tax declaration form (IFU in French) showing all the transactions on your share account is sent to you by your financial institution d in registered form continuously e date of payment of the dividend No the convening notice ronic version e Letter to Shareholders r meetings in your region s arranged specifically rs (e.g.: factory visits) (1) Sending of the convening notice by your financial institution on request Sending of invitations and information on request

22 HOW TO REGISTER OR TRANSFER YOUR SHARES Regardless of your current situation, the registration of shares or conversion to 1 st stage You currently hold bearer shares of L Oréal and you wish to convert them to managed registered shares Send your financial institution a request to register your shares to managed registered shares (1). The form is available on in the Shareholders Corner, section on Loyalty Bonus and Registered Shares. You currently hold bearer shares or managed registered shares of L Oréal and you wish to transfer them to directly registered shares Send your financial institution a request to transfer your shares to directly registered shares. The form is available on in the Shareholders Corner, section on Loyalty Bonus and Registered Shares. You are not yet a L Oréal shareholder and you wish to purchase directly registered shares Send BNP Paribas Securities Services an agreement for account opening and stock market services (COCPB in French). The form is available on in the Shareholders Corner, section on Loyalty Bonus and Registered Shares. To be sent to: BNP Paribas Securities Services C.T.S. Émetteurs - Service Mouvements Titres Grands Moulins de Pantin - 9 rue du Débarcadère PANTIN CEDEX France or request it on the following number: on outside France (1) You will have to repeat this step when purchasing new shares.

23 TO REGISTERED FORM? registered shares takes place in 2 stages! 2 nd stage Your financial institution will send your registration form to BNP Paribas Securities Services and will continue to manage your account. Your financial institution will transfer your shares to BNP Paribas Securities Services which will become your unique point of contact. BNP Paribas Securities Services will be your unique point of contact. The custody fees for managed registered shares may be increased. The fees for transferring L Oréal shares to directly registered form will be reimbursed by L Oréal for up to a maximum of 50 and upon proof of payment. TRADING CODE BONUS CODE FR L Oréal shares which were registered prior to December 31 st, 2013 and which already benefit from the loyalty bonus are identified by this code.? HOW CAN YOU FOLLOW YOUR REGISTERED SHARES? The introduction of the preferential dividend has made it necessary to create specific ISIN codes. These codes make it possible to determine each year whether the shares concerned will give the right to an ordinary dividend or a preferential dividend. FR The L Oréal share is listed and traded under ISIN code FR L Oréal shares, which have been registered during the current year, are identified by this code and will benefit from the loyalty bonus after 2 full calendar years. FR L Oréal shares which were registered in 2014 and which will benefit from the loyalty bonus in 2017 are identified by this code. FR L Oréal shares which were registered in 2015 and which will benefit from the loyalty bonus in 2018 are identified by this code. Only the FR is a trading code. If you want to sell shares with the bonus codes FR , FR , FR , your financial institution will deal with modifying this code in order to execute your order.

24 Become a registered shareholder and receive a loyalty bonus +10% A preferential dividend : 3.41 (1) instead of 3.10 (2) (1) For shareholders who continuously hold their shares in registered form for a minimum of two full calendar years, up to a maximum of 0.5% of the capital for the same shareholder. (2) Dividend approved at the AGM of April 20th, Published by the Financial Communications Department of L Oréal - Photograph Thomas Gogny (p.1), Alain Buu (p.12), Okea/ Imagehub88/Thinkstock, Kevin Dutton/GO Premium/GraphicObsession, Leonello Calvetti/Science Photo Library/ Photononstop (p.4 and 4th cover page), X. Designed and published by: Birdie Blue