Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 1 of 361 PageID #: 643
`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 1 of 361 PageID #: 643
`
`
`
`
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`EXHIBIT 6
`
`EXHIBIT 6
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 2 of 361 PageID #: 644
`
`2016
`REGISTRATION
`DOCUMENT
`
`REGISTRATION
`
`DOCUMENT
`
`ANNUAL FINANCIAL REPORT
`ANNUAL FINANCIAL REPORT
`INTEGRATED REPORT
`INTEGRATED REPORT
`
`i.
`
`__
`
`__.I
`
`"
`
`
`
`
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 3 of 361 PageID #: 645
`
`Content
`5 FINANCIAL STATEMENTS*
`
`2016 PARENT COMPANY
`
`1 – INTEGRATED REPORT 
`
`PRESENTATION OF THE GROUP
`
`1.1.
`1.2.
`1.3.
`
`1.4.
`1.5.
`
`The L’Oréal Group: fundamentals
`A clear strategy: Beauty for all
`Good growth momentum for shared, lasting
`development *
`An organisation that serves the Group’s development
`Internal Control and risk management system
`
`2 CORPORATE GOVERNANCE *
`
`2.1.
`
`2.2.
`2.3
`
`2.4.
`2.5.
`2.6
`
`2.7
`
`2.8
`2.9.
`
`Framework for implementation of the corporate
`governance principles
`Composition of the Board of Directors
`Organisation and modus operandi of the Board of
`Directors
`Remuneration of the members of the Board of Directors
`Remuneration of the executive officers
`Summary table of the recommendations of the
`AFEP-MEDEF Code which have not been applied
`Summary of trading by Directors and executive officers in
`L’Oréal shares in 2016
`Risk factors and control environment
`Statutory auditors' report
`
`3
`
`5
`6
`12
`
`23
`37
`41
`
`43
`
`44
`47
`
`63
`80
`82
`
`98
`
`99
`99
`121
`
`L’ORÉAL’S CORPORATE SOCIAL,
`ENVIRONMENTAL AND SOCIETAL
`RESPONSIBILITY *
`125
`3.1.
`The L’Oréal Group’s corporate social, environmental and
`societal policies
`The Sharing Beauty With All programme
`Methodological notes
`Tables of concordance
`Reports by the Statutory Auditors
`
`127
`169
`192
`195
`201
`
`3.2.
`3.3.
`3.4.
`3.5.
`
`5.1.
`5.2.
`5.3.
`5.4.
`5.5.
`5.6.
`
`5.7.
`5.8.
`
`5.9
`
`Compared income statements
`Compared balance sheets
`Changes in shareholders’ equity
`Statements of cash flows
`Notes to the parent company financial statements
`Other information relating to the financial statements
`of L’Oréal parent company
`Five-year financial summary
`Investments (main changes including shareholding
`threshold changes)
`Statutory Auditors' Report on the financial statements
`
`6 SHARE CAPITAL 
`
`STOCK MARKET INFORMATION
`
`6.1.
`6.2.
`6.3.
`6.4.
`6.5.
`6.6.
`
`Information relating to the Company
`Information concerning the share capital * 
`Shareholder structure *
`Long-Term Incentive plans *
`The L’Oréal share/L’Oréal share market
`Information policy
`
`7 ANNUAL GENERAL MEETING
`
`7.1.
`
`7.2.
`
`Draft resolutions and report of the Board of Directors
`(statement of reasons) to the ordinary and extraordinary
`general meeting to be held on April 20th, 2017
`(adopted on February 9th, 2017)
`Statutory Auditors' Reports
`
`8 APPENDIX
`
`8.1.
`8.2.
`8.3.
`
`Statutory Auditors
`Historical financial information included by reference
`Person responsible for the Registration Document and the
`Annual Financial Report
`Declaration by the person responsible for the Registration
`Document and the Annual Financial Report
`Registration Document table of concordance
`Annual Financial Report table of concordance
`Table of concordance with the AMF tables on the
`remuneration of executive officersand Directors
`Table of concordance of the Management Report
`
`271
`272
`273
`274
`275
`276
`
`296
`297
`
`298
`299
`
`301
`302
`304
`307
`312
`318
`324
`
`327
`
`328
`347
`
`349
`350
`350
`
`351
`
`351
`352
`354
`
`354
`355
`
`4 STATEMENTS* 
`
`2016 CONSOLIDATED FINANCIAL
`
`4.1.
`4.2.
`4.3.
`4.4.
`4.5.
`4.6.
`4.7.
`4.8
`
`Compared consolidated income statements
`Consolidated statement of comprehensive income
`Compared consolidated balance sheets
`Consolidated statements of changes in equity
`Compared consolidated statements of cash flows
`Notes to the consolidated financial statements
`Consolidated companies at December 31st, 2016
`Statutory Auditors' Report on the consolidated financial
`statements
`
`8.4.
`
`8.5.
`8.6.
`8.7.
`
`8.8.
`
`209
`211
`212
`213
`214
`216
`217
`264
`
`269
`
`Detailed chapter contents can be found at the beginning of each chapter.
`* This information forms an integral part of the Annual Financial report as provided in the Article L. 451-1-2 of the French Monetary and Financial Code.
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 4 of 361 PageID #: 646
`
`REGISTRATION DOCUMENT
`2016
`
`Annual Financial Report – Integrated Report
`Corporate and Social Responsability
`
`This Registration Document summarizes the activities and the results of the Group in 2016. It is part
`of an integrated communications approach and aims at presenting the well-balanced model of L’Oréal,
`its strategic orientations and its relationships with its stakeholders, particularly in the context
`of the Sharing Beauty With All programme.
`
`In application of Article 212-13 of the General Regulation of the Autorité des
`Marchés Financiers (AMF), this Registration Document was filed with
`the AMF on March 14th, 2017.
`This Registration Document may be used in connection with a financial
`transaction if it is accompanied by an information memorandum
`approved by the AMF. The document has been prepared by the issuer
`and its signatories incur liability in this regard.
`
`The use of the FSC (Forest Stewardship Council) label in this product is intended to signify that the paper comes from responsible
`sources — environmentally appropriate, socially beneficial and economically viable.
`
`LABEL OR
`
`This label recognises the most transparent Registration Documents according to the criteria of the Annual
`Transparency Ranking.
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 5 of 361 PageID #: 647
`P R O S P E C T S
`by Jean-Paul Agon, Chairman and Chief Executive Officer
`
`2016 was
`another good
`year for L’Oréal.
`We accelerated
`our growth,
`outperformed the
`market once again
`and increased
`our worldwide
`leadership of the
`beauty industry.
`
`2
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 6 of 361 PageID #: 648
`P R O S P E C T S
`by Jean-Paul Agon, Chairman and Chief Executive Officer
`
`2016 was another good year for L’Oréal. Three of our divisions,
`L’Oréal Luxe, Consumer Products and Active Cosmetics,
`made great progress and we gained market shares in each of
`our three strategic regions. 2016 was also a great vintage in
`terms of emblematic innovations and strategic acquisitions.
`With IT Cosmetics, CeraVe, Atelier Cologne and Saint-Gervais
`Mont-Blanc, we made four very diverse acquisitions that
`perfectly complement our global flotilla of brands and allow
`us to respond to new beauty desires. And, last but not least,
`we delivered a compelling set of results that once again prove
`the robustness of L’Oréal’s economic model and its powerful
`capacity to create value.
`
`“2016 was also a year of great progress in the
`transformation of our company, with the group
`becoming even more digital, efficient, agile and
`sustainable.”
`We increased our digital lead. Our e-commerce sales grew
`by +33%(1) and are now equivalent to the group’s 4th largest
`country. More than 30% of our advertising is now digital, with
`even more targeted and efficient communications. We have
`recruited 1600 experts and trained almost ten times that
`amount in-house. Across all divisions, digital is amplifying the
`power of our brands and bringing them even closer to our
`consumers.
`We also continued our Industry 4.0 transformation program,
`which integrates all the new opportunities that digitalisation
`offers. There is a true industrial revolution taking place
`throughout our entire value chain.
`We also profoundly transformed ourselves to meet our
`sustainable development targets, set by our Sharing Beauty
`With All initiative. 2016 was a pivotal year for our 2020 objectives
`and a year of major achievements, particularly in sustainable
`innovation and sustainable production. We achieved and even
`went beyond our goal of reducing CO2 emissions by 60%, four
`years ahead of schedule(2).
`
`“If we have been working hard to transform our
`company into a New L’Oréal it is because we believe
`that we are right now at the dawn of a Bright
`New World of Beauty.”
`The world is changing around us at an amazing speed, the
`world of beauty is also changing radically. As digital and social
`media become omnipresent in our lives, we are entering into
`the era of « social beauty ».
`
`An era where beauty is becoming even more essential. The
`way you look, the quality of your hair and skin, will be more
`important than ever in expressing your personality, crafting
`your image of yourself, and interacting positively with others.
`
`1
`
`“This Bright New World of Beauty is a unique
`opportunity for L’Oréal, since we are uniquely
`positioned to drive and lead this new era.”
`First, because our superiority in Research and Innovation
`gives us an edge in quality, efficacy, safety and sincerity. These
`qualities are now, more than ever, required by consumers. Our
`capacity for innovation includes services too, like the Makeup
`Genius app, the My UV Patch or the connected brush by
`Kérastase.
`Furthermore, because we are able to track emerging trends and
`quickly offer products that meet these new aspirations, such as
`makeup, natural beauty, or personalization desires. Moreover,
`because of our proximity and the quality of our interactions
`with consumers. Digital, in particular, offers opportunities for
`an ongoing dialogue and personal advice. With over 1 billion
`viewers on our brand websites and social media pages, L’Oréal
`is clearly the champion of connected beauty. We are also
`currently exploring all the direct-to-consumer channels, from
`e-commerce to boutiques opened by some of our brands.
`
`“Finally, our unique characteristics appear
`to be perfectly fitted to this New World of Beauty.”
`Our global flotilla of brands, each of which addresses specific
`consumer needs; Our presence across all channels, categories,
`price points and regions; Our agile and flexible organization,
`strategically concentrated but operationally decentralized;
`And, last but not least, our entrepreneurial culture and highly
`engaged teams.
`
`“We at L’Oréal plan to make the most of this new
`golden age of beauty.”
`More than any other company, since we are and will be the
`Beauty Company. The one that offers the best of beauty to all
`women and men living on this planet, thus fulfilling its mission:
`Beauty for all.
`
`(1)
`
` Sales achieved on the brands’ own websites and estimated sales achieved by the brands corresponding to sales through retailers’ websites (non-audited
`data). Like-for-like growth.
`(2) In the plants and distribution centres. Period 2005-2015. In absolute value.
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`3
`
`

`

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`4
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`REGISTRATION DOCUMENT / L'ORÉAL 2016
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`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 8 of 361 PageID #: 650
`
`1
`
`Presentation of the Group
`– 
`Integrated report  
`
`1.1.
`1.1.1.
`
`1.1.2.
`1.2.
`1.2.1.
`
`1.2.2.
`1.2.3.
`
`1.2.4.
`
`1.2.5.
`
`1.2.6.
`
`The L’Oréal Group: fundamentals
`A clear mission and strategy, supported by
`stable governance
`Key figures
`A clear strategy: Beauty for all
`Universalisation, to meet global demand for
`beauty
`An international presence
`The beauty market, huge development
`potential
`A portfolio of diverse and complementary
`brands
`Research and innovation adapted to the
`world’s markets
`Operations, expertise and services close to
`consumers
`
`6
`
`6
`9
`12
`
`12
`12
`
`14
`
`15
`
`16
`
`18
`
`1.3.
`
`1.3.1.
`1.3.2.
`1.4.
`
`1.4.1.
`1.4.2.
`1.4.3.
`1.4.4.
`1.5.
`
`Good growth momentum for
`shared, lasting development *
`2016 Results*
`Constant, shared growth
`An organisation that serves the
`Group’s development
`L’Oréal S.A.
`Operational Divisions
`Support departments
`Members of L’Oréal’s executive committee
`Internal Control and risk
`management system
`
`23
`23
`33
`
`37
`37
`37
`39
`40
`
`41
`
`
`
`* This information forms an integral part of the Annual Financial Report as provided in the Article L. 451-1-2 of the French Monetary and Financial Code.
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`5
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 9 of 361 PageID #: 651
`
`1 Presentation of the Group – Integrated report 
`
`THE L’ORÉAL GROUP: FUNDAMENTALS
`
`1.1.
`
`THE L’ORÉAL GROUP: FUNDAMENTALS
`
`1.1.1.
`
`A CLEAR MISSION AND STRATEGY,
`SUPPORTED BY STABLE
`GOVERNANCE
`
`For over 100 years, L’Oréal has devoted itself to one business:
`beauty, in which it is the world’s leading company. It is the
`Group’s raison d’être, because, far from being futile and
`superficial, cosmetics are full of meaning. They give everyone
`self-confidence, enable them to blossom and open up to
`others and contribute to individual and collective well-being.
`
`international portfolio of 34 diverse and
`Boasting an
`complementary brands, the Group responds to all beauty
`aspirations worldwide. Present in all distribution channels,
`L’Oréal generated sales of €25.84 billion in 2016 thanks to its
`89,331 employees across the globe.
`
`The Group’s governance, the guarantee of stability in a
`changing world, makes it possible to work towards long-term
`objectives and to ensure regular growth.
`
`Loyal shareholders, stable capital structure
`
`THE SHAREHOLDERS AT DECEMBER 31ST, 2016
`
`33.05%
`
`23.12%
`29.84%
`
`7.76%
`
`4.72%
`
`0.31%
`1.20%
`
`Bettencourt Meyers
`family
`
`Nestlé S.A.
`
`International
`institutional investors
`
`French institutional
`investors
`Individual
`shareholders
`Treasury stock
`
`Employees(1)
`
`(1)
`
`Concerns the employees and former employees of L’Oréal.
`Pursuant to the French law of 08/06/2015, the percentage of shares
`also includes, in 2016, the free shares granted in accordance with the
`system provided for under Article L. 225-197-1, of which 0.76% in the
`L’Oréal Company savings plan (PEE) as defined by Article L. 225-102
`of the French Commercial Code.
`
`A balanced and committed Board of Directors,
`which plays its role of reflection and strategic
`impetus to the full
`The Board of Directors determines
`L’Oréal’s
`strategic
`orientations and ensures their implementation. It oversees the
`management of both the financial and extra-financial aspects,
`and ensures the quality of the information provided to the
`shareholders and to the market.
`
`The structure of L’Oréal’s Board makes it possible to take into
`account the specificities of
`its shareholding structure while
`guaranteeing the interests of all its stakeholders. It comprises
`15 members, consisting of the Chairman and Chief Executive
`Officer, Mr. Jean-Paul Agon, five Directors from the Group’s
`majority shareholders (the Bettencourt Meyers family with
`Mrs. Françoise Bettencourt Meyers, Mr. Jean-Pierre Meyers and
`Mr.
`Jean-Victor Meyers, and Nestlé with Mr. Peter
`Brabeck-Letmathe and Mrs. Béatrice Guillaume-Grabisch),
`seven independent Directors (Mrs. Sophie Bellon, Mrs. Belén
`Garijo, Mrs. Virginie Morgon, Mrs. Eileen Naughton, Mr.
`Charles-Henri Filippi, Mr. Xavier Fontanet, Mr. Bernard Kasriel)
`and two Directors representing the employees (Mrs. Ana Sofia
`Amaral, Mr. Georges Liarokapis). All of them make sure that
`the Board’s work is carried out on a collective basis with the
`common objective of ensuring
`the Group’s
`long-term
`development.
`
`The Board takes steps to ensure that the Directors are from
`different backgrounds, and most of them have international
`experience acquired in groups with a global dimension and
`complementary skills: industrial, financial, digital and above all
`entrepreneurial competencies. The diversity of skills and
`expertise on the Board enables it to understand rapidly and in
`detail the development issues facing L’Oréal, the leader on a
`highly competitive globalised cosmetics market,
`in a
`fast-changing world.
`
`L’Oréal is attentive to compliance with the principle of
`balanced gender representation on the Board: 46% of its
`members are women, and 2 Committees out of 4 are chaired
`by women, the Audit Committee and the Appointments and
`Governance Committee.
`
`6
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 10 of 361 PageID #: 652
`Presentation of the Group – Integrated report 
`THE L’ORÉAL GROUP: FUNDAMENTALS
`
`COMPOSITION OF THE BOARD AT DECEMBER 31ST, 2016
`
`Independence
`
`Expiry Date
`Of Current
`Tenure
`
`Strategy &
`Sustainable
`Development
`
`Board Committees
`
`Audit
`
`HR &
`Remuneration
`
`Appointments &
`Governance
`
`1
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122) (cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122) (cid:122) (cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`(cid:122)
`
`2018
`
`2017
`
`2017
`
`2020
`
`2018
`
`2019
`
`2019
`
`2018
`
`2018
`
`2020
`
`2020
`
`2018
`
`2020
`
`2017
`
`2020
`
`Mr. Jean-Paul AGON
`
`Mrs. Françoise
`BETTENCOURT MEYERS
`
`Mr. Peter
`BRABECK-LETMATHE
`
`Mr. Jean-Pierre MEYERS
`
`Mrs. Ana Sofia AMARAL
`
`Employee
`Director
`
`(cid:161) (cid:161) (cid:161) (cid:161)
`
`(cid:161)
`
`Mrs. Sophie BELLON
`
`Mr. Charles-Henri FILIPPI
`
`Mr. Xavier FONTANET
`
`Mrs. Belén GARIJO
`
`Mrs. Béatrice
`GUILLAUME-GRABISCH
`
`Mr. Bernard KASRIEL
`
`Mr. Georges LIAROKAPIS
`
`Employee
`Director
`
`(cid:161) (cid:161)
`
`Mr. Jean-Victor MEYERS
`
`Mrs. Virginie MORGON
`
`Mrs. Eileen NAUGHTON
`
`(cid:161) Independence within the meaning of the criteria of the AFEP-MEDEF Code as assessed by the Board of Directors.
`(cid:122)Committee Chairman/Chairwoman (cid:122)Committee Member
`
`58
`
`Average age
`of the Directors at
`12/31/2016
`
`7
`
`independent
`Directors
`
`46%
`
`female Directors
`(excluding the Directors representing
`the employees)
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`7
`
`

`

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`
`1 Presentation of the Group – Integrated report 
`
`THE L’ORÉAL GROUP: FUNDAMENTALS
`
`Activities of the Board and its Committees in 2016
`The Board of Directors fully assumes its role in defining the
`Group’s strategic orientations.
`
`Thanks to an open, constructive dialogue with the General
`Management and regular meetings with management, the
`Directors are completely up-to-date with L’Oréal’s economic
`reality and fully informed of all the Company’s activities, its
`performances and the challenges it faces. They examine the
`main areas and opportunities for long-term development and
`acquisitions in particular.
`
`The Directors make sure that the decisions taken contribute to
`implementation of the strategy.
`
`Wishing to continually enhance its role of reflecting on issues
`and
`providing
`support with
`regard
`to
`strategic
`decision-making, the Board carried out an evaluation of its
`modus operandi and organisation in 2016, as it has done
`every year since 1996.
`
`s
`
`Main work in 2016:
`Monitoring of business activities
`Financial issues
`Market and competitor analysis
`Development challenges (by zone and by business segment)
`Acquisitions and follow-up of business plans
`Digital development
`
`s
`
`s
`
`s
`
`s
`
`s
`
`BOARD OF DIRECTORS
`
`6 meetings in 2016
`98% attendance rate
`
`s
`
`s
`
`s
`
`Monitoring Sustainable Development commitments
`Ethics and Human Resources Policies
`Strategic seminar in New York: visit to the main sales channels, analysis
`of the American market and review of the challenges and opportunities
`for L’Oréal USA
`
`HR AND REMUNERATION COMMITTEE
`
`s
`
`s
`
`s
`
`s
`
`APPOINTMENTS AND GOVERNANCE
`COMMITTEE
`4 meetings
`95% attendance rate
`Main activities in 2016
`Reflection on the composition of
`the Board and its Committees
`Review of the succession plans
`Review of the independence of
`Directors
`Methods of organisation of
`executive sessions (meetings held
`without the presence of the
`executive officers)
`Topical issues with regard to
`Governance (reports of the Haut
`Comité de Gouvernement
`d’Entreprise and of the AMF, etc.)
`Review of the voting policies of
`the main investors and proxy
`advisors
`
`s
`
`s
`
`s
`
`STRATEGY AND SUSTAINABLE
`DEVELOPMENT COMMITTEE
`4 meetings
`100% attendance rate
`Main activities in 2016
`Analysis of sales, update on
`business activities, markets and
`competition.
`Analysis of the performance of the
`latest product launches.
`Examination of the Group’s
`strategic development prospects.
`Review of the main acquisition
`projects
`
`s
`
`s
`
`s
`
`AUDIT COMMITTEE
`
`s
`
`s
`
`s
`
`s
`
`4 meetings
`96% attendance rate
`Main activities in 2016
`Review of the accounts and
`financial situation
`Risk review and monitoring
`Review of Internal Control and
`Internal Audit
`Follow-up of business plans for
`acquisitions
`Examination of the procedure for
`the approval of non-audit services
`Information systems security
`Audit of CSR reporting
`Policy with regard to insurance
`
`s
`
`s
`
`s
`
`s
`
`8
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`s
`
`s
`
`s
`
`s
`
`5 meetings
`97% attendance rate
`Main activities in 2016
`Analysis of the performance of the
`Chairman & CEO and
`recommendations with regard to
`setting the remuneration for 2016
`Recommendations concerning the
`2017 remuneration policy.
`Recommendations concerning the
`bonus structure and objectives for
`the Chairman & CEO for 2017
`Preparation of the Say On Pay
`resolutions (ex ante and ex post).
`Long-Term Incentive policy
`(proposed resolutions, 2016 Plan
`and proposed grant of
`performance shares to the
`Chairman & CEO)
`Attendance fees
`
`s
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 12 of 361 PageID #: 654
`Presentation of the Group – Integrated report 
`THE L’ORÉAL GROUP: FUNDAMENTALS
`
`1.1.2.
`
`KEY FIGURES
`
`2016 Key figures
`
`1
`
`Present
`in 140 countries
`
`89,331
`employees
`
`473
`patents
`
`Research & innovation
`budget: €850 million
`
`Consolidated sales
`(€ million)
`
`Operating profit
`(€ million)
`
`25,257 25,837
`
`22,532
`
`4,540
`
`4,388
`
`3,891
`
`Net Profit from continuing
`operations excluding
`non-recurring (1) item
`(€ million)
`
`3,647
`
`3,490
`
`3,125
`
`2014
`
`2015
`
`2016
`
`2014
`
`2015
`
`2016
`
`2014
`
`2015
`
`2016
`
`(1)
`
`Non-recurring include mainly capital gains and losses and long-term asset diposals, impairment of long-term assets, restructuring costs and elements
`relating to identified operational incomes and expenses, no recurring and significant regarding the consolidated performance. See note 11.4 of the
`Consolidated Financial Statements
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`9
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 13 of 361 PageID #: 655
`
`1 Presentation of the Group – Integrated report 
`
`THE L’ORÉAL GROUP: FUNDAMENTALS
`
`OPERATIONAL DIVISIONS SALES – 2016
`
`BY DIVISION
`
`BY BUSINESS SEGMENT
`
`BY GEOGRAPHIC ZONE
`
`48.1%
`7.5%
`30.8%
`13.6%
`
`Consumer Products
`Active Cosmetics
`L’Oréal Luxe
`Professional Products
`
`28.5%
`26.4%
`19.2%
`12.1%
`9.5%
`4.4%
`
`Skincare and suncare
`Make-up
`Haircare
`Hair colours
`Perfumes
`Other (1)
`
`Western Europe
`32.1%
`North America
`28.5%
`New Markets
`39.4%
`Of which :
`22.6%
`6.3%
`3.1%
`7.4%
`
`Asia, Pacific
`Eastern Europe
`Africa, Middle East
`Latin America
`
`(1)
`
`“Other” includes hygiene products and sales made by American professional distributors with non-Group brands.
`
`CONSOLIDATED SALES BY CURRENCY(1)
`
`Other currencies
`Mexican Peso
`Japanese Yen
`Russian Ruble
`
`17.7%
`1.5%
`1.9%
`2.3%
`2.8%
`Canadian Dollar
`Brazilian Real 2.9%
`Hong Kong Dollar 4.8%
`Pound Sterling 6.4%
`Chinese Yuan 7.7%
`
`24.7%
`27.3%
`
`Euro
`US dollar
`
`NET DEBT
`
`Net Cash Position =
`Net cash flow or net financial debt
`(€ million) (1)
`Net gearing
`(Net financial situation/
`equity)
`
`12.31.2014 12.31.2015 12.31.2016
`
`-671.3
`
`+ 618.0
`
`+ 481.4
`
`3.3%
`
`n/a
`
`n/a
`
`(1)
`
`Net cash (+) or net debt (-) = cash and cash equivalents – current and
`non-current debt.
`
`SHORT-TERM RATINGS
`
`A1 +
`PRIME 1
`F1 +
`
`Standard & Poor's
`Moody's
`Fitch Ratings
`
`SEPTEMBER 2016
`MAY 2016
`SEPTEMBER 2016
`
`(1)
`
`Breakdown of consolidated sales in the main currencies in 2016.
`
`10
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 14 of 361 PageID #: 656
`Presentation of the Group – Integrated report 
`THE L’ORÉAL GROUP: FUNDAMENTALS
`
`1
`
`STOCK MARKET CAPITALISATION
`
`WORKFORCE AT DECEMBER 31ST
`
`12.31.2014
`
`12.31.2015
`
`12.31.2016
`
`78.18
`
`87.4
`
`561,230,389
`
`562,983,348
`
`97.4
`561,855,741
`
`Stock market capitalisation
`(€ billion)
`Number of Shares
`
`A SOLID BALANCE SHEET (1) (€ MILLION)
`
`89,331
`
`78,611
`
`82,881
`
`2014
`
`2015
`
`2016
`
`Total assets and liabilities
`
`33,711.3
`
`32,058.8
`
`ASSETS
`35,630.2
`
`LIABILITIES
`
`33,711.3
`
`32,058.8
`
`35,630.2
`
`Total assets and liabilities
`
`Non-current assets
`
`23,284.2
`
`24 ,457.6
`
`25,584.6
`
`20,196.9
`
`23,617.0
`
`24,504.0
`
`Shareholders’ equity
`
`Current assets
`
`8,774.6
`
`9,253.7
`
`10,045.6
`
`2,528.5
`2,588.3
`
`1,879.8
`781.8
`
`1,888.0
`1,264.6
`
`Non-current liabilities
`Debts (current and non-current)
`
`Including cash and cash equivalents
`
`1,917.0
`
`l,399.8
`
`1,746.0
`2016
`
`2014
`
`2015
`
`6,745. 1
`
`2014
`
`2015
`
`7,973.6
`7,432.7
`2016
`
`Current liabilities
`
`(1)
`
`The balance sheet at December 31st, 2014 has been restated to reflect the change in accounting policies on recognition of levies resulting from the
`application of IFRIC 21.
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`11
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 15 of 361 PageID #: 657
`
`1 Presentation of the Group – Integrated report 
`
`A CLEAR STRATEGY: BEAUTY FOR ALL
`
`1.2.
`
`A CLEAR STRATEGY: BEAUTY FOR ALL
`
`Demand for beauty is universal. L’Oréal deploys a global strategy to satisfy this demand.
`
`1.2.1.
`
`UNIVERSALISATION, TO MEET
`GLOBAL DEMAND FOR BEAUTY
`
`L’Oréal relies on a single strategy – Universalisation – meaning
`globalisation that respects differences. This strategy aims at
`offering beauty attuned to the specific expectations of
`consumers in every region of the world. It is based on a keen
`ability to listen to consumers and a profound respect for their
`differences.
`
`This is why the Group’s Research and Marketing teams pay
`heed to all consumers and laboratories on all continents study
`their specificities. The
`innovation policy
`is based on
`affordability and on the adaptation of products to the beauty
`rituals and lifestyles of all men and women in their infinite
`diversity.
`
`1.2.2.
`
`AN INTERNATIONAL PRESENCE
`
`Founded in France in 1909, the Group developed rapidly in
`Western Europe. In 2016, it generated 32.1% of its cosmetics
`sales on this historical territory. To make Universalisation a really
`powerful strategy, the global market has been organised into
`5 large homogeneous strategic regions, even more attentive
`to consumers and closer to their desires.
`
`The Group’s organisation is now resolutely multi-centric, with a
`strong “nerve centre” based in France. Each major region of
`the world now has its own centre of expertise which groups
`together Research and Marketing activities. Research therefore
`has 6 hubs across the globe, led by central teams and fuelled
`by the Group’s core expertise and fundamental knowledge.
`
`12
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 16 of 361 PageID #: 658
`Presentation of the Group – Integrated report 
`A CLEAR STRATEGY: BEAUTY FOR ALL
`
`1
`
`HISTORY: THE IMPORTANT DATES IN THE GROUP’S DEVELOPMENT
`
`2016
`
`2015
`
`2014
`
`2013
`
`2012
`
`2011
`
`2010
`
`2009
`
`2008
`
`2007
`
`2006
`
`2004
`
`2003
`
`2000
`
`1998
`2000
`1996
`
`1994
`
`1993
`
`1989
`
`1981
`
`1979
`
`1973
`
`1970
`
`1965
`
`1964
`
`1963
`
`1957
`
`1954
`1935
`1929
`
`1909
`
`Acquisition of IT Cosmetics.
`
`Strategic Transaction agreed between L’Oréal and Nestlé
`Acquisition of Magic Holdings in China
`and NYX Professional Makeup in the United States.
`
`Acquisition of Urban Decay in the United States.
`
`Acquisition of Essie Cosmetics in the United States.
`
`Acquisition of YSL Beauté.
`
`Acquisition of The Body Shop.
`
`L’Oréal becomes the majority shareholder of Shu Uemura in Japan.
`
`Acquisition of Softsheen and Carson in the United States
`and in South Africa.
`
`Acquisition of American agents Cosmair.
`
`Acquisition of La Roche-Posay.
`
`The first model of a reconstructed epidermis from L’Oréal Research.
`
`Acquisition of Biotherm.
`
`Acquisition of Lancôme.
`
`Launch of Elnett hair lacquer.
`
`Ambre solaire, the first sun protection oil with filtering.
`
`La Société Française de Teintures Inoffensives pour Cheveux
`is created by Eugène Schueller.
`
`After anchoring itself in Western Europe, L’Oréal gained a
`foothold in North America in the first half of the 20th century.
`Initially, the Group entrusted distribution companies with
`commercializing its products, these companies being united
`in 1953 around an exclusive agent, Cosmair. Following
`Cosmair’s takeover in 1994, the Group developed in North
`America with the status of a subsidiary. The acquisition of
`brands such as Maybelline (1996), Matrix and Kiehl’s (2000),
`Urban Decay (2012), or more recently NYX Professional
`Makeup (2014) and IT Cosmetics (2016) have considerably
`reinforced its presence in North America. In 2016, its sales on
`that continent increased by 5.8% like-for-like, and represent
`28.5% of world cosmetic sales.
`
`Acquisition of Niely Cosmeticos.
`
`
`
`The Sharing Beauty With All programme is unveiled..
`
`Acquisition of Clarisonic in the United States of America.
`
`L’Oréal celebrates its centenary and sets itself the goal of
`winning one billion new customers.
`
`
`
`Creation of L’Oréal Corporate Foundation.
`
`Takeover of the Gesparal holding company.
`
`Acquisition of Matrix and Kiehl’s since 1851
`in the United States.
`
`
`
`Acquisition of Maybelline in the United States.
`
`Acquisition of Redken 5 th Avenue in the United States.
`
`Creation of Laboratoires dermatologiques Galderma.
`
`Acquisition of Gemey, an open door to the consumer make-up market.
`
`Acquisition of Laboratoires Garnier.
`
`L’Oréal enters the Paris stock market.
`
`Cosmair is named as L’Oréal’s agent in the United States.
`
`Imédia, the first quick oxidation hair colour.
`
`Beginning in the 1970s, the Latin America Zone developed with
`a multi-divisional organisation that the Group has since
`adopted in the other major regions of the world.
`
`Present in Japan for nearly 50 years, L’Oréal has expanded its
`presence in the country by choosing the brands to be given
`priority for this extremely specific market: Kérastase in hair
`salons, Lancôme in Luxury products and Maybelline and
`L’Oréal Paris in mass-market products.
`
`The 1990s witnessed the opening up of New Markets with very
`strong development in Eastern Europe. At the same time, the
`Group extended its activities to more distant markets like India
`or China.
`
`L’Oréal was among the first foreign groups to obtain an
`authorisation from the Indian government in 1994 to create a
`wholly-owned subsidiary with its registered office in Mumbai.
`
`REGISTRATION DOCUMENT / L'ORÉAL 2016
`
`13
`
`

`

`Case 1:17-cv-00868-JFB-SRF Document 28-6 Filed 12/08/17 Page 17 of 361 PageID #: 659
`
`1 Presentation of the Group – Integrated report 
`
`A CLEAR STRATEGY: BEAUTY FOR ALL
`
`In 1997, the Group created a large multi-divisional zone in Asia
`and opened new subsidiaries, particularly in China where
`L’Oréal holds all of the capital of its entity.
`
`Africa and the Middle East, where the Group lacked a strong
`presence, became a new frontier for development.
`
`turning point: a sharp
`The mid 2000s were another
`acceleration in growth of the New Markets led to a shift in the
`economic world’s centre of gravity.
`
`In total, the percentage of cosmetics sales generated by the
`Group in the New Markets was 15.5% in 1995, 27.1% in 2006
`and 39.4% in 2016. Sales in New Markets increased greatly as a
`
`proportion of the Group’s total sales between 2006 and 2016.
`This trend is expected to continue.
`
`The Group has a well-balanced geographical footprint across
`most of the world’s main markets.
`
`The New Markets show considerable growth potential: in many
`countries,
`the consumption of cosmetics products per
`inhabitant is 10 to 20 times lower than in mature countries.
`Every year across the globe, several tens of millions of people
`gain access to income levels that make them part of the
`“middle classes”, enabling them to afford modern cosmetics
`products.
`
`1.2.3.
`
`THE BEAUTY MARKET, HUGE DEVELOPMENT POTENTIAL
`
`WORLDWIDE COSMETICS MARKET FROM 2005 TO 2016 (1)
`
`+5.0%
`
`+4.9%
`
`+3.8%
`
`+4.6% +4.6%
`+4.2%
`
`+4.0%
`+3.9%
`+3.8%
`+3.6%
`
`+2.9%
`
`+1.0%
`
`is worth approximately
`The worldwide cosmetics market
`€205 billion and grew by an estimated +4.0% (1) in 2016. It is a
`particularly robust market which is steadily expanding while
`proving very resilient during difficult economic times. The
`cosmetics consumer always looks for quality and novelty
`value, and puts a premium on leading-edge technology,
`trends and new ideas. The cosmetics market remains a
`supply-led market driven by innovation, where consumers are
`always on the look-out for quality, performance and perceived
`results.
`
`2005
`
`2006 2007 2008 2009 2010 2011 2012
`
`2013
`
`2014 2015 2016
`
`BREAKDOWN OF THE WORLD COSMETICS MARKET IN 2016
`
`BY GEOGRAPHIC ZONE
`
`BY PRODUCT CATEGORY
`
`36.9%
`2.9%
`
`6.0%
`19.3%
`24.7%
`10.2%
`
`Asia, Pacific
`Africa,
`Middle East
`Eas