World Duty Free Group 2014 Sustainability Report

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Foreword and instructions for use Foreword World Duty Free Group’s first Sustainability Report Over the past few years, World Duty Free Group (WDFG, the Company or the Group) reported its activity relating to Corporate Social Responsibility through Autogrill’s Sustainability Report (its parent company at the time). In October 2013 World Duty Free Group demerged from Autogrill, was listed on the Milan Stock Exchange and began to report its financial results independently. With more than 9,500 employees, and present in 20 countries worldwide, World Duty Free Group is much more than a business that generates profit. It is a Company that interacts proactively with the society and environment in which it operates. With the aim of making a further commitment and to report beyond its financial performance1, World Duty Free Group has decided to publish its first Sustainability Report as a standalone company in order to carry out a detailed analysis of its relationship with and the impact it has on society and the environment. The objective of this communication tool is to demonstrate the Group’s sustainability performance, outlining its impact, describing the way in which the Group manages and controls this area, highlighting the year’s main achievements, and identifying its areas for improvement as of 31st December 2014. The Scope of this first report is varied. The general profile includes information on the whole Group, however the performance review is limited to Europe, specifically to the United Kingdom (UK) and Spain, which are the Group’s most important markets in terms of sales. 1

Every year WDFG publishes an Annual Financial Report

Application of the Global Reporting Initiative guidelines This report has been drafted following the Global Reporting Initiative (GRI-G4) guidelines. Its contents, design and structure are all based on the criteria given for the “in accordance” core approach. In addition, in accordance with the guide, the following principles have been used together to define the report content: Stakeholders: Stakeholders have a major influence on companies’ strategic decisions. Therefore the profile of each stakeholder has been analysed, with particular focus on their interests in specific areas of the Company. Sustainability in the context of the sector: The Company’s economic, environmental and social context has been assessed to define relevant interactions. In addition, the impact that the Group’s activities, products and services has on a wider sustainability context have been identified for this report. Materiality: Material Aspects are those that reflect the organization’s significant economic, environmental and social impacts; or substantively influence the assessments and decisions of stakeholders. For this report, a specific materiality analysis has been undertaken to identify the aspects which are relevant to the Group’s activities and therefore need to be covered in this report. Scope: Once the material aspects have been identified, comprehensive information regarding each aspect was included in the report to enable stakeholders to assess the organisation’s economic, social and environmental performance along the whole reporting period. To ensure the quality of information included in this report and to allow stakeholders to make a

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reasonable assessment of performance, GRI also establishes a number of principles which World Duty Free Group has followed throughout the preparation of this report. These principles are:

• Balance: to ensure a correct balance between positive and negative performance, the Group has disclosed both its achievements and its areas of improvement. • Comparability: to ensure that the data provided allows the reader to assess the Group’s progress in performance, this document reports on activity since 2012. • Accuracy: despite being the first year that WDFG has written its own sustainability report, the Company has ensured that all the data provided is accurate and sufficient to allow the reader a good assessment of performance. • Timeliness: this report was published as soon as the 2014 consolidated financial data was made available and approved by the Board of Directors. The Group has ensured that the information given is up-to-date to allow stakeholders to make informed decisions. • Clarity: this report has been presented in a comprehensible manner to allow stakeholders with a reasonable understanding of the Group and its activities to access and use the report.

outline the Group’s future sustainability strategy rather than focus on past activities. These instructions are a user guide to this report in order to help readers to rapidly find information relevant to them, and to get the best out of reading this WDFG Sustainability Report. The report has been divided in two main sections. The first section gives the reader a wider view of the company and the relationship it has with its key stakeholders, followed by a more sustainability-focused section, in which the material sustainability aspects are listed and a description of how these aspects are managed is given. The first section, “WDFG, a leading Travel Retail & Duty Free operator worldwide” is divided into four sub-sections: 1.1 Setting the Scene: an introduction to the Company and its Corporate Governance. This section also gives a general picture of the travel retail sector context and the role that WDFG plays within it. 1.2 WDFG in numbers: more technical information about the Group with some quantitative data about its financial results (specifying its principal product categories), and workforce structure.

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1.3 Excellence, our ethos: the key elements of the Company strategy and the pillars of the relationship with its key stakeholders (customers, airports and brand partners). It also highlights WDFG’s most recent awards and accolades.

Instructions for use

1.4 2015-2017: the Company strategy for coming years, based on the current and future key risks and opportunities for the Group and its sector.

Reliability: WDFG has gathered, recorded, analysed, compiled and disclosed information in a way that it can easily examined.

This Sustainability Report coexists and complements both the Group’s Annual Financial and Corporate Governance Reports. It goes into more detail than the latter reports do, describing the Company’s interaction with society and the environment, and aims to

The second section, “Developing Business in a Sustainable way”, is also divided into four subsections:

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2.1 Commitment to sustainable management: this section explains how the Group engages with its stakeholders, describes the Company’s ethical commitments and bribery and corruption controls, and details some steps already taken as well as forthcoming actions to develop the Group’s role as a sustainable company.

[email protected]

2.2 Respecting the environment: an important part of the Group’s performance in sustainability is environmental management. This section outlines the Group’s main environmental impacts and the current and future measures to address them. 2.3 Our team, the key to our success: another important aspect for the report is the Company’s relationship with its closest stakeholder: the employee. Diversity, non-discrimination, benefits, and career development are assessed and disclosed in this section. 2.4 Community Support: this section shows all the initiatives and support that the Company gives to communities through collaborations and donations, etc. Finally, there is a third section which contains summary information. The data is presented in different tables with quantitative indicators, cross-referenced with GRI indicators and page numbers. There is a final text that summarises the report methodology. This report can be found on the Group’s website in PDF format http://www.worlddutyfreegroup.com/

Please send any comments about the content of the report or WDFG’s commitment to sustainability to the following email address:

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Highlights A company present in 20 countries worldwide, 104 locations, 99 are airports

More than 500 stores

2.407 million revenue in 2014 In the Travel

Retail Industry

Focused on offering customer a unique shopping experience Pioneer in the creation of new commercial and marketing concepts such as the Walkthrough Stores, and Contentainement

Caring for Our people With more than 9,500 employees About 65% are female2* In Spain and UK, over 90% have a permanent contract Investing in the Group’s talent with the Global Talent System Environment All WDFG UK shops certified with ISO 14001:2004 & OHSAS 18001 standards Winner of the Champion of Champion Green Apple Awards for a system to track and reduce energy use in its stores. Promoting industry sustainability by participating in sustainability partnerships Excellence Winner second consecutive year, Airport Retailer 2

Excluding Germany which by law does not disclose the gender breakdown

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of the Year (multiple locations) Fostering industry by having Board members at 6 top travel retail associations to track and reduce energy use in its stores.

1. World Duty Free Group, a leading Travel Retail and Duty Free operator worldwide

similar products to those offered to travellers in the Group’s stores. This year, the Group discontinued its Palacios & Museos business, the commercial and management services at cultural institutions and historical sites (such as cathedrals, museums or palaces) in Panama, Spain, Turkey.

1.1 Setting the scene 1.1.1. A GLOBAL GROUP World Duty Free Group is one of the world’s leading travel retail companies, operating more than 500 stores, predominantly in airports, in 20 countries worldwide. It belongs to the travel retail sector, which is dedicated to the sale of goods, or the provision of services mainly to travellers, through different sales channels. Its main activities are concentrated in the airport market, which is constantly growing in all the main geographical areas of the world. World Duty Free Group currently operates concession contracts in more than 100 locations worldwide. The Group also has a small number of shops in other locations outside of the airport, specifically in ports, train stations and souvenirs stores at cultural institutions and sites of historical heritage in the UK and USA. In addition to this, the Group provides wholesale and logistics services on a small scale to ship chandlers, embassies and diplomatic corps, shops on ferries and cruise liners, onboard retail operators, port and border shops and to airport and military bases, offering them

The Group has developed its own unique commercial concepts, tailored to match the purchasing preferences of travellers passing through the airports in which it operates. As of 31st December 2014, WDFG operates more than 500 stores spread over 20 countries in Europe, the Americas, Africa and Asia, and hires more than 9,500 talented professionals. The Group’s largest market is Europe, where it is one of the market leaders, with a solid presence in the United Kingdom and Spain. Roughly 70% of the Group’s revenues are generated from activities in these two countries. The Group also has a large portion of its business in the US (assets acquired in 2012). WDFG has head offices in London and Madrid. Despite the concentration of the Group’s activities in these markets, geographical diversification has been one of the cornerstones of World Duty Free Group’s growth model. Looking for new business opportunities in countries with a high passenger growth rate and that offer a safe legal framework, and reinforcing its presence in those countries where it already operates, has consolidated this international growth. Opportunities have been

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gained through regular concessions and acquisitions as well as through joint ventures, such as the Group’s partnerships in India and Saudi Arabia.

Presence of World Duty Free Group worldwide

To face this challenge, WDFG puts great effort into the design of its stores to adapt them to the different needs and expectations of a great variety of passengers around the world.

World Duty Free Group has become one of the world’s benchmark travel retail operators because of its depth of understanding of the needs of the passengers which pass through its stores. A standalone global travel retail company

United Kingdom Spain Germany Brazil Canada Kuwait Italy Mexico Jamaica France

Saudi Arabia Finland Chile US Cape Verde Sri Lanka Peru Jordan India Curacao

Travel retail, the Group’s core business

WDFG was created in 2012, following the merger of three travel retail operators owned by the Autogrill Group; World Duty Free and Alpha Group from the United Kingdom, and Aldeasa from Spain with assets in Latin America and other countries. In 2012 World Duty Free Group acquired the retail division of HMSHost in the US and in 2013, the Group demerged from Autogrill to reinvent the business as a stand-alone global travel retail company.

Simplified Group structure

The Group’s main activity is based in airport stores where it sells a wide range of duty free and duty paid luxury and high-end products. Its main product categories are Beauty, Wine & Spirits, Tobacco, Food & Confectionery and Others3. WDFG’s main challenge is that as airport passengers, its customers only have a limited amount of time to spend in store, which makes the ‘right product, in the right place, at the right time’ motto the key to their success. As a result of this, their marketing campaigns are more relevant than they may be for shops on the high street.

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This category includes Luxury and Accessories, Convenience and Souvenirs

Since October 2013, World Duty Free S.p.A. (IM: WDF S.p.A.), the parent company of World Duty Free Group (WDFG, the Group or the Company) has been listed and trades on the Milan Stock Exchange. Schematrentaquattro S.p.A. (IM: Schema 34), a wholly owned subsidiary of Edizione S.r.l (which belongs to the Benetton

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family), is the majority shareholder and holds 50.1 % of the share capital.

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Shareholders’ structure as on 31 December 2014

Leading values The company values, outlined in World Duty Free Group’s Code of Ethics, are loyalty, cooperation, responsibility, ethics in the workplace, integrity and innovation. These values are applicable to all those who operate in the name or on behalf of WDFG, to ensure every Group or third party employee is committed to working in line with legislation and the Group’s rules and policies, while at the same time being respectful to others and aiming to continually improve.4

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Section 2.1 gives further information on the Group’s ethical behaviour, including anti-fraud and anti-corruption policies.

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Governance Structure

1.1.2. CORPORATE GOVERNANCE The Company’s corporate governance system is based on international best practice in which the Board of Directors holds the central role. Situations that present conflicts of interest are carefully and properly managed, and the internal control system and a policy transparency are efficiently handled. WDF S.p.A.’s governance is structured according to the traditional administration and control model and consists of the following:  The Shareholders’ Meeting  The Board of Directors, with the appointment of a Chairman and a CEO  The Board of Statutory Auditors The convening of the Shareholders’ Meeting, its constitution, the validity of its resolutions, and the Shareholders’ right to attendance and representation are governed and administered in accordance with Italian law. At WDF S.p.A., all the Directors attend the Company’s Shareholder Meetings and the Board of Directors report on the activity carried out during the reporting period as well as giving future projections where relevant. The Board of Directors and the Board of Statutory Auditors are appointed at the Shareholders’ meeting.

WDF S.p.A. has a Voluntary Code of Conduct In compliance with the Borsa Italiana S.p.A. Code of Conduct, WDF S.p.A.’s Board of Directors defined and adopted the WDF Voluntary Code of Conduct (the ‘WDF Code’) which states the rules by which the corporate governance structure is administered. The WDF Code sanctions the Board of Directors to set up internal committees with proposalmaking and/or advisory functions, in order to improve the efficiency of the work of the Board of Directors itself. Accordingly, the Board of Directors set up a Human Resources Committee, a Control, Risk and Corporate Governance Committee and a Related Party Transaction Committee. The Board of Directors has exclusive responsibility and complete power to manage the corporate enterprise, and, subject to mandatory consultation with the Board of Statutory Auditors, grants the Chief Executive Officer (CEO), sufficient means and powers to undertake the ordinary management of the Company.

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Committee functions

Organisational Structure

The Human Resources Committee has attributed responsibilities for thethe remuneration of Directors and key management personnel including the Executive Committee, as well as functions relating to the organisation and development of human resources and the drafting of guidelines for the appointment of the members of the corporate bodies of the Company’s major subsidiaries. This committee is made up of three members, two of which are independent Directors.

The Group is structured in business units which manage operational levers according to the objectives and guidelines defined by the corporate bodies of WDF S.p.A.

Organisational Structure

The Control, Risk and Corporate Governance Committee is empowered support, with adequate preliminary analysis, the assessments and decisions of the Board of Directors inherent to the internal control and risk management system. The committee also has advisory and proposal-making functions for the implementation of the corporate governance rules in the Group. This committee is made up of three members, two of which are independent Directors. The Related Party Transaction Committee is appointed to regulate the execution of related party transactions, in order to ensure their compliance with the law and their material and procedural transparency and correctness. This committee is made up of three members, all of which are independent Directors. The Board of Directors also appoints a supervisory body in charge of supervising the execution of and compliance with the Organisational, Management and Control Model.

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1.2 WDFG in numbers

the new Düsseldorf stores in Q3 and a +14.1% across Spanish airports. Spain sales increased thanks to a higher passenger volume and spend, even after Madrid experienced a sales drop of -2.6% compared to the previous year. This decrease in sales was partly due to customer experience disruption caused by the new store refurbishment works and lower revenues from domestic travel.

1.2.1. FINANCIAL HIGHLIGHTS The Group’s 2014 financial results are characterised by a robust performance made possible by the maintenance of a positive trend since the beginning of the year.

Revenue Consolidated 2014 revenues amounted Euro 2,406.6m, +15.8% (+13.7% at constant exchange rates5) versus the previous year figures of 2,078.5 million Euros. These positive results were higher in part due to the September 2013 acquisition of the US retail business (Euro 148.9m of 2014 revenues), however, excluding the US, the business revenues were still +11.0% up on previous year (+8.9% at constant change rates), with increasing growth rates every quarter.

The Canary Islands showed the strongest performance of the Spanish regions, aided by the new Tenerife South main store and an increase in tourist passenger numbers.

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Excluding the sales of 148.9m Euros from the US business, revenue from the America’s region increased by +4.1%. Vancouver benefited from high Chinese passenger spend, and LATAM experienced positive growth in Peru and Jamaica (the latter increased +138% thanks to the transfer of competitor stores at the airport to WDFG). This positive trend was partly offset by Mexico (-3.9%) due to the destruction and subsequent closure of Los Cabos airport following a hurricane, and Chile, (-1.9%) impacted by currency weakness and increased taxes on high spending nationalities – a trend which affected the entire LATAM region in this reporting period.

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Asia and Middle East business reported increased revenues in Kuwait and especially Jordan, where sales were driven by improved passenger volumes and the completion of the walkthrough store.

Business segments

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The UK experienced a growth of +8.4% at current exchange rates (+2.9% at constant exchange rates), thanks to higher airport traffic numbers and a higher spend per passenger. Stansted, Gatwick and Manchester airports increased sales over the previous year, however Heathrow sold less due to the negative impact of the weaker Non-EU local currencies compared to a strong sterling (not so noticeable at other UK airports with higher domestic traffic rates). The abolition of the ‘One Bag6’ rule and the completion of the Group’s walkthrough shop developments also increased the volume of sales. The rest of Europe’s total revenues also increased +18.8% versus 2013 (+18.4% excluding Palacios y Museos), mainly thanks to the new Helsinki business, the completion of

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Negative impact on revenue of USD weakness has been partially offset by the sterling strength. 6 Now passengers are entitled to carry more than one bag when boarding the plane.

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Net profit Adjusted EBITDA

In 2014 Net profit amounted to 41.5m Euros, down 69.3m Euros on 2013. This was mainly driven by lower EBIT and higher income tax.

Adjusted EBITDA7 amounted to 289.7m Euros, +5.2% compared to 2013. As a percentage of revenue, adjusted EBITDA was higher in 2014 (12.0%) than in 2013 (11.4%).

Condensed Consolidated Income Statement Change

12 Months

(m€)

2014

Revenue Other Operating Income TOTAL REVENUE AND OTHER OPERATING INCOME Cost of goods sold Personnel expense Rents&Royalties Other operating cost EBITDA Provisions for risk and charges Restructuring costs Effect of linearization of concession rents Depreciation, amortisation and impairment losses EBIT Net financial expense Revaluation and write-down of financial assets Pre tax profit Income tax Net profit attributable to: - controlling interest - non-controlling interest

2,406.6 33.0 2,439.6 (993.0) (279.0) (750.0) (157.1) 260.5 (9.3) (9.5) (8.5) (103.3) 129.9 (43.6) 10.7 97.0 (55.5) 41.5 34.9 6.6

% on Revenue 100.0% 1.4% 101.4% 41.3% 11.6% 31.2% 6.5% 10.8% 0.4% 0.4% 0.4% 4.3% 5.4% 1.8% 0.4% 4.0% 2.3% 1.7% 1.5% 0.3%

2013 2,078.5 27.2 2,105.7 (853.3) (220.7) (639.7) (136.2) 255.8 (1.0) (91.2) 163.6 (34.3) 2.0 131.3 (20.5) 110.8 105.8 5.0

% on Revenue 100.0% 1.3% 101.3% 41.1% 10.6% 30.8% 6.6% 12.3% 0.0% 0.0% 0.0% 4.4% 7.9% 1.7% 0.1% 6.3% 1.0% 5.3% 5.1% 0.2%

constant 2014 exchange rates

15.8% 21.3% 15.9% 16.4% 26.4% 17.2% 15.3% 1.8% 830.0% n.a. n.a. 13.3% (20.6%) 27.1% 435.0% (26.1%) 170.7% (62.5%) (67.0%) 32.0%

13.7% 21.7% 13.8% 14.5% 24.4% 15.1% 14.1% (0.6%) 840.0% n.a. n.a. 11.4% (23.5%) 25.7% 430.0% (29.4%) 166.3% (65.6%) (53.2%) 32.0%

Adjusted EBITDA Change

12 Months

(m€)

Adjusted EBITDA

2014

% on Revenue

2013

% on Revenue

289.7

12.0%

275.4

11.4%

constant 2014 exchange rates

5.2%

2.9%

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Adjusted EBITDA refers to EBITDA plus the recovery of annual concession fees paid in advance to AENA

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1.2.2. BREAKDOWN SALES

OF

PRODUCT

BEAUTY: Unrivalled quality and diversity of beauty products are a must have for an airport store and World Duty Free Group knows it. Premium brands are given pride of place in the Group’s stores and promotions and marketing campaigns are carefully designed with WDFG’s Brand Partners to increase product visibility.

The above figures show the breakdown of sales by product category 2014

(Please update it with thepaid 2014 Duty free and duty The Group operatesfigures) duty free and duty paid stores almost exclusively in airports, through a partnership concession model. Under the duty free regime, goods sold are exempt from import taxes, customs and other taxes while under the duty paid regime custom duties, import taxes and other taxes are applied to the goods sold.8

WDFG offers a large variety of Travel Retail & Duty Free products that can be divided in five main categories: Beauty, Wines & Spirits, Tobacco, Food & Confectionery and Others, which includes Luxury and Accessories, Convenience and Souvenirs. All the categories are generally sold in the Group’s traditional duty free stores and sometimes, in their specialist stores9. The latter are fully dedicated to products of a single category or even a single brand.

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Regarding the operations in the European Union, in accordance with Directive 2008/118/EC, the duty paid regime applies if the passenger’s final destination is ‘domestic’, that is, a European Union member state, while the duty free regime applies if the passenger’s final destination is ‘international’, or outside of the European Union. 9 Further detail in section 1.3

Beauty products currently comprise nearly half of the Group’s sales. Creative in-store displays and the unique products offered to customers, for example first-to-market launches of perfumes, cosmetics and skincare products make this category so popular. WINES & SPIRITS: WDFG’s wine and spirits portfolio includes a wide range of international bestsellers and premium liquor. The key to its success is the strong, long-established relationship that the Group has with its brand partners, with whom WDFG frequently collaborates to promote collectors’ editions, exclusives, and new innovative campaigns. WDFG’s success in selling liquor is proven by the fact that it is the biggest retailer of malt whisky in the UK. TOBACCO: Tobacco is also one of the major income sources for the Group.

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The variety of brands offered, which include the most popular labels as well as products for the connoisseur tobacco customer, added to the attractiveness of the duty free prices and WDFG’s product expertise, are the key to the Company’s success in this category. FOOD & CONFECTIONERY: WDFG stores are ideal for those who want to indulge themselves in a confectionery treat, or for those who like buying local food products as gifts or souvenirs. The most popular confectionery brands, both local and international, are sold at WDFG stores and it is common to see special offers on these products. The wide range of prices makes these products suitable for any passenger, regardless of their budget or their age. OTHERS (Convenience, Souvenirs, Luxury and Accessories): The Group sells fashion from the world’s most prestigious luxury brands. Passengers can pick up hot-off-the-catwalk clothes and accessories such as watches, jewellery or handbags from leading brands, at tax-free prices. WDFG also has stores dedicated to the sale of essential reading and last minute food and travel purchases. The group operates in the USA from a range of news stores that cater for all – international, regional and local readerships. In addition, WDFG works to sell high quality souvenirs that capture the local style.

1.2.3. THE GROUP’S WORKFORCE One of the Group’s points of excellence is its staff, at the airport, in its warehouses and in its offices. WDFG has a multi-cultural team of over 9,500 people from around 80 different countries. The Group is proud of having qualified professionals with the flexibility to adapt to the needs of different nationalities and cultures, the ability to provide great customer service, and the knowledge and expertise on every product the Group offers in order to advise clients on their purchases in the best possible way.

The second section of this sustainability report provides further information on the Group’s professionals, their working environment and the different policies and procedures in place to ensure a good work-life balance and the development of their talent.

Asia & Middle East includes the operations in Cape Verde.

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Flexibility to adapt with its customers: Employees of 32 different nationalities in Barcelona. World Duty Free Group has a team that specialises in Destination Targeting which continuously analyses passenger trends, taking into account travellers’ nationalities and where they are flying to. Once these trends have been defined, specific activities are designed and carried out tailored to the nationality and destination patterns identified. El Prat airport in Barcelona is a good example of how the Group has adapted its service to meet the needs of its customers of many different nationalities. It was identified that a high volume of Russian, Eastern European and Asian passengers were flying through the airport, making it relevant to ensure these customers are well attended in store. The staff at El Prat averages 375 employees and is made up of 32 different nationalities, including 20 employees from Russia, 36 from East European countries and 7 from China10. In order to synchronise staff shifts and the times when passengers of these nationalities are flying through the airport, 60 employees speak four or more languages and overall the staff in Barcelona can serve customers in 16 different languages.

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As at December 2014

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1.3 Excellence, our ethos World Duty Free Group believes business excellence starts with engaging with its airport and brand partners, continues with reflecting this good relationship on the delivery of the best service to its customers, and ends with being recognised as a renowned travel retailer by the industry and its stakeholders for this excellent service.

1.3.1. IT’S CUSTOMERS

ALL

ABOUT

OUR

At WDFG the customer comes first. The nature of the traveller customer makes the business need to adapt its retail strategy to meet customers’ needs in a limited time, with the extra challenge of satisfying the expectations of diverse passengers in terms of nationality and destination.

There is however a common feature of airport customers: their cosmopolitan profile. The challenge of the business is therefore to investigate and discover what these customers want and how and when they want it, and to offer it in exclusively designed stores in order to create a unique shopping experience. The Group is restless in its efforts to exceed customer expectations and to enhance their airport shopping experience, putting them at the heart of the decision making process. All this would never be possible without a team of talented professionals attending every

customer and providing expert advice. Therefore, from the selection process to the customer service training programme, the Company is continuously investing in its employees.

To satisfy all the different customer needs, the Group has developed different shopping solutions offered through a portfolio of different store concepts: WDFG Stores The traditional duty free concept stores, for every type of customer, where all the main product categories and a wide range of brands are offered in carefully arranged zones. WDFG continuously innovates on this store concept. Apart from engaging with the brand partners to get the best and most exclusive products, they also coordinate with airport partners to offer the most avant-garde store design. WDFG pioneers the development of ‘walkthrough stores’, the first of which was inaugurated by WDFG in 1997. These stores are shopping areas established along the passenger route from security to the lounge. Other shopping concepts are those offered in the Group’s specialist and theme stores. These spaces are focused on a single product category and have highly trained staff ready to give expert advice to customers. The Company also has luxury boutiques in its portfolio, which are stores especially designed to create a glamorous and sophisticated environment

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where luxury jewellery, watches and leather products are sold.

offers and to pre-order items for collection and payment in-store. Going even further…CONTENTAINMENT® (CTT) Today’s world is moving at a fast pace and WDFG did not want to miss the opportunity to be ahead in the travel retail market.

Some examples of specialist and theme stores are the Group’s beauty stores such as The Perfume Gallery or the Beauty Studio. WDFG also operates brand boutiques (standalone stores) with some of beauty’s biggest names, such as MAC, Kiehl’s and Aveda, and stores specialised in liquor for example World of Whiskies or The Wine Collection. Examples of WDFG’s specialised stores in the food & confectionery category are The Food Society or Simply Chocolate and in the Tobacco category, La Cava del Cigarro. The Group also has specialist souvenir stores (such as Glorious Britain and Thinking España) that offer a wide range of typical and original local products and convenience stores with reading and last-minute food and travel products such as Wall Street Journal or Sunset Store.

Travellers’ haste, their diversity of tastes and tough competition constantly challenge the Group’s marketing strategies and selling techniques. With the collaboration of airport and brand partners, WDFG has designed an innovative solution to beat both: Contentainment. CTT has revolutionised traditional airport shopping: it offers the passenger much more than just a walk through the store looking for a particular product, or waiting to see something that calls their attention. It is about creating a unique customer - brand - store interaction through a new way of selling and launching products based on leading technology, high impact live events, and targeted sampling that invite the passenger to participate.

Innovating for a great shopping experience WDFG has developed an innovative multichannel and highly successful marketing concept called Contentainment. The objective is to involve the customer in the store experience through interactive elements that capture their attention and bring promotions, the product range and the store to life. Another project WDFG has been developing throughout 2014 with the aim to keep innovating is a new ‘Reserve & Collect’ website. This tool will be available soon and will allow customers to view WDFG products, prices and

This innovative marketing concept provides a shopping experience focused on entertaining customers using interactive elements: from digital marketing campaigns, delivered through the most innovative technology (iPads, multitouch tablets, motion sensors, etc.), to luxury product sampling such as top beauty brand make up sessions or food and liquor products tasting, to performances such as typical dances local to the country or region where the store is located, with the aim of celebrating certain cultures, destinations and local products.

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Customer security At WDFG, customer satisfaction is the first priority. To achieve this, a fundamental first step is to ensure that all products strictly comply with the applicable legislation and health and safety requirements. The Group complies with legal requirements and takes a proactive approach working with governments and regulators to shape legislation which meets Government objectives but takes into account this specific market channel.

An example of this are the new Tobacco Display Areas (TDAs) installed in Scotland and Jersey in 2014 and already part built what are due to become legal requirement in England in April 2015, to limit open access to tobacco products. Another important commitment that WDFG makes to its customers is to only make both credible and substantiated claims that comply with airport and local regulations at every location.

Scanning boarding passes and occasionally passports; as well as receiving information from other data sources such as store cameras or the WDFG public website, comprise a risk for data protection. WDFG has a number of items in place to ensure that customer data is handled correctly, for example a robust IT security system, a data protection and CCTV policy, specific training for employees dealing with personal information, internal procedures which follow relevant laws and regulations, etc. In addition, to control this, the Group undertakes internal Data Protection Audits and intrusion tests and quarterly meetings are held to discuss and improve the protection of customers’ personal data. For any customer, employee or third party who wishes to report a grievance or who has questions regarding WDFG’s data privacy, there is a specific email address to contact the Company and inquiries are replied to by the Internal Audit Committee. All the systems and strict controls in place to prevent any customer data incidents have resulted in the company receiving zero complaints in 2012 and 2013 and just one in 2014, the liability of which is still under investigation.

Customer Data Privacy Another important concern for the Group is its management and protection of customers’ private data in those processes that involve the handling of client information. The customer’s boarding pass is scanned with each sales transaction to check the passenger’s destination for fiscal and contractual11 reasons.

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Number of incidents or complaints regarding customer data privacy in Spain and the UK: 2012

2013

2014

0

0

1

This refers to WDFG’s contract with the Airport.

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WDFG IS MORE THAN AN AIRPORT TENANT Airports offer travellers services that go beyond flying. Today, going to the airport means much more than just waiting to take a plane. The traditional waiting time has become an experience in itself thanks to all the services and shopping options that airports offer. Travel retail companies tender to be tenant at the airport and become part of this experience. The challenge for these companies is to demonstrate to airport authorities that they can perform in a way that will maximise revenues and satisfy customer expectations. For WDFG however, becoming an airport tenant is much more than gaining the concession for being the retailer who projects the highest volume of sales. To win and maintain airport concessions, WDFG believes in actively engaging with airport partners as the key to building a strong relationship and a culture of mutual collaboration that maximises the growth of both parties. World Duty Free Group has already found that working in partnership with airports is beneficial to both the Group and its landlords. In the UK, the Group has even carried out specific collaborations with its airport partners and this method of working is becoming increasingly integral as part of day to day business. And there is a third party that can be collaborate and even increase the benefits enjoyed by all: brand partners. When the three parties collaborate, this is known as a ‘trinity’ partnership and working in this way for mutual benefit has already proven to produce fantastic results, with the ultimate aim of giving the best experience possible to the focus of all three parties, the customer.

Trinity partnerships are designed for the benefit of everyone involved: the airport operator, the airport retailer and brand partners, but most of all, for the passenger. In order to support and encourage this type of partnership, each year WDFG participates in trinity forums with airports and brand partners. These are organised to discuss the main challenges encountered in the world of airport retail and propose new trinity initiatives to improve the passenger experience and therefore enhance general industry performance. These collaborations have allowed WDFG to develop innovative retail campaigns. Trinity partnership turns Heathrow pink for Breast Cancer Awareness A great example of this is the collaboration between London Heathrow Airport, the Estée Lauder companies and World Duty Free Group as part of the Estée Lauder Companies’ global Breast Cancer Awareness (BCA) Campaign. In 2012 this ‘Trinity Partnership’ came together to illuminate Heathrow Terminal 3 and its retail offering in pink lights to raise awareness about the importance of breast health and that early detection saves lives. Adapting to different landlords Another key objective of a global travel retailer such as WDFG is to be able to adapt to the legislation of all the different countries where it operates. Even more challenging than this, is learning to meet the requirements of all the different airport operators and furthermore, working in close partnership with them as WDFG aims to do.

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WDFG professionals receive special training for this through the Company’s international talent programme (see section 2.3).

Global Business Partner Conference In 2013, the Group undertook a full programme to improve its relationship with brands. After undertaking a first survey, in which some areas of improvement were highlighted, a Global Business Partner Conference was organised. Partners from almost 80 brands attended the event, in which the WDFG strategy and retail model was shared and explained to them. The conference was very well received and the outputs were very positive for both the Group and its brand partners.

The Group aims to implement the partnership culture wherever it operates to build and maintain the trust of its airport partners and to keep growing an image of excellence as being one of the world’s best travel retail partners.

1.3.2. RELATIONSHIP WITH BRANDS Another outstanding feature of WDFG, is the excellent range of top brands it offers. The Group works with around 500 major brand partners, including the world’s leading tobacco, liquor, beauty and fashion brands who trust WDFG to showcase their products in its first class stores. But WDFG believes it is not only about when and where the product is displayed. The most important part of product marketing is the “how”. The aim is to combine displaying the right product in the right place, at the right time, and in the right way, to maximise their visibility and therefore their sales.

As the interface between brand partners and customers, WDFG is constantly observing and listening to passengers to understand their needs and preferences and at the same time it engages and collaborates with its brand partners in order to convey their products’ features and benefits to travellers in the best way possible. WDFG involves brand partners at a strategic level when designing the different store spaces and when planning marketing campaigns with the aim of responding quickly and successfully to customers’ needs. The Company strives to support the commercial objectives of its partners by carefully placing every product in the store in the right way, at the right time.

In order to achieve this, WDFG works together with its brand partners to decide the best promotions according to the brand partner and the passenger profile at the different locations. Some examples of promotions and campaigns designed in collaboration are:

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Category campaigns Global campaigns are designed to bring categories to life for customers by delivering audio-visual and static content, or sampling campaigns. WDFG designs them together with multiple brand partners to showcase the range of products within a category and therefore give its customers a well-rounded experience, demonstrating an in-depth knowledge of the product. These campaigns may be implemented

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in all airports or only selected airports depending on the needs/expectations of the profile of passengers. Some examples are the Whisky, the Wine or the Sweet Festival for which the Company installs bars, tasting units, videos, in-store sampling, etc.

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Brand activations in store In collaboration with its brand partners, WDFG designs campaigns to showcase new & exclusive launches and also to further build sales of key brands. These activations are promotional spaces with printed materials, screens, tasting bars for food and liquor, etc. Which sit in key locations of maximum exposure along the customer journey through WDFG stores, designed to slow passengers down and encourage them to enjoy more time browsing the store.

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Local product activities WDFG knows that local products are an important part of its product range especially in touristic airports. Apart from the always present international brands, the Group works with small and local suppliers to showcase these products in store. Expert staff members explain to customers about the product’s origins and history and give them a chance to try before they buy. Some examples are Spanish 5Js ham at Spanish airports, or Tequila products in the Group’s Cancun and Los Cabos stores in Mexico sampled at various times throughout the year.

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Contentainment (CTT): As previously explained in the section “It’s all about our customers”, with CTT activities WDFG offers its brand partners the option to add this unique and innovative experiential marketing concept to their activation and really bring the brand alive for passengers.

Toblerone: ‘Tour’ of interactive aeroplane game from Barcelona to Madrid to Palma to Stansted to Gatwick.

Daisy Dream & Jean Paul Gaultier Exclusive Launch is an example of one supplier’s activation campaign.

Any brand participating in Contentainment agrees key performance indicators (KPIs) with WDFG, which are monitored during the activity to ensure agreed benchmarks and against which

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the post event report is made. This ensures a very high level of satisfaction in terms of brand image, execution, staff interaction and commercial return for all participants.

Boss Ma Vie: Global exclusive launch across UK and Spain across CTT screens, merchandising units, specialist sampling staff and expo activity in UK and Spain.

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Promoting the duty free and travel retail industry together Events are usually hosted or attended by WDFG to build a solid network with other industry players, especially with brand partners and airports. From forums, in which best practice is shared and new strategies for the industry are planned between the parties, to awards ceremonies hosted by the most important travel retail industry associations, WDFG believes in the great importance of attending and participating in these events to make the travel retail network stronger, more aligned and more successful every year. Since its beginnings World Duty Free Group has participated in the TFWA (Tax Free World Association) World Exhibition and Conference which is the industry’s premier event and 2014 was no different. The Group participates actively as a key player in this event which all companies, including brands, airport operators, retail operators and service suppliers of the travel retail industry attend.

WDFG’s participation in the most relevant international Travel Retail and Duty Free associations WDFG participates in the most important travel retail associations worldwide. These are focused on promoting the conditions for growth the travel retail and duty free industry. Upcoming regulations and trends are monitored to give the industry a voice in shaping legislation which may affect the industry and to protect it from detrimental changes which may affect customer choices or impact sales. The Company has members on the Boards of several national and international associations such as Duty Free World Council (DFWC), European Travel Retail Foundation (ETRC), Middle East & Africa Duty Free Association (MEADFA), Asociación Sudamericana de Tiendas Libres (ASUTIL), the International Association of Airport Duty Free Stores (IAADFS) and Asia Pacific Travel Retail Association (APTRA).

TWFA World Exhibition and Conference: Once a year, the world’s duty free and travel retail industry meets in Cannes for this event. Airports, travel retail and duty free operators, brands and other industry participants get together to view the latest products to be launched in the market, to share ideas, plan business development and to network. For the 4th consecutive year, this year WDFG organised a cocktail for brand partners at the beginning of the week, giving the Group’s brand partners, as well as the WDFG team, an opportunity to network, catch up and discuss new ideas in an informal, relaxed atmosphere in between the hundreds of meetings which are held during the week. It is also an opportunity to say thank you to the brands and people so essential to driving our business. The 30th edition of the Frontier Awards was also celebrated during the TFWA event. WDFG was the winner of arguably the most prestigious award for the second year running: ‘Airport Retailer of the Year - Multiple Locations’. 23

1.3.3. AWARDS AND RECOGNITION WDFG’s expertise and achievements are recognised and reflected through the prizes awarded by the travel retail and wider industries.

For many years, the Group has been shortlisted for one or more Frontier Awards, “The Oscars of the travel-retail industry”. WDFG has received awards for its marketing campaigns, partnership initiatives, and in 2013 it received the renowned ‘Airport Retailer of the Year’ award. Continuing with this trend, on the 30th anniversary of these awards celebrated in 2014, WDFG was awarded ‘Airport Retailer of the Year: Multiple Locations’ during the TFWA World Exhibition week. WDFG has also gained recognition by ‘The Moodies’, the airport digital, mobile and social media awards organised by Moodie International, publishers of The Moodie Report (one of the top trade media covering the sector). Since 2012, the Group has been honoured as Highly Commended or as Winners of various airport retail awards and also listed in the The Moodie Report ‘Dreamstore’ competition. In 2014, the Group was awarded “Best Use of Digital &

Social Media”, and Highly Commended in the “Best Facebook Page”, “Best Twitter Feed” and “The Best Use of Digital Media In-store” concessionaire categories.

WDFG was also selected as one of the 100 recipients of the 'Ruban D'Honneur' in the 2013/ 2014 European Business Awards and shortlisted with 9 other nominees in its category “Businesses with a turnover of over 150m Euros p.a.”. These awards are pan-industry, for any company based in Europe and aim to recognise the best examples of innovation, ethics and business success across a range of categories. In addition, the Group was proud to be awarded Silver in the Marketing Category of the Asian CTW (Chinese Tourist Welcome) Awards 2014.

Apart from being honoured with awards as a Group, WDFG stores and airport shopping developments have received recognition for their product marketing and partnership campaigns, design, adaptability to different passenger profiles, etc. In 2014, Heathrow was named winner of the Skytrax Airport Awards for 5th consecutive year in the World’s Best Airport Shopping category , and was awarded Best Airport Retail Design for its Aveda store at Minneapolis St. Paul Airport

(T1) in the 2014 ARN Awards.

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1.4 2015-2017: Creating value and preparing the Company for the future The Group’s strategy is to achieve steady growth in value to our shareholders and landlords and to build a more solid, agile and competitive company, able to keep leading the global travel retail industry in the coming years and become the partner of choice for key airport authorities around the world, setting the standard for travel retail excellence. WDFG believes that moving forward goes hand in hand with constantly seeking innovation and new business opportunities, continuous improvement to its current procedures and systems, and endeavouring to reduce the business risks to a minimum. In order to do this, the company has risk management processes in place to identify and control risk through the design and implementation of mitigation measures.

1.4.1. RISK MANAGEMENT Every company has to deal with external risks and uncertainties derived from general economic and political conditions, and with those characteristic to its own activity and the wider industry. WDFG is very conscious of this fact and is constantly making sure that its strategy is prepared to face and mitigate any risks that could pose a threat to the Group’s performance. To do this, it has risk management processes in place that identify new risks and designs mitigation measures to control those already detected. Currently, these processes have identified several external risks that could directly affect the Group’s financial position, such as those related to airport or government decisions or passenger trends, or other risks; those that affect the Company’s reputation, such as its

social and environmental performance and its ethical behaviour. Some examples of risks that directly affect the Group’s financial performance are those derived from the relationship with airport authorities, as the business relies on the renewal and acquisition of airport concessions; those derived from government regulations, especially those regarding the sale of duty free and controversial products; issues that could affect the passengers’ decision to travel or spend, such as the economic crisis, unfavourable exchange rates, or even situations political instability (for example terrorist threats or coups) or finally those which originate from the Group’s relationship with its key brand partners, or its employees. There are other risks derived from situations that could affect the Group’s reputation, such as incidents of corruption, a reduction in the perceived quality of services, the inability to fulfil contractual obligations with airports, or irresponsible environmental or social behaviour. These could have a great influence on an airport’s decision to grant a concession or on a customer’s willingness to purchase in WDFG stores, and may even result in the loss of a customs licence. Therefore, indirectly, these risk factors may also affect the Group’s financial position. All these risks are therefore carefully assessed and thoroughly measured by the risk management processes, in order to be mitigated and reduced to a level that is assumable by the Group.

1.4.2. STRATEGY There are three main areas of focus for the Group’s strategy; the travel retail industry’s positive growth trend, its unique portfolio of locations and partnership. The travel retail industry Over the past decade, the travel retail - and specifically the airport retail industry – has been

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constantly delivering sustained growth and this positive trajectory is expected to continue in the future, fuelled by a combination of three main drivers. The first is the increasing passenger number trend, a figure which has proven to be resilient even in times of economic slowdown. The second is the increasing spend per passenger, as a result of more passengers travelling from countries with high-spending growth rates, such as Asian and Middle Eastern countries. Lastly, the third driver is made up of the emerging duty free markets, locations which are showing growth potential in this sector, with the US rising as an additional attractive market for the duty free industry. World Duty Free Group’s unique portfolio The Group has a stronghold position in three key flight destinations, (the UK, Spain and the US) which are becoming increasingly important, as the airports where the Group is located are continually attracting more passengers on a positive spending curve, predominantly from Asia, the Middle East and Latin America. This makes the concession portfolio of the Group second-to-none, both for the quality of the airports where it operates and for the length of its contracts. With roughly 96% concession retention rate and 9 years of contract length on average, WDFG’s portfolio is the longest in the industry. This permits the Group to fully capture the retail potential in a business environment characterized by short term concessions, while at the same time reducing risk.

to create the most exciting and innovative environments, to showcase some of the world’s most prestigious and loved brands. WDFG also works shoulder-to-shoulder with airports to design and merchandise the stores in the best, most enticing way and to provide a shopping experience specifically tailored to meet the demands and interests of the passenger profile at each location.

1.4.3. THE 2015 – 2017 PROGRAMME World Duty Free Group has defined the principal factors that will shape the Company’s internal and external growth over the next three years. World Duty Free Group has developed a structured and comprehensive programme internally, focused on streamlining operations and implementing efficiency initiatives across the whole business, with the objective of delivering a more solid, agile and competitive company. The main levers of this plan are to maximise the value of existing contracts, to enhance the performance of less-profitable concessions in its portfolio, to complete the integration of its European platforms, with the aim of streamlining processes and releasing synergies, and finally to develop the US business. This last lever includes the identification of opportunities for growth and the revitalisation of US assets, as well as improving the profitability of the entire business by leveraging on the Group’s retail expertise. Externally, the Group will continue to assess new concession opportunities, potential business combinations and the possibility of entering into new product categories and/or distribution channels.

Partnership Partnership is pivotal to WDFG’s strategy and the close relationship that the Group has with airports and brand partners is instrumental to its success in the industry. World Duty Free Group works hand in hand with brand partners

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Reinforcing its commitment to society and to the environment, and looking for new ways of motivating and developing its people talent will be the levers to build a responsible and sustainable company.

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Developing business in a sustainable way 2.1. A commitment to sustainable management Over the last few decades, there has been a global movement towards sustainability. The theory that human activities are transforming the Earth is a fact and the need for sustainable growth is more and more evident every day. As a result, institutions such as governments and corporations, as well as individuals themselves, are changing their behaviour and their entire work philosophy with the common objective of conserving our planet for the benefit of future generations. All of WDFG’s activities should be sustainable, particularly those involving interactions with society and with the environment and the Group is committed to implementing best practices and continually improving performance in this respect. This commitment is reflected in the Group’s efforts to improve both its operational efficiency and the management of its relationship with stakeholders (brand partners, employees, suppliers, airports, governments, NGOs, etc.). In addition to this, it endeavours to implement best practices with the aim of reducing negative environmental and social impacts in its circle of influence and transform them, if possible, into benefits.

2.1.1. STAKEHOLDER ENGAGEMENT World Duty Free Group places great importance in building and maintaining a good relationship with all of its stakeholders. To achieve this, understanding their key expectations and interests in the Company is fundamental, and this is accomplished principally through maintaining direct and continual dialogue with them. Honesty and transparency are two values which guide the Group. Once a basis of trust is built, the Group reinforces its relationships by ensuring that its commitments to each stakeholder are delivered and both parties’ interests are safeguarded. The following table describes the Group’s key stakeholders, their mutual interests and the commitments made to them, as well as the channels used to communicate and be aware of their needs and opinions.

The following section will detail the Group’s principal stakeholders and will explain how the Group looks after the relationship it has with each stakeholder, followed by a section on the ways in which the Company ensures that business is carried out in an ethical manner. The last section of the chapter describes the first steps which are being taken to build a strong reputation of excellence in sustainability.

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STAKEHOLDER ENGAGEMENT: COMMITMENTS AND CHANNELS OF COMMUNICATION

Financial Community Areas of interest

Dialogue channels The has

Group a financial commitmen t to its shareholder s and investors. They need and want to be fully informed about the Group’s management structure and organisation, as well as its performance. WDFG is therefore committed to regularly communicating its strategy and performance to them, to allow them to make informed decisions on their investment.

The main communication channel with the financial community and the shareholders is the Group’s website, with a specific section on Investor relations. The Group also organises regular meetings such as the Annual Shareholders’ meeting, where it presents information relevant to its shareholders and publishes an Annual Financial Report, as well as periodic financial results (Q1, half year, Q3 and full year) all of which are published on the Group’s website. Apart from this, the Group uses the SDIR-NIS circuit to publish its regulatory disclosures and these are stored centrally with "1info". All information disclosed is available on the website www.1info.it. The Investor Relations team also organises roadshows and meetings for investors and analysts on a regular basis. The Corporate Governance report is published through the same channels, informing investors of the company’s structure and corporate governance. The Group is also publishes a ticker on its website so that investors have easy access to the progress of the share value.

Employees Areas of interest

Dialogue channels

One of the most important assets to the Group is its people. The employees of WDFG have certain needs and rights and the Company should both be aware of and meet them in order to ensure that its people feel comfortable and satisfied in their jobs. Promoting a good work-life balance, and showing concern for the professional development and satisfaction of employees creates a win-win situation: employees feel motivated and engaged and the Group benefits from a higher productivity rate which traditionally comes as a result of this.

To ensure that employees are kept involved and up-to-date with the latest company information and news, communication is vital. Informing them about any relevant news, their labour rights, benefits and obligations, the Group’s strategy, etc. is very important. The Group has several tools to send and receive communications, and to measure employee engagement. The most important communication tool for employees is LINKonline, the Group’s intranet. This is a multidirectional tool which allows WDFG to communicate with its employees and vice-versa, and facilitates intra-employee communication. Corporate and Human Resources information, policies, any templates and forms they may need, as well as the Group and industry news are published there. In 2012 the Group also started publishing LINK, its internal magazine, complimented by LINKweekly, a weekly bulletin sent by email to inform employees of what has been happening throughout the previous week. During 2012 and 2013, a global engagement survey, “LINKed” was undertaken to measure employees’ level of commitment and satisfaction. Internal ad hoc bulletins, a specific email address for internal communications and internal leadership conferences are other initiatives that the Group offers to give and receive information.

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The Group also organised a leadership conference in 2014 for its top management, with presentations from the Company Directors and creating opportunity to network and share ideas.

Customers Areas of interest

Dialogue channels

Customers are the principal focus of the Group. Their shopping needs and expectations are what drive the Company’s retail strategy. Their perception of WDFG’s stores and their willingness to spend time and money depend on the products, the services and the Group’s reputation amongst other factors. A responsible marketing policy and compliance with all the legal requirements regarding product information and labelling is a high priority for World Duty Free Group.

WDFG has several bidirectional communication channels, such as its website, to inform them about the company and its latest developments. The website also offers an area which directs customers to the Group’s customer services department to receive and reply to any queries, suggestions or complaints. The Group is also highly active on Facebook, Instagram, Youtube and Twitter in the UK and Spain, alerting customers to the latest offers and news, even collaborating with airports on this to make sure that the customer has the best possible experience. It is extremely important that the customer experience is at its best at all times, therefore the company also undertakes several customer satisfaction surveys and behaviour studies throughout the year, as well as mystery shopper surveys on a global scale. The Group also has strong relationships with industry and mainstream media, through which it publishes any relevant news.

Airport Authorities Areas of interest As landlords, airports have several requirements and economic and reputational expectations that the Group has to meet. Retail is one of the biggest income streams for airports today. Therefore, the Group’s retail strategy, its management and its financial results are of great interest to the airports and regularly communicated to them as agreed with each airport. The retail offer at an airport affects its reputation, is an important part of the total airport experience for their passengers and can help to create a ‘sense of place’ so it is important that World Duty Free Group works hand in hand with the airport to deliver on all these points.

Dialogue channels This relationship is extremely important to the Group and carefully managed, with regular communication between and frequent meetings held with, airport authorities to collaborate in day to day business and even in the design and development of the retail strategy. Both the Group and airport representatives attend and participate in several industry conferences and events throughout the year such as Airports Council International (ACI) meetings and conferences and the TFWA conference and exhibition, with the aim of sharing ideas and networking. The Group also hosts a conference for its airport partners to take them through previous performance and strategy for the coming years.

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Brand partners Areas of interest

Dialogue channels

The relationship with this stakeholder is another one of extreme importance to the Group. Brands take great interest in the Group’s reputation as well as in its retail strategy and performance, as their own sales rely on them. WDFG works in partnership with its brands, and involves them in the design of spaces and marketing campaigns amongst other things

Being proactive and communicating daily with the Group’s brand partners is essential in order to look after these important relationships. Great importance is given to working collaboratively, joint planning of campaigns and creating common goals which benefit all stakeholders and improve the customer experience. To measure their level of satisfaction with the Group, surveys are frequently undertaken and steps taken to improve based on the results. The Group is active in industry events and promotes networking and exchange of ideas with its brand partners and other stakeholders such as the airport authorities. To compliment this, WDFG hosts special conferences, events and activities for brand partners to facilitate better two-way communication and alignment of strategies and to demonstrate the Group’s appreciation and commitment.

Travel retail associations and key Industry bodies Areas of interest

Dialogue channels

The industry's duty free and travel retail associations promote and protect the travel retail industry. WDFG is member of each of the regional and national associations in the countries and regions in which it operates. It is proud to have senior staff members on the Board of the some of the most respected industry bodies - ETRC, MEADFA, IAADFS, ASUTIL - and the newly formed Duty Free World Council. This gives the Group a voice in industry debates, ensuring that it plays a proactive role in shaping the industry's future.

Directors and other Group employees attend and sometimes chair or speak at the events organised by travel retail associations and other industry stakeholders, representing WDFG in wider industry debates. WDFG has an active relationship with the industry media organisations, keeping them up-to-date with the latest Company news.

Suppliers Areas of interest This group is represented by suppliers of nonstrategic products and services. A good relationship with them is very important in order to achieve long lasting and solid contracts, which in turn improve efficiency and profitability, which are beneficial to both the Group and its suppliers. Being aware of suppliers’ performance with regards sustainability is also important to WDFG.

Dialogue channels In order to manage and operate contracts, there is frequent communication between the Group and its suppliers. At all stages, from the tender process until the termination of a contract, there are high levels of contact to ensure compliance with all of the Group’s requirements and policies.

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Governments and public authorities: Areas of interest

Dialogue channels

Governments, local authorities, customs, environmental agencies, and other regulatory bodies are the entities that comprise this important stakeholder group. The relationship with them is of major importance, as they are the generators and guardians of laws and regulations that circumscribe the Group’s operating environment. New laws and regulations can have a significant impact on the business and WDFG needs to be aware of any changes and be prepared to influence draft regulations and react to comply as needed.

The Group’s reporting documents, internal and external audits, submissions of periodical required information and license requests are some of the channels and tools used in communications with these regulatory bodies. As a reflection of the importance of this relationship to the company, the Group also has a department of Business Relations and External Affairs which directly deals with changes in law which may affect the business and works to improve conditions for the company and the industry. This is achieved through developing close working relationships with governments and regulatory authorities directly, at national and regional level, developing position papers and contributing to industry debates by participating in and speaking at conferences and forums.

Communities Areas of interest

Dialogue channels

As part of its commitment to corporate social responsibility, WDFG supports many activities in communities in which it operates. The Group has a particular focus on education, youth development and charities for children and encourages its employees to work as active members at a local level.

Through partnership agreements, the Group uses a combination of corporate donations and employee fundraising to benefit a number of charities and community projects. A close relationship is maintained with these organisations in order to agree and manage the partnership, audit the destination of the funds donated and follow up on the progress of projects.

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2.1.2. ETHICAL BEHAVIOUR WDFG believes in the importance of defining clear and strong corporate values with which the whole Group identifies. The Company ensures that all its activities and procedures are aligned with these values, building a powerful image of integrity and transparency. To achieve this, the Group has several procedures in place. The Code of Ethics (approved by the Board of Directors on August 1, 2014) and several policies have been developed to guide the actions of all WDFG employees as well as the actions of those who operate in the name of or on behalf of the Group. This way, the Company guarantees a high level of compliance of legal and corporate requirements. The Code of Ethics outlines the Group’s values of loyalty, cooperation, ethics in the workplace, integrity, responsibility and innovation. Every employee has to adhere to the Code’s guidelines when carrying out their daily tasks. A signature of acknowledgement of the Code of Ethics is gathered at the time of hiring and periodic training is given to reinforce and update any changes or issues related to its contents. The Code is supported by a Policy Pack that sets the rules to protect the interests of stakeholders and their relationship with the Group. It also guides any business activity to ensure compliance with the applicable legislation at every location. This pack is also provided to every WDFG employee.

WDFG has a policy of zero tolerance for corruption. To establish the Group’s position on ethical behaviour and to achieve its objective of acting in

line with the highest international standards, the Group has several anti-corruption and internal audit policies12 that, following the OECD guidelines, establish the Company’s requirements and control measures to avoid any illegal or illegitimate practices. WDFG tools to ensure ethical behaviour Training and communication are the main tools used by the Company to familiarise every employee with the Group’s Policy Pack and maintain their commitment to it. The Code of Ethics, the anti-corruption policy, customer service and data protection are some of the topics covered in the Group’s training sessions and online courses. A total of 159 members of top management and the Board of Directors and their direct reports in the UK and Spain (99% and 100% of the total respectively) received anti-corruption training in 2012, and the same group of professionals received refresher information via email in 2013. In addition, every employee attends a Policy Pack training course and receives and signs a copy of the document. Throughout 2014, the policy was under review to update its contents to meet new legal requirements and in 2015, anti-corruption training will be given. Internal audits are the main tool to assess how well the Group’s ethical values are adhered to. The various audits scheduled by the Group focus on assessing employee and departmental compliance with policies, procedures and local laws and regulations. The various business activities that may pose a risk to compliance and the Group’s reputation are periodically audited. Financial management and reporting, corporate governance, social and employment issues, supply and capital expenditure transactions, and other operational procedures are examples of the activities audited.

12

Last revised in 2014 33

Any cases or suspected cases of activity involving fraud or corruption have been solved following the WDFG Code of Ethics. None of these cases have required further action. The Group also has a ‘Whistle Blowing’ communication procedure to encourage employees to disclose any malpractice or misconduct which they become aware of. The employees who use this channel are provided with protection by the Company. The following figure shows the number of Whistle Blowing tips received in the last two years in Spain and the UK:

international standards of best practice regarding ethical behaviour.

2.1.3. WORKING TOWARDS A SUSTAINABILITY STRATEGY WDFG is committed to reducing the negative environmental impact of its activities, and to developing a Corporate Social Responsibility (CSR) strategy. The aim is to build a strong and comprehensive sustainability framework that will be assumed and implemented by all the Group’s employees and departments in their day-to-day activities.

Background to WDFG sustainability

Following Code of Ethics training and communication, the number of allegations reported is usually higher. These have all been addressed and none have ended up having legal consequences for the Group.

Benefits and future goals A good reputation facilitates the Group’s relationship with its stakeholders. In addition, amongst other benefits, being a trusted Company improves the possibility of gaining airport concessions and operating licences, increasing sales, developing new brand partnerships, and maintaining a highly motivated and committed workforce. To monitor and improve ethical behaviour across the Company, WDFG’s internal audit department undertakes a risk assessment every year and based on the risks identified during the assessment, an audit plan is defined and then approved by the Board of Directors. The Company is constantly investigating the latest

WDFG has taken various steps to introduce environmentally responsible practices and efficiency improvements into its stores and business activities. The Group’s ECCO (Efficiency and Cost Control Optimization) project, put in place for cost reduction and the streamlining of business synergies, and the actions taken as a result of the Heathrow sustainability partnership - an initiative which unites companies from all sectors at the airport with the aim of Heathrow achieving its commitment to operate responsibly - are examples of measures taken to reduce the Group’s environmental impact, with the added benefit of cost savings. WDFG has received awards for the energy efficient refurbishment of its stores (see Green Apple awards case study in section 2.2), and indirectly for its participation in the Heathrow Sustainability partnership. As well as this, all of the Company’s UK stores are certified to ISO 14001.

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In relation to sustainability and the Group’s relationship with its closest and most vulnerable stakeholders, several actions have been taken. Significant progress has been made concerning employee benefits and in promoting career development and the empowerment of talented professionals in the Company, such as more training and internal promotions. With regards local communities, several programmes to promote local employment and contracts with local suppliers and their communities have also been implemented (see the case study of employees in Jordan in 2.2). As a reflection of its commitment to its social environment, WDFG also has initiatives in place to engage with the communities in which it operates. Combining corporate donations and employee fundraising, WDFG benefits several NGOs and charities through partnership and sponsorship agreements that support projects generally focused on the aid of children, young people, their families and their education. Next steps Moving forward, the Group’s objective is to become a reference for responsible airport retail operating. To face the challenge, WDFG will develop a specific strategy to design and implement a sustainability and CSR management framework that will guide all its future activity in these fields. The first step to this has been the analysis undertaken to prepare this report. This has allowed the Group to define its background and to identify the material aspects relevant to the Company in the context of sustainability, as well as highlighting the main areas of improvement. With this background and the areas of improvement outlined, the Group has the basis to build its strategy, which is already taking shape. It will focus on improving the efficiency of all the business processes and activities. Reducing material consumption and improving energy

efficiency will be two of the challenges faced regarding the environment, and in terms of its social strategy, the creation of a procedure to manage corporate donations, and the support of local communities will be among the objectives. Regarding its employees, the aim is to maintain a workplace in which people of all backgrounds, genders and cultures can pursue the career they wish to, and feel recognised for their work and efforts.

The Group also aims to adhere to the universally accepted UN Global Compact principles. This means aligning the Group’s strategy to these 10 human rights, labour, environmental and anticorruption principles. The Group invites everybody to get involved and be proactive in the development of the new strategy. The aim is to encourage professionals and business partners to participate by suggesting improvements and collaborating in the implementation of new initiatives, and to challenge the efficiency and performance of the current environmental and social management.

Being proactive will be the leitmotiv of WDFG’s strategy to becoming a more responsible and sustainable Company. The following chapters outline in further detail the background and future objectives of the Group’s environmental, labour and social sustainability strategy.

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2.2 Respecting the environment 2.2.1. WDFG ENVIRONMENTAL MANAGEMENT WDFG activities’ Aspects & Impacts World Duty Free Group is a retail company whose core activity consists of selling third party products in third party facilities. Its direct environmental impact is therefore low, but not insignificant. WDFG’s main environmental aspects13 are primarily associated with the consumption of energy and materials and with waste generation. Efficient management of these aspects can lower environmental impact14 to a minimum. Therefore the energy consumption produced by the Group’s stores and logistics activities, materials and fuel use, as well as packaging and other waste, are the main aspects to be considered. Head and airport offices’ energy, water and materials consumption, waste production, and emissions generated through business travel should also be taken into account. WDFG Environmental Policy To respond to the need of mitigating business impacts and guide employees’ actions in respect of this objective, the Group has developed an Environmental Policy. With this policy, World Duty Free Group’s (WDFG) Board of Directors recognises WDFG’s ongoing commitments to manage and develop its business sustainably. The Policy’s objective is to define an environmental framework to guide management and control of this area at every location and to 13

Environmental aspect: element of a facility’s activities, products, or services that can or does interact with the environment. (www.epa.gov). The relevant aspects for WDFG have been identified in the materiality analysis 14 Environmental impact: any change to the environment, whether adverse or beneficial, resulting from a facility’s activities, products, or services. (www.epa.gov)

define environmental accountabilities for Senior Executives and appointed persons within WDFG. This is to ensure legal compliance and the active management of the Group’s environmental responsibilities and impacts wherever it operates. This environmental framework has been implemented in the UK through the development of an environmental management system (EMS). The system monitors and manages all business environmental aspects and includes targets for reduction in energy use and a strategy for continual improvement. All UK stores are currently awarded with ISO 14001 environmental management system certification. The regional Health, Safety & Environmental (HSE) manager oversees the EMS. WDFG is conscious of the fact that its liabilities are not only limited to the impacts generated by its own actions. The Group is also aware of its accountabilities as an airports concessionaire and in the minimisation of the impacts generated along its supply chain. Concessionaire accountabilities As a concessionaire, WDFG believes in the importance of ensuring compliance with relevant environmental legislation and airport authorities’ requirements in every region, airport and country in which it operates. Airport contracts or tenders typically have environmental conditions related to waste management, energy efficiency and general pollution prevention measures. In recent years, in some cases, these specifications have gone further, indicating that concessionaires have the opportunity to contribute to the reduction of carbon emissions and to help governments and airports to achieve their national and corporate mitigation goals. WDFG engages pro-actively with airport partners and responds to their requirements through joint planning programmes and environmental management projects.

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One example of WDFG working in collaboration with an airport and other operators to deliver environmental improvements is the Heathrow Sustainability Partnership. WDFG, founder member of the Heathrow Sustainability Partnership (HSP) In 2009 Heathrow airport (HAL) targeted sustainability improvement and development as critical actions to achieve its carbon reduction target (34% by 2020 from 1990 base) and become Europe’s hub of choice. With 400 companies operating within its terminals, working for this challenge alone seemed impossible. The solution for this problem was the creation of the Heathrow Sustainability Partnership which consists of companies representing all sectors at the airport (including airlines, ground handlers, construction companies and retailers) working together to improve Heathrow’s sustainability.

Commitments as an operator Other than its responsibilities as an airport concessionaire, WDFG understands its commitment as a retail operator, and is conscious of the benefits of being a sustainable company. In its Environmental Policy, WDFG recognises this responsibility towards society and the environment, and builds a framework for action. Several initiatives and activities have already been undertaken in this sustainability framework to improve the Group’s environmental performance. The re-fitting of stores to the highest energy efficiency standards (cost permitting), or the optimisation of waste management and supply chain design are some examples of these initiatives that will be further explained in the following sections.

Due to their relevance to the airport community, Transport, Resources and People are the core areas of focus for HSP. The projects in action include the development of Pollution Prevention and the Energy Code of Practice. The Energy Code of Practice has been developed by an energy working group chaired by WDFG. It aims to assist the delivery of the Heathrow carbon reduction target by inviting all Heathrow employees to take action to reduce energy consumption and especially to encourage all of Heathrow's business partners at the airport to 'sign-up' to a set of agreed guidelines. Adherents have to set energy reduction targets, measure and monitor their usage and build energy management action plans to report against with HAL. As a start, HAL has replaced all energy metres with smart metres to measure usage more effectively.

In addition to these specific actions, in 2013 WDFG designed the ECCO project, a cost saving and efficiency programme which seeks continual improvement, taking into account that the key to success is to involve employees in its environmental strategy and ensuring that managers lead by example.

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Focus on Efficiency: ECCO Philosophy In 2013, the Group designed and started implementing the ECCO project. More than just a project, ECCO was designed as a new philosophy of commitment to saving and efficiency, and therefore to sustainability. The aim of this initiative was, and still is, to further drive efficiency and high performance. The key to achieving this objective and bringing the project to life has been in driving a change in attitude for the business, and involving employees across the Group has been crucial. In addition to engaging the highest levels of the organisation such as department heads and directors, the Group has also launched employees’ ECCO ideas through efficiency competitions to encourage everyone to participate in the initiative. ECCO has already achieved considerable savings and improvements, which are not only evident in the substantial cost reductions attained resulting from contract renegotiation and process optimisation, but also in its improvement of environmental performance in energy efficiency and consumption of materials. More details of these initiatives are explained the following sections of this chapter. In addition to changing its behaviour in the short term to become a more sustainable travel retailer, WDFG looks further into the future by sponsoring a research project that will allow further understanding and better addressing of the industry’s environmental impacts. The Manchester Metropolitan University doctoral research project is dedicated to understanding and measuring the impacts resulting from Travel Retail activity and subsequently suggesting improvements aimed at improving sustainability for WDFG and the industry sector.

The implications of Climate Change for the future of airport retail and the duty free sector In 2012 WDFG sponsored a three-year research doctorate in partnership with the Manchester Metropolitan University (MMU). Although CO2 emissions associated with airport retail represent a small proportion of those from the wider aviation industry, the sector nonetheless needs to evaluate its Climate Change risks and develop adaptation strategies. This study aims to investigate CO2 emissions arising directly and indirectly from the airport retail and duty free sectors and to consider alternative low carbon business models that would be appropriate for a future low carbon economy. The objective is to examine the business model and - where appropriate - seek solutions to enable the sector to adapt to Climate Change so as to maintain income, employment, meet customer expectations and wider societal concern. Key outputs of this research study include a number of reports which will identify potential new opportunities and assist in developing the Group’s future sustainability strategy. This work is due for completion in April 2015, and will comprise a key driver for WDFG’s progress in sustainability. Accountabilities within the supply chain WDFG also has responsibility beyond its own direct activities. The Group wants to ensure that suppliers of goods and services to the Group behave responsibly towards society and the environment. To ensure this, (as a minimum) the Group expects suppliers and business partners to comply with the law and with all contract conditions. WDFG also expects them to fully comply with the Ten Principles of the UN Global Compact. Additionally the Group takes sustainability KPIs into account and values best practice and innovative impact reduction initiatives in the tender selection process.

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The Group also believes that its indirect environmental impact through its brand partners is important. 13 (representing 40% of sales) of WDFG’s Top 23 brand partners in terms of sales in Europe are certified ISO 14001 and 9 (representing 30% of sales) out of the Top 23 are certified OHSAS 18001 WDFG has a Supplier Policy to manage this and other relevant contract aspects, and in the UK the supply chain department has a supplier manual to help suppliers successfully trade with the Group. The manual is a guide to WDFG’s processes in the UK supply chain and logistics functions, ensuring companies comply with all its requirements and standards. The following sections explain the initiatives already undertaken and the future objectives of the Group to address and minimise the risk of environmental impact of each of its activities’ material environmental aspects.

2.2.2. ENERGY CONSUMPTION AND EMISSIONS WDFG operational energy consumption has traditionally been high in its retail operations due to the importance of optimal in-store lighting and ambient temperature consistent with a luxury shopping experience. Refrigeration of food and beverage products, screen displays and other energy-consuming devices used in stores can increase this consumption considerably. The Group also uses energy for its offices and warehouses, and for the transport of goods. This energy consumption has an associated environmental impact. Greenhouse gas (GHG) emissions generated by its production contribute to climate change.

In recent years, awareness of its relatively high energy consumption and the derived environmental impact and costs, together with the improvement of technology and knowledge has led the Group to focus its efforts on redefining processes and re-designing premises to lower their energy requirements. Additionally, some airport contracts already require WDFG to participate in the CRC Energy Efficiency Scheme15. The largest investment in energy efficiency has been in the re-design of stores. The focus has been to substitute traditional lighting for LED and low energy bulbs on ceiling and furniture displays. Other measures such as purchasing ‘A’rated appliances such as air conditioners and fridges, or changing the differential switches to ensure minimum consumption during closing hours, have also been implemented. This energy efficiency design standard is being implemented in all new stores, and in those already operated by the Group that have been targeted for refurbishment. One example of this was the redeveloped walkthrough duty free store at Birmingham Airport which won the Champion of Champions accolade at the Green Apple Awards, 2012.

15

UK Policy committed to reduce industry, business and public sector energy demand.

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WDFG’s awards for energy reduction

communicating tips to save energy and organising ideas competitions to encourage employees to participate and feel involved.

In 2012, WDFG won the prestigious Green Apple Awards’ ‘Retail Green Champion’ and the ‘Champion of Champions’ accolades for an energy measurement and monitoring system designed to help track and reduce energy use in its stores. Energy consumption The overall electricity consumption for all WDFG’s premises in Spain and the UK from 2012 to 2014 is represented in the following figures (millions of KWh):

The case study used was the walkthrough tax and duty free store in Birmingham Airport. The 2100sqm space was 54% more energy efficient than the previous store and led to £27,000 of savings per year in energy costs. World Duty Free Group has gone on to use this model in two further store developments at Eurotunnel and Gatwick Airport. The mechanical and electrical components were designed by Rediger Ltd. Warehouses are also targeted to improve their energy efficiency and sustainability. For example, the UK Central Distribution Centre (CDC) purchases all the electricity it consumes from a renewable energy company and therefore is emissions free. More information on WDFG’s warehouses and logistics efficiency can be found in the “logistics and supply chain” section of this chapter. Employee awareness campaigns are designed and delivered to promote easy habits that avoid unnecessary energy consumption. The ECCO project promotes some of these initiatives by



UK electricity consumption only includes the period January-October 2014. Invoices for November and December were not available at the time of publication of this report. This information will be updated in the 2015 Sustainability ReportTotal Spanish KWh include mainland, Balearics and Canary Island stores, offices and warehouses; Total KWh in the UK includes stores, offices and the central warehouse.

Traditionally, the variation in electricity consumption is directly proportional to the number of square metres operated by the Group. Over the few last years however, this trend has changed; the increase in the number of KWh consumed in Spain and UK compared to the increase of the total surface of stores has been proportionally lower.

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Reductions in the energy consumption have been possible thanks to the higher efficiency of LED lighting systems, the installation of “A” rating appliances and other efficiency improvements implemented at new and refurbished stores.

CO2 emissions The CO2 emissions associated with WDFG are mainly derived from its electricity consumption at its stores, warehouses and offices and diesel used to power its logistics vehicles.

As energy and emissions reduction targets are directly related, energy efficiency initiatives will directly affect the total tons of CO2 emissions. Other sources of emissions that contribute to the Group’s carbon footprint are those derived from the fuel consumed by the logistics transport fleet in Spain, and some premises’ boilers17, as well as those associated with the volume of business travel18. These emissions have also been targeted for reduction.

The following chart shows the CO2 emissions associated with WDFG activity in Spain and UK since 2012:

Spanish data includes indirect emissions derived from its offices’, stores’ and warehouses’ electricity consumption; UK figures include electricity consumption of stores and offices (UK CDC warehouse consumption is emissions free) plus diesel consumed by its internal logistics fleet (in Spain this data is not available).

The majority of the CO2 emissions are derived from electricity consumption, hence, the figures reflect the same trends as the overall electricity consumption. Those emissions associated with diesel consumption have been very similar year on year, because fuel use has also remained similar with just a slight increase due to the higher number of stores16.

16

For more information please go to logistics section.

Some of the actions taken regarding business travel, include awareness campaigns promoted through ECCO communications, advising employees to consider alternatives to travel such as the use of virtual meetings systems 17

Total emission figures for fuel consumed by the logistics and supply chain fleet in Spain, and some boilers are not available in this 2014 report; however, these sources have been identified for monitoring and will be available in future reports. 18 WDFG could not obtain business travel emissions data for 2012 because the Group was working with a different travel agent at the time and does not have access to this information.

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(videoconference, Skype) or reducing the travel frequency by optimizing each trip. Regarding freight transport, actions include measures such as routes optimisation and collection services to use empty vehicles after delivery (these are further explained in the “logistics and supply chain” section).

2.2.3. MATERIALS In recent years, the depletion of natural resources has become a major environmental concern and one of the biggest sustainable development issues together with the overproduction of waste and climate change. In line with its commitment to sustainability, WDFG has several initiatives designed to reduce its consumption of materials. Although it does not produce goods itself, the Group consumes materials in several parts of its supply chain, from the materials used to build stores and the boxes and pallets used to transport products, to office supplies and the carrier bags given to its customers with every sale. The Group is already working on reducing its consumption of resources and looks at using construction materials that are responsibly sourced and with a low environmental impact (such as Forest Stewardship Council timber and timber derived products, or low Volatile Organic Compounds content materials).

marine ecosystem. Their environmental impact is therefore high. WDFG is active in seeking sustainable solutions to reduce its consumption of bags and it has already designed and undertaken several alternatives. In 2012, the traditional bag in Spain was changed for a fully recyclable one made of potato starch. These bags were charged to customers, and profits went to WWF for ocean environment recovery projects. Despite a large reduction in bag consumption and the waste issue being eliminated, changes in airport regulations created the business need to move to free of charge plastic bags. Early in 2013, a new bag made of 50% recycled material was used but the quality was poor and finally in 2014, the Group decided to introduce reusable bags (allowing up to 15 uses), with 25% of recycled input materials, as the official WDFG bag at every location (apart from where national legal or airport contract restrictions apply). Other solutions implemented to continue reducing the number of bags used have included advising retail staff to ask if customers need a bag, to fix a target maximum of bags per transaction, and increasing bag assortment to 3 sizes so that packaging relevant to the size of the products purchased is used with less plastic waste. Bags consumed in the UK and Spain, and the number of bags per transaction, which gives a better idea of the increase or reduction of bag use, is represented in the following charts:

Bags Of all the materials that the company uses in its activities, in recent years, bags have been the biggest focus of attention. Barely recyclable, once used bags end up either in landfills or even in the

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In Spain, this reduction has not yet been possible due to the increase in the number of employees in 2013 and 2014 and the fact that the Group has not carried out a campaign to reduce paper consumption in this country.

In the UK, the apparent increase in bags used is directly related to the increase in sales, but in reality the number of bags per transaction has not increased. The variation of the consumption of bags in Spain is directly related to the effect of the initiatives that have been implemented. Investigating alternatives to reduce the number of bags and the impact of each individual bag is an ongoing improvement objective for WDFG. Paper In terms of office materials, the reduction of paper consumption is one of our biggest challenges. During recent years, paper use has been tracked at WDFG offices in Spain and the UK. The following chart shows trends in each country.

Pallets and Cartons Regarding cartons and pallets used to transport and protect products, WDFG ensures these are reused as much as possible and therefore reduces consumption of new resources. Pallets, which have a high resistance to heavy loads, weather conditions etc., allow high repeat use until they break. In some locations, broken pallets are repaired to extend their life.

2.2.4. WASTE Together with climate change and resource scarcity, pollution caused by the amount of waste generated every day is a huge sustainability challenge. WDFG is taking action to minimise its waste production. The problem can be addressed both at its source by reducing consumption of materials (explained in the previous section) or with end-of-life measures, by segregating and ensuring appropriate waste treatment.

WDFG UK has a 10% reduction target year on year for its paper consumption. This goal has been achieved over time due to awareness campaigns such as ECCO and other best practice communications. These include tips to reduce the amount of paper used such as printing double sided, avoiding printing of the legal text on the bottom of emails, and encouraging people only to print when necessary.

WDFG works with brand partners to reduce the amount of excess packaging entering the waste stream and thus to address the problem at its source. Regarding end-of–life solutions, the UK business has a policy of sending no waste to landfill. This objective is achieved by ensuring that all the waste generated at WDFG UK premises and sent back to the Central Distribution Centre (CDC) for

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processing (this applies to the majority of UK waste) is recycled as much as possible with the remainder going to energy recovery. In 2014, 100% of waste in the UK was either recycled or used to generate energy.

contractors are still required to handle it correctly. Other than these measures, WDFG has a waste production prevention plan at some airports and in Spain, the Group adheres to guidelines given by Ecoembes19, a national waste management organisation that ensures that all packaging waste is collected, recycled and recovered. ECCO awareness campaigns are also delivered to remind employees to segregate waste.

2.2.5. LOGISTICS *Other waste includes printer cartidges, metal and electrical waste.

** Hazardous Waste (*) Includes 0,016 tons of batteries (1) 2012 information is not available (2) 2014 Information is not yet available. It will be available for the 2015 Sustainability Report

The majority of WDFG waste comes from cardboard boxes. Due to increased awareness of the issue, the amount of cardboard waste has not increased in 2014 despite sales (and therefore consumption of boxes) being higher. In the case of construction waste, contractors are in charge of correct segregation and disposal. WDFG contract conditions require them to segregate waste into general, gypsum and COSHH for treatment and recycling, and to use licensed waste management companies to dispose of it. Occasionally the airport disposes waste, but

Logistics activities currently have an associated environmental impact. For WDFG, the transport of goods from suppliers’ warehouses to the Group’s distribution platforms and on to the stores’ shelves requires a permanent transport fleet and several warehouses to achieve efficient product distribution. The supply chain has to ensure optimum on-shelf availability, allowing the business to minimise stock investment as well as economic and environmental costs. WDFG has its own transport fleet in the UK and several warehouses in UK and Spain to store supplier products and subsequently distribute them between airport stores. In Spain, most of the transport is provided by a national logistics company chosen for its strong efficiency record. Several measures have been implemented to reduce environmental impact in the supply chain, some already mentioned in this report. Internal fleet WDFG’s own delivery vehicles are fitted to Euro 5 and 6 engine standards, the highest grades regarding low emissions currently on the market. Measures are taken to minimise fuel consumption and derived emissions by optimising transport shifts and routes. For example, vehicles returning from their airport delivery use the 19

http://www.ecoembes.com

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“backhaul” trip to collect products and thereby avoid empty running, and reduce the routes required to pick up suppliers’ products. In 2011, WDFG was awarded with the Supply Chain Team of the Year prize at the Retail Week Supply Chain Awards for its efficient and agile end to end supply chain. In the UK, fuel consumption of its transport fleet is also tracked year on year:

The slightly higher diesel consumption in 2014 is due to the increase in the number and size of several concessions (LHR T2 opening, Stansted has doubled in size, and Glasgow & East Midlands have also increased their commercial area) in the UK. The increase in miles driven however is partially offset by improvements implemented in the defined routes.

as much as possible and all the waste generated in the UK is segregated for recycling or energy recovery (in Spain the recycling rate is also close to 100%).

Notable initiatives in other countries: Helsinki Tiilitie Logistics warehouse WDFG has a concession contract for supply chain and logistics at the Helsinki Tiilitie warehouse that holds a silver rating LEED (Leadership in Energy and Environmental Design) certificate for its sustainable building design and construction. The warehouse stands out for its optimised energy performance, its innovative wastewater technologies, its low emitting and fuel efficient vehicles transport fleet, and its construction best practice regarding use of regional materials and waste management. Its good location, which makes it accessible by public transport and to cyclists, is also a valuable feature of this working centre.

Warehouses An effective warehouse network is also vital to optimise logistics management. WDFG operates with around 1200 suppliers in 28 countries, so the need for a strong connection between stock and shops is vital. The Group has a Global Distribution Centre (DC) in Barcelona and country Distribution Centres in each major country (plus three extra third party regional consolidation centres to provide flexible routes for suppliers). Country DC’s then deliver to airport stores on a daily basis. Reducing energy usage and consumption of materials in warehouses is therefore another important area of focus. As mentioned in the materials section, pallets and cartons are reused

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2.2.6. FUTURE PERSPECTIVE WDFG’s aim is to continue working on the improvement of its environmental performance and reduce its impact to the minimum possible. Beginning with the cross pollination of best practice between all countries in which it operates, and continuing to investigate new sustainable options to implement innovative strategies, WDFG aims to become a benchmark in sustainability for the Travel Retail Industry.

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2.3. Our team: The key to our success World Duty Free Group’s employees are its most valuable asset. The Group believes that its workforce is the engine that powers the company and therefore that their wellbeing is essential to the Group’s wellbeing. For this reason the Group’s objective is to be an employer of choice, attracting and maintaining talent through offering a good work-life balance, career development and a good working environment. This chapter explains how the Group currently manages this and the initiatives it has in place to keep improving employee engagement. WDFG’s workforce: employee trends and contract types The total workforce across Spain and UK20 has increased over the 2012-2014 period.

Over 90% of the Group’s employees are recruited on a permanent contract basis and the rest of the staff is hired on a temporary basis to cover the seasonal traffic peaks at the airport. The Group endeavours to hire the same people to cover the peak season each year.

2.3.1. WORKFORCE BALANCE AND DIVERSITY Progress has been made towards equal opportunities in the 21st century, however there is still room for improvement. Discrimination has been and still is an important social and corporate issue, especially (but not exclusively) in developing countries. Many locations in which the Group operates still pose a risk to guarantee the equality and the freedom of citizens, regardless of their race, gender, sexual orientation, political views, religion or age. The Group’s policy is to provide equal employment conditions to all its employees. The Company respects the local laws of each country where it operates, and rejects any type of child or forced labour, with recruitment procedures in place to ensure this never happens at any location. Employment offers are only made once the relevant checks21 have been confirmed. WDFG offers total transparency to its stakeholders around non-discrimination and the importance that diversity has for the business. In fact, the nature of the business makes employee diversity a key feature of WDFG due to the similarly diverse profile of the passengers which pass though its stores. WDFG has a policy that sets the guidelines to manage and ensure equal opportunities at all stages of the recruitment and internal promotion process across the entire Group22. The policy states that recruitment is based exclusively on 21 WDFG conducts reference checks, security checks and also assess state of health before job offer is confirmed.

20

The figures on this chapter give information about the workforce structure at the UK and Spain (the scope for the specific disclose of this report).

22

For the Senior Executive WDFG has a different recruitment policy which also ensures equal opportunities for candidates regardless of their age, gender, nationality, religion, etc..

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the candidate’s suitability to carry out the relevant job role, based on individual merit and qualifications, experience and skill-set. This means that employees are selected without taking age, gender, gender reassignment, sexual orientation, marital or civil partnership status, pregnancy, colour, race, nationality, ethnic origin or religious or beliefs into account. Those who are members of a trade union or people with a disability are also granted the same opportunities23. WDFG complies with all relevant disability laws and regulations. WDFG believes it is important that all employees begin their career at the Company in a positive and supportive environment. The Group is conscious of the benefits of a thorough induction to the integration of a new employee. The Group adapts each induction to the background and needs of each new member of staff, not only to help them to become productive as promptly as possible, but also to make them feel valued as an individual and integrated and engaged in their new working environment. In the UK, every new hire is provided with an employee handbook, which contains all the practical information they need (information about the company, their rights and obligations, etc.). Every employee in Spain and UK is also provided with the Group’s policy pack, to help familiarise them with the Group’s values, standards and requirements. WDFG conducts regular compliance audits to ensure that company policies and procedures are followed, which includes ensuring that human rights policies are adhered to.

Women who work for WDFG in Spain and the UK represent 70% and 63% of the total workforce respectively. Gender throughout the different levels of the Company WDFG has five employee categories, which each employee fits into depending on their responsibilities and their location. Levels A,B and C are for Headquarter (HQ) employees and D and E are for sales and operations (store based) staff:

• Category A: HQ Heads and Directors; • Category B: HQ Administration & Professional; • Category C: HQ Junior; • Category D: Sales & Operations Managers; • Category E: Sales & Operations Staff Gender diversity by category and on the WDFG Board of Directors, is as follows:

% of male and females by employment category

The following figures give a picture of the gender and age diversity and balance in WDFG. Workforce by gender 23

Unless it is clear that the candidate is unable to perform a duty that is intrinsic to the role, once reasonable adjustments have been made by the Company.

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Key statistics of the WDF S.p.A. Board members

between 30 and 50 years, however there is also a large number of employees under 30.

Workforce by age and gender (Spain and UK)

In categories B to E there are more women than men, a trend which changes in the senior management categories and on the Board of Directors. WDFG is committed to bridging this gap with the aim of levelling out gender balance throughout the different levels of hierarchy. Equal remuneration

These figures aside, the current trend in the Group is to hire people under age 30, with a higher number of females among new recruits.

Equal remuneration by gender is also important to WDFG and the Group is proactive in achieving this. The Group has established pay rates for the different job levels which means that there is little difference between salaries24 for people with similar responsibilities and job roles and this that they are not influenced by gender. Proof of this is that the remuneration ratio (female to male) is close to 1 in Spain and the UK for all employee categories:

This age diversity is key to combining the business experience of those who have had a longer professional career and the fresh knowledge and ideas of the younger employees that have finished their academic degrees more recently. Grievance procedures

Workforce by age and gender Diversity can also be assessed by looking at employee age. The figures below show that the majority of the Group’s current workforce is aged 24

If an employee believes that the Group is not implementing its diversity policy as expected, or that they or a colleague of theirs is not being given equal treatment, or has any other complaint regarding their employment, WDFG has a grievance procedure (tailored as relevant to each location) to allow them raise such concerns.

in Spain salaries are regulated by the collective agreement which is negotiated every 4 years

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In the UK, the employee handbook explains the procedure to report a grievance. Depending on the circumstances, grievances can be raised informally with line managers or a member of the HR team, or sent as a formal grievance in writing if the matter is not concluded satisfactorily or within a reasonable time span. The number of formal grievances received in Spain and UK over the last few years is detailed in the following table: Grievances received and resolved by year (Spain & UK)

Year Nº of grievances received Nº of grievances resolved

2012

2013

2014

25

27

32

25

27

32

Typically grievances are raised concerning matters either relating to recruitment and internal promotions or job moves, performance management issues or issues relating to employee contract terms. All grievances received are addressed and resolved. No incidents of discrimination occurred in WDFG during the 2012-2014 reporting period. Freedom of Agreements

Association

and

Collective

WDFG respects legally recognised unions and internal forums created to represent their employees’ interests. The Company’s policy on collective agreements is tailored to each location in which it operates, as each location is subject to its own specific laws and regulations.

WDFG in Spain has a collective agreement in place that covers all employees in that location except the senior management. The agreement is negotiated between the Company and a committee made up of employee representatives and labour union members and outlines conditions such as salary, holiday days and health and safety in the workplace, among other human resources related matters. In the UK, WDFG has an employee forum - ‘Voice’ - made up of staff representatives. This forum was created as a partnership between WDFG management and employees to influence and communicate business change.

2.3.2.BEING A RESPONSIBLE EMPLOYER For World Duty Free Group, being a responsible employer means being concerned with employee welfare and motivation, as well as being proactive in achieving this. Designing effective strategies and procedures that achieve a high level of satisfaction is key to being considered a good employer, and WDFG manages this through its Human Resources (HR) strategy, with the objective of making employees feel safe and motivated in their jobs, and proud of being part of the Group. The HR policy also covers non-discrimination and equal opportunities as mentioned previously, as well as addressing topics such as health and safety, work-life balance, freedom of association and internal communications.

Health & Safety at work Health and safety (H&S) in the workplace is essential to ensure employee welfare. WDFG strives to achieve the highest occupational H&S standards and actively encourages compliance across the whole Group and among all its business partners and sub-contractors.

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WDFG has a Health and Safety Policy that sets the Group’s standards framework and defines the Senior Executives and appointed persons responsible for each item.

The framework, which aims to build a culture of H&S at every location, states that WDFG will always try to adhere to the following principles amongst others:

All UK sites are certified OHSAS 18001, which requires a strict control of H&S risks and continual improvement in H&S management in the workplace. In Spain there is a Labour Risk Prevention System in place, as well as different H&S management procedures with the same objectives. The following table shows a breakdown of the number of Health and Safety incidents by type which occurred in Spain and UK in the last three years:

• Adherence

to global, state and local H&S legislation and any other requirements • Workplaces as safe and hazard-free spaces • That employees have the necessary skills and training to perform their duties • That employees have been informed of the contents of the policy • That all the elements and protective equipment required for employees to carry out their job safely have been provided • That the Group has procedures in place in case of emergency The way in which this H&S framework is implemented is explained in further detail throughout the document. The Group relies upon all stakeholders, both internal and external to play their part in implementing the H&S policy. The Group has Health and Safety Committees at every relevant location25. Their mission is to represent employees regarding occupational health and safety by monitoring, collecting feedback and advising on H&S matters. All employees in Spain and the UK are represented by a H&S committee, and in Spain in addition to this, those covered by the collective agreement are also represented by Union Delegates.

Type Of Event* RIDDOR** Lost Time Minor Ill Health Major Incident RTA*** Incident Near Miss

2012 16 NDA 29 NDA NDA NDA NDA NDA

2013 15 9 367 44 3 0 40 14

2014 15 4 424 43 1 1 42 37

Grand Total

423

492

567

(*)Incidents happened on the way to work are not included. (**) RIDDOR Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (***) RTA Road Traffic Accidents. NDA: No data available for 2012 detailed breakdown is not available.

Ensuring a good work-life balance WDFG understands that having highly satisfied and productive employees is not only the result of good personnel management. The Group is also committed to ensuring a good work-life balance for its employees. WDFG offers a wide range of shift patterns to suit both the Group’s operational requirements and individual needs. About one third of employees have a part time contract:

25

These include sites with more than 50 employees. For those with fewer than 50 employees, the Prevention Officer takes on the role of the Committee

51

The following table shows the ratio between the minimum wage offered by WDFG in Spain and UK and the minimum statutory or average entry wage. WDFG salaries are always above those taken as references. Ratio of the entry level wage Spain UK M F M F 1.2:1.0 1.2:1.0 1.3 : 1.0 1.3 : 1.0 Additionally, the Group has a Flexible Working Policy that defines the cases in which further flexible working arrangements may be allowed for a greater work-life balance (considering individual job criteria and impact on others within the team). Each application is considered on an individual basis. This is beneficial to both parties, allowing professionals to manage work and their personal life without stress or guilt, and making them feel trusted and valued as individuals. As a result, they feel motivated which in turn benefits the business, as happy employees are more likely to be productive and loyal. Flexible working conditions also help the Group to be an employer of choice for talented and experienced individuals that may not be able to work standard full-time hours. The Group investigates and implements new ways to add further flexibility to the workplace, providing that they are practical solutions that bring added value to the business.

Salary and Benefits Contract conditions such as base pay and employee benefits always comply at least with the statutory minimum; employees are treated equally regardless of gender26. In several locations, these conditions are regulated through collective agreements.

26

This is further explained in the section on workforce diversity

Ratio of Entry level wage UK: compares Heathrow Customer Service Assistant wage in Sep 2014 to UK national minimum wage in Oct 2014 Ratio of Entry level wage Spain: is benchmarked against an entry level retail role.

Apart from salary provisions, WDFG offers a range of benefits that improve employee welfare, increasing morale and giving peace of mind and security. In Spain and the UK, life insurance is offered to every employee and additionally in the UK the Group operates a pension contribution plan27 for all active employees. Senior management employees in mainland Spain are also provided with a pension plan and further to this, Canariensis (the Group’s Canary Island operations) offers a pension plan scheme to all its employees. WDFG has recently introduced a new employee benefit in the UK: the Employee Assistance Programme. This is a new wellbeing service which offers support, information, expert advice and even specialist counselling to help employees deal with life’s milestones and unexpected events. This initiative will be extended across Europe retail operations 27

The Group holds no retirement contribution liabilities with the current pension plan in the UK as this is contributed by each individual on a monthly basis through payroll. In the case of some long-serving employees who still benefit from a previous pension plan, the Group is still liable to the value of 11,904 (thousand Euros).

52

during the course of 2015-2016 to enhance the benefits offered in these countries.

Communication and engagement

In Spain, in addition to the annual medical check available to employees as required by law, additional gynaecological and urological checks are also offered to every employee. In the UK, employees have the opportunity to get private medical insurance. In both Spain and the UK, members of senior management are given private healthcare insurance. Employees are entitled to take minimum statutory parental leave as regulated by local law. Moreover, the different location agreements, such as the collective agreement in Spain or the employee handbook in UK, state additional leave permitted in each region. Both in Spain and UK, the Group has a range of voluntary benefits such as childcare vouchers, cycle to work scheme and discounts with local companies such as gyms or physiotherapists, etc. Finally, both in Spain and the UK, a Phantom Stock Option plan is provided to selected senior managers. WDFG plans to develop a suite of employee benefits called “Worklife Plus”. These packages aim to enhance the employees’ understanding of their benefits and also improve employee engagement. The objective is to roll this initiative out across all WDFG European countries from 2015.

Internal Communication is the main tool that a company has to build a good relationship with its employees and share its mission, vision and values with them. Communication helps the business to strengthen its employees’ feelings of pride and belonging to the Company and therefore their engagement with the Group. For WDFG, employee engagement is extremely important. Studies show that an engaged workforce is key to sustaining competitive advantage and accelerated business performance, leading to improved financial results, increased customer satisfaction and higher employee retention. To gain a high level of engagement, communication needs to be clear, transparent, bi-directional and aligned with the Group’s strategy. Dialogue should be regular, open, clear, constructive and a balance between sending and receiving information should be achieved to ensure that employees are listened to and their concerns raised.

For the 2015-2017 period, WDFG will strive to develop new reward mechanisms to ensure talented personnel are attracted to the Company and to enable talent retention.

53

The Group has developed various communication and dialogue tools28, such as the Group’s online intranet (LINK online) launched in 2014, their internal magazine available in print and digital versions and several face-to-face conferences and meetings.

82% of the employees carried out the survey, a very high participation rate, and the results showed a high level of staff engagement (84%), higher than the sector average. The survey also identified that WDFG professionals are conscious of what the Group expects of them and believe that the Company makes good use of their skills and abilities. However, they felt this should be better recognised and would like the Company to demonstrate how their opinions count. Conscious of the importance of taking action on this employee feedback, the Group’s 2014 HR strategy focused on improving the areas which employees had given the lowest rating, involving all those with a management role in the implementation of measures to raise engagement and satisfaction levels. WDFG also undertakes periodical surveys to assess employees’ level of engagement and satisfaction, measuring employee commitment to its goals and values. An outstanding example of this, is the Global engagement survey.

WDFG Global engagement survey In 2012-2013, the first Global engagement survey called “LINKed” was undertaken. It was the first time that a WDFG survey included all employees worldwide. The survey aimed to discover the Group’s strengths and its areas of improvement from an internal perspective, to identify where efforts should be focused in the future and set the framework for a new strategy. 28

For more information please see section 2.1

This survey will be carried out again in the 20152017 period. The Group communicates operational changes with the notice period established at each location, which may vary depending on the type of communication and the number of people affected.

2.3.3. INVESTING IN ITS TALENT Qualified and engaged employees are essential to defining good strategies, efficient operations, offering outstanding customer service and in general carrying out the Group’s activities successfully. For this reason, the Group is fully committed to empowering its internal talent at all levels and is constantly seeking to give employees

54

opportunities to grow and develop successful careers within the Company. Setting the development scene: Progressme To align employees with the Group’s values and corporate objectives and to generate common expectations for personal performance, WDFG has created progressme, a flexible and simple Global Competency Framework. This framework defines 6 main principles that WDFG professionals need to follow to work in line with the Group’s philosophy: 1. The foundation theme of the framework is One Group Vision and a Global Business.

Training To encourage internal development and knowhow, WDFG has a training programme that apart from including general health and safety, policy pack and other basic training required by law29, has specific courses customised for employees depending on their role. The objective is to build employee excellence across the Group which is relevant to their job role. Examples of these training courses are the multiple customer service programmes delivered across all the WDFG locations in order to develop and deliver a strong and consistent customer service proposition, or the retail talent and trainee leader schemes delivered in retail operations as part of succession planning.

2. Great importance is placed on Customer Dedication. 3. Commercial Innovation and activity - Making it Happen. 4. And, at the heart of all of this, WDFG People who have the abilities and qualities to perform in line with this framework. The framework also enables employees and managers to have open, objective and constructive discussions about careers and development. The Group has several systems to promote and manage employee training and development within the progressme framework.

Training hours per employee at WDFG30 Country 2012 2013 2014 Spain 6.26 11.02 9.17 UK 6.75 7.35 9.9 Longer-term career development qualifications (masters degrees, chartered qualifications, etc.) are also sponsored by the Group for those employees who excel in their job role and when the certification is aligned with the needs of the business and the skills required by the employee’s job role. There is a Study Policy that states the eligibility conditions and requirements to be entitled to this support. 29

An example is the security surveillance staff qualification training that WDFG gives to all its security staff 30 The training hours provided is the total number of hours divided by the total number of employees rather than by the number of people that received training.

55

The Group also has a Language Learning Support Policy to enable employees to work across multiple locations where different languages are spoken and where customer service requires it. This policy sets the process to be followed by the Group’s staff who are entitled to language learning and details the different courses offered on an individual basis depending on the employee’s needs, level and position in the company. To allow employees to plan and track their training, the Group has a learning management system called Developme. This tool contains information on all the training available, allows employees to search and book the training courses in which they would like to participate, to record the training they have completed in-house and externally, send automatic reminders, etc.

Moreover as part of the Group’s training and succession strategy, World Duty Free Group offers those employees seeking international experience and to advance their career within the Group, the opportunity to participate in the International Talent Programme. This programme is the best way to develop internal talent, giving participants a managerial role at an international location for a period of time and even to rotate between different locations. This gives them unique company expertise and the flexibility to adapt to different locations and cultures, as well as promoting internal talent and loyalty. Several employees have already taken part in this Talent Programme and these are now progressing to roles with more responsibility thanks to the skills and knowledge obtained. WDFG will keep seeking new opportunities to develop an effective organisation of high

performing individuals, with a specific focus on delivering first class customer service experience. Performance review WDFG also has a performance management system called Prepareme to define employee Personal Development Plans and measure achievements against targets. This tool helps professionals to set their objectives for the year, define the necessary actions to achieve them, the KPIs to track them and establishes the times for periodical self-reviews and performance meetings with their managers, which are required to follow up on the individual’s objectives along the year. WDFG asks its employees to ensure all their objectives are SMART (Specific, Measurable, Actionable, Realistic and Timely). Objectives are approved by managers and Mid and End of Year reviews are held between employees and their managers to assess the progress and delivery of the different targets and update the objectives if required. Apart from individual objectives reviews, all WDFG employees are also assessed against their progressme capabilities (Global Competency Framework principles). Each employee is expected to demonstrate behaviour and performance against each of the six competencies up to a certain level according to their category grade and relevance to their role.

Employees’ Grades at WDFG

After each Mid and End of Year Review, employees are scored with a performance rating which takes into account what employees have achieved against their objectives and how they have achieved it.

56

Employee participation in career performance reviews Year LABOUR

Unit

Scope

2012

2013(*)

2014

Spain

158*

532

UK

350*

175 652 (retail mgt. & HQ)*

Career performance and reviews Spain UK

Nº of employees

678

• 2013 For the first time included Retail CSLs and managers in the UK.

WDFG aims to recognise and reward positive behaviour and good performance.

tool will allow WDFG employees and teams to make connections across the Group, facilitating the transfer of know-how between different teams and countries. With the GTS, WDFG aims to centralise all its career development tools, ensuring that appropriate frameworks and support are in place to facilitate the development and nurturing of global talent and enable management succession in all retail operations.

The Group’s objective for the 2015-2017 period is to increase the number of employees who participate in the annual performance review. Global Talent System (GTS) The most important milestone in 2014 regarding employee training and development has been the design and launch of the Global Talent System, a new online ‘one stop shop’ portal that integrates all the Group’s provisions dedicated to managing employee development.

The GTS integrates the already operative Developme and Progessme tools, which became available through this portal from the 2014 Midyear appraisal and will also introduce two new tools, discoverme and myprofile, which will be available in 2015. These two platforms will further the management of employee career development: 

Discoverme will allow employees to plan their next career move within World Duty Free Group. Myprofile will centralise a global World Duty Free Group CV network, where employees will be able to create and update their profile with their skills and experience which will provide a valuable resource for colleagues searching for someone with those abilities. This new online

57

2.4 Getting involved in the Community Community engagement is a major part of World Duty Free Group’s commitment to sustainability and is carried out in two principal ways: 



Having a positive impact in the local communities in which it operates, both by supporting the local economy and by promoting employment policies that favour the local community. Supporting charitable partnerships, which have a wider impact on society.

2.4.1. ENCOURAGING LOCAL COMMUNITY DEVELOPMENT Thanks to World Duty Free Group’s wide and varied geographical reach, the Group understands the nuances of different cultures and is expert in operating in line with the requirements of each location, usually conditioned by regional economic development, cultural background and the environment. The Group is committed to the local community at each location where it operates and aims to have a positive impact in the region by actively contributing to the surrounding area. As part of this approach, World Duty Free Group hires local staff and purchases goods from local suppliers when possible. In all locations, WDFG’s recruitment process is done through the local labour market31. Moreover, when the Group wins a new concession, it maintains staff from the previous retail operator. Apart from the jobs that WDFG generates directly, the Group contributes to the development of the local markets where it operates through the procurement of services 31

Excluding some cases such as country managers from the international talent programme explained in previous chapters.

and products from local brand partners, distributors and suppliers. This means not only purchasing goods from well-established local brand partners, but also buying crafts, souvenirs, food and beverages on a smaller scale from local manufacturers and hiring local companies to provide transport and construction services amongst others. In 2014, WDFG UK purchased £173m of goods from nationally-based brand partners, representing almost half of the total purchases that year. WDFG Spain purchased around €84m of products from local suppliers during the same period. Percentage of procurement budget of key locations spent on local suppliers Company 2012 2013 2014 WDFG Spain SA

33%

29%

26%

WDFG UK Ltd

49%

48%

47%

Percentages based on the country of the suppliers’ invoice to WDFG

One good example of how the Group champions local development is the Canary Islands operation. There, WDFG operates a joint venture under the name Canariensis, in partnership with a local retailer. Other similar cases involving working with local operators would be those of the Company’s operations in India or Saudi Arabia where WDFG operates joint ventures with local partners. Through these agreements, WDFG shares its retail know-how and its business development expertise with these operators, getting involved in and bringing value to the local market. In addition, the Company carries out employee training at each location. Through different courses and programmes, WDFG contributes to the enhancement of the skills and knowledge of the local professional community and with its aim to grow, may even improve local employment opportunities for the future. These activities therefore contribute to the development of local markets, which is especially

58

important in the case of developing countries where the investment of solid international companies is an important source of income, economic development, modernisation and employment.

2.4.2. COMMUNITY SUPPORT World Duty Free Group also engages with the community in many of the regions in which it operates through charitable partnerships. The principal (but not exclusive) focus of its support is to the aid of disadvantaged children, young people and their families and to promote their education. The Group uses a combination of corporate donations and employee fundraising to benefit a number of non-profit organisations and community projects and encourages its employees to work as active members at regional and local levels. The Group closely follows all of the community projects which it supports and urges its employees to get involved by organising and participating in fundraising events and in some cases even giving the committed volunteers the opportunity to visit the community projects supported in situ. All of the organisations which WDFG supports provide periodic reports in order for the Company to maintain clarity on the destination of every donation and ensure that they are having a positive effect. In every case, the Group complies with the local laws that regulate community support activities. Currently, each project is coordinated by a different WDFG office. This is due to the fact that the different NGOs and charities sponsored are based in the different countries where WDFG operates. One of the 2015-2017 objectives of the Corporate Social Responsibility department is to prepare a single policy that will coordinate and control the whole Group’s community support activity. It will set a common approach for project selection and follow up on these, as well as offering a model partnership agreement and fundraising ideas to facilitate the community support process, make it more

streamlined and share best practise across the globe. The non-profit making organisations which the Group currently collaborates with are (in alphabetical order):

•

FUNDACIÓN IBEROAMERICANA DOWN 21. Since 2001, World Duty Free Group has sponsored the website Canal Down21, the main communication channel of this foundation. This website creates a network of foundations, associations, schools, universities, hospitals and other bodies that work together in the study, teaching, development and research of people with Down syndrome. Their main aim is to improve information and education in areas of professional, family, and institutional concern, to promote the care and social inclusion of people with Down syndrome. The website has general information for the public and online forums, books and blogs so that relatives, specialists and teachers can keep up-to-date with information about the latest advances in the treatment of people with this disorder. The ongoing partnership with WDFG has helped the organisation to expand beyond Spanish borders and become a reference for other Spanish speaking countries as one of the most widely-used Spanish speaking forums for the understanding of Down syndrome. WDFG donated 45 thousand Euros to this organisation in 2014.

59

•

FUNDACIÓN XALEY More than 50% of the population is below the age of 18, one in three children do not go to school, 25% of children under five years old are undernourished. This is the situation in Senegal. Fundación Xaley is a Spanish NGO that seeks to improve the conditions and promote the education of the most vulnerable young children in this African country. Senegal has a high rate of street children and youth who do not attend school in order to work to help their families from a very young age. The foundation’s task is to fight for the rights of these children by offering them better living conditions, access to health care, drinking water and training to develop their abilities. This will allow them to strive for a better life with dignity, in an environment that respects their rights and their culture. Xaley works with child and youth worker associations in the cities of St. Louis, Thies, Louga and Duribel. Its 2013-2015 programme focuses on two main projects:  ‘Children and young workers as actors of change’, which strives to build strong relationships between the youth workers and their communities so that the youth workers become the engine to support their communities, promote the benefits of children’s schooling and offer assistance to those who have been victims of abuse.  ‘The micro-credit’ programme, which aims to create or support 350 small businesses run by young entrepreneurs, 90% of which are girls.

•

THE ONE FOUNDATION. Water for water. One of the biggest problems on earth is the lack of access to fresh water. A UN report published in 2013 estimated that over a billion people around the world do not have access to clean drinking water. In developing countries, some three million people die prematurely each year because of illnesses contracted from poor quality water, drainage and hygiene. The founder of The One Foundation, Duncan Goose, set up the bottled water brand ‘One Water’ in 2005 to help those who live this situation every day. All profits generated from the sale of this water are donated to the construction of infrastructure to provide SubSaharan African regions with drinking water. In 2006 WDFG began to work with The One Foundation. By selling ’One’ branded water bottles and reusable jute bags in its UK stores, the Group has helped to raise over £1.5 million to fund clean water and nutrition projects in subSaharan Africa regions.

60

beneficiary of employee-driven fundraising for that region. The objective is to raise £150,000 over two years to help maintain 650 support centres that allow these families to meet with each other and have contact with people in the same situation.

In 2014, World Duty Free Group was recognised at an event held at 10 Downing Street for its contribution to The One Foundation with the ‘Marco Longari Award for Changing Lives’.

The organisation relies on voluntary donations. Apart from the family support centres, the organisation has support staff in hospitals and in the community and a helpline to attend families in desperate situations.

WDFG has also engaged its employees with ‘One Water’ and raised awareness on the problems originating from water scarcity by organising insight trips to allow employees committed to the sale of One bottled water in its UK stores to see the projects first hand.

One of the winners of a trip to Malawi to learn first hand about the drinking water projects

WDFG has financed 116 water projects in 4 different sub-Saharan countries, changing over 333,000 lives.

•

RAINBOW TRUST This charity is committed to offering emotional and practical support to children with a life-threatening or terminal illness and to their families. It currently supports around 12,000 families a year. World Duty Free Group started to collaborate with the Rainbow Trust in 2013, following a nomination and vote involving all UK employees in which this organisation was selected as the

WDFG believes that every child has the right to feel protected and supported, no matter where they are in the world. Several fundraising events such as half marathons, 10k and Santa dash runs, skydives and manager apprentice challenges amongst others, have been organised by the employees across the different WDFG UK regions to raise money to support these children and their families. The Group has raised £123,000 since January 2013.

Several activities are already programmed for 2015 and WDFG employees look forward to

61

continuing their collaboration with Rainbow Trust.

•

TOUCHSTONE FAMILY ASSOCIATION WDFG also supports the Touchstone Family Association through its Vancouver operation. This association is non-profit, community-based social service agency whose aim is to preserve and enhance family relationships which have been affected by times of financial crisis. Since 2012, the WDFG Vancouver team has raised $47,000 to support the agency’s programmes such as the ‘Front Porch’ programme, an initiative that provides barrier-free counselling and support to offer solutions to families before their issues become unmanageable.

62

Indicators and methodology 3.1. Summary of indicators table General Disclosure Year GENERAL DISCLOSURE Scale of the organization Number of employees Number of operations Net Sales (Revenue) Debt Equity

Unit

Scope

2014

GRI indicator

Nº of employees Nº of locations millions of € millions of € millions of €

GROUP GROUP GROUP GROUP GROUP

9642 104 2.406.6 969.5 486.6

G4-9

Year GENERAL DISCLOSURE

Unit

Scope

2012

2013

2014

Spain

575

601

625

Spain

1081

1170

1123

UK

937

932

985

UK

1053

1016

1098

GRI indicator

Type of contract (Part/Full Time): by gender No of employees with a full time contract Male in Spain Female in Spain Male UK

Nº employees

Female UK No of employees with a part time contract Male in Spain Female in Spain Male UK

Nº employees

Female UK

G4-10 Spain

56

68

98

Spain

433

467

606

UK

331

335

376

UK

1155

1177

1210

Year GENERAL DISCLOSURE

Unit

Scope

2012

2013

2014

Male in Spain

Spain

531

553

604

Female in Spain

Spain

1299

1310

1393

Male UK

UK

1234

1241

1340

Female UK

UK

2126

2128

2264

GRI indicator

Type of contract (Perm/Temp): by gender No of employees with a Permanent contract G4-10

63

No of employees with a temporary contract Male in Spain

Spain

100

116

119

Female in Spain

Spain

215

327

336

Male UK

UK

34

26

21

Female UK

UK

82

65

44

Year GENERAL DISCLOSURE Unit Scope Nº of employees GLOBAL GROUP by gender UK Male UK Female Spain Male Spain Female Peru Male Peru Female Chile Male Chile Female Mexico Male Mexico Female Curaco Male Curaco Female Jamaica Male Jamaica Female Italy Male Italy Female Sri Lanka Male Sri Lanka Female Kuwait Male Kuwait Female Jordan Male Jordan Female Cape Verde Male Cape Verde Female Germany Male (*) GermanyFemale (*) Brasil Male Brasil Female Vancouver Male Vancouver Female Stanford (US) Male Stanford (US) Female US Male US Female Finland Male Finland Female (*) Gender Breakdown was not available for Germany

2012

2013

2014

GRI indicator

1268 2208 631 1514 66 116 52 148 102 134 5 23 5 27 17 16 186 54 44 69 131 67 6 6 NDA NDA 0 0 75 121 2 13 0 0 0 0

1267 2193 669 1637 70 129 58 141 112 134 3 26 5 32 15 8 181 58 49 59 140 73 7 5 NDA NDA 0 2 79 136 2 13 365 939 0 0

1361 2308 723 1729 84 152 84 153 133 154 2 31 31 61 14 8 145 57 46 57 157 87 7 5 NDA NDA 4 5 96 198 5 15 365 939 40 130

G4-10

64

Year GENERAL DISCLOSURE Nº of employees covered by collective bargaining agreements

Unit

Scope

Nº of employees

Europe

2012

2013

2014

GRI indicator

2300

G4-11

2014

GRI indicator

Economic Year ECONOMIC Direct economic value generated Revenues (Net Sales) Other operating income Financial income Impairment losses on financial assets Economic value distributed Suppliers and goods Leases, rentals, concessions and royalties Other operating expense (excluding the provisions for risks, net or releases) Personnel expense Depreciation, amortization Impairment losses on property, plant and equipment and intangible assets Financial expenses Income tax Profit of the year attributable to owners of the parent Profit of the year attributable to noncontrolling interests Economic value retained Provisions (for risks, net or releases) Reserves

Unit

(€K)

Scope

2012

2013

2.031.241

2.117.335

2.001.973 26.607 817

2.078.477 26.016 10.801

1.844

2.041

2.023.778 819.989

2.116.419 847.711

615.470

657.459

117.431

122.758

205.891 112.379

220.810 90.708

2.406.600 33

0

279

GROUP

G4-EC1 287

569

19290 30029

45060 20469

55500

100.727

105.826

g

2285

5049

7463

916

7.463

916

0

0

0

0

65

Year ECONOMIC

Unit

Scope

2012

2013

2014

GRI indicator

Benefit plan obligations (Economic)

€K

UK

Not req.

Not req.

11,904

G4-EC3

Financial Assistance Received from Government

€K

Spain&UK

0

0

0

G4-EC4

GRI indicator

Year ECONOMIC

Unit

Scope

2012

2013

2014

Spain

Not req.

Not req.

1.2:1.0

Spain

Not req.

Not req.

1.2:1.0

UK UK

Not req. Not req.

Not req. Not req.

1.3 : 1.0 1.3 : 1.0

Standard wage levels - Ratio of entry level wage Spain Male Ratio WDFG wage/minimum local wage

Spain Female UK Male UK Female

G4-EC5

Year ECONOMIC

Unit

Scope

2012

2013

2014

GRI indicator

Purchasing practices-Procurement budget for significant locations spent on local suppliers WDFG España SA Soc. Distr. Comercial Aerop. Canarias

%

Spain

33,00%

29,00%

26,00%

Canaries (Spain)

97,00%

97,00%

98,00%

Uk

49,00%

48,00%

47,00%

WDFG UK Ltd

G4 - EC9

Environment Year ENVIRONMENT Materials consumed Type of material Plastic Bags Paper

Unit

Scope

2012

2013

2014

GRI indicator

Nº of bags A4 Sheets

Spain

6.940.298 3.035.500

13.091.492 4.312.500

13.920.812 4.408.500

G4 – EN1

12.279.000

15.341.250

17.584.250

G4 – EN1

5.902.500

5.515.000

4.935.000

Type of material Plastic Bags

Nº of bags

Paper

A4 Sheets

UK

66

Year ENVIRONMENT

Unit

Scope

2012

2013

2014

Plastic Bags

%

Spain

NA

50%

25%

Plastic Bags

%

UK

25%

25%

25%

GRI indicator

% of recycled input materials used G4 – EN2

Year ENVIRONMENT

Unit

Scope

2012

2013

2014

UK

438.178

437.214

441.704

kWh

UK Warehouse CDC

1.564.006

1.586.431

1.606.562

Spain

kWh

Spain

17.931.839

16.674.473

18.470.595

UK (*)

kWh

UK

15.227.544

15.637.093

13.193.607

GRI indicator

Fuel consumption from non-renewable sources Diesel (UK)

litres

Fuel consumption from renewable sources Electricity (UK)

G4 – EN3

Total electricity consumption

(*) Electricity consumption figures for UK 2014 are only until October 2014 as later data wasn't available

Year ENVIRONMENT

Unit

Scope

2012

2013

2014

m3

Spain

5.542

6.056

4.299

€

UK

8.269

7.608

9.999

GRI indicator

Water consumption Spain United Kingdom

G4 – EN8

Year ENVIRONMENT Unit Scope 1 GHG Emissions in tons of CO2 Emissions (t CO2)

t Co2

Scope

2012

2013

2014

UK logistics fleet diesel consumption emissions

1.140

1.130

1.149

GRI indicator

G4-EN15

Scope 2 GHG Emissions in tons of CO2 Emissions (t CO2)

t Co2

TOTAL sum of below

11.971

11.804

12.308

Spain

t Co2

Spanish stores, offices and warehouse

5.218

4.852

5.375

G4 – EN16

67

United Kingdom(*)

t Co2

UK Offices and stores

6.753

6.952

6.933

(*) Emmission figures for UK 2014 are only until October 2014 as later data wasn't available

68

Year ENVIRONMENT

Unit

Scope

2012(1)

2013

2014

GRI indicator

Waste weight Cardboard

Tons

943

1.054

1.045

Plastic

Tons

79

34

30

Printer Cartridges

Tons

0

0

1

Wood

Tons

0

0

0

Metal

Tons

0

6

10

Electrical

Tons

0

0

0

Waste to recycling

Tons

140

139

165

Waste to energy

Tons

0

44

48

Total Recycling

Tons

1.162

1.276

1.298

Glass

Tons

NDA

11,82

NDA

Paper and carton

Tons

NDA

601,01

NDA

Plastic

Tons

NDA

12,42

NDA

Wood(pallets)

Tons

NDA

364,30

NDA

Electronic waste

Tons

NDA

4,36

NDA

Batteries Food waste (domestic oil, ...) Domestic waste

Tons

NDA

0,02

NDA

Tons

NDA

0,60

NDA

Tons

NDA

0,90

NDA

Tons

NDA

0,20

NDA

Mineral oils (excluding cooking oil)**

UK (*)

Spain

G4 – EN23

NDA - No Data Available (*) 100% of the waste managed by WDFG in the UK is recycled or sent for energy recovery, and in Spain, 100% is segregated for recycling or processed through authorised agents for recycling. Carton Boxes and pallets are reused as much as possible at UK and Spanish warehouses. **Hazardous waste (1)2012 Data is not currently available (2) 2014 Data is not yet available but will be disclosed in the 2015 report Year ENVIRONMENT

Unit

Scope

2012

2013

2014

GRI indicator

Compliance (fines and sanctions) Total number of sanctions

Nº sanctions

0

0

0

Monetary value of fines

€

0

0

0

Number of non-monetary sanctions

Nº fines

0

0

0

Cases brought through dispute resolution mechanisms

Nº cases

0

0

0

Total number of sanctions

Nº sanctions

0

0

0

Monetary value of fines

€

0

0

0

Number of non-monetary sanctions

Nº sanctions

0

0

0

Cases brought through dispute resolution mechanisms

Nº of cases

0

0

0

UK

Spain

G4 – EN29

69

Year ENVIRONMENT

Unit

Scope

2012

2013

2014

GRI indicator

1.564.006

1.586.432

1.606.562

G4-EN30 G4 – EN3

Warehouse Environmental Impact Energy use (kWh)

kWh UK

Emissions (t CO2)

t CO2

0

0

0

G4-EN19 G4-EN30

Energy use

kWh

1.215.976

1.165.985

1.208.445

G4-EN30 G4 – EN3

Emissions

t CO2

354

339

352

1.575

1.624

1.208

Water consumption

Spain

m3

G4- EN16 G4-EN30 G4-EN8

Organisation’s own fleet mileage, fuel consumption and emissions(*) Total fuel used- Diesel

litres

438.178

437.214

441.704

Total Emissions FUEL

t CO2

1.140

1.130

1.149

G4-EN-18

(*) Diesel and Emmission figures for UK 2014 are only until October 2014 as later data wasn't available

Year ENVIRONMENT

Unit

Scope

2012

2013

2014

Associated business travel CO2 emissions (Kg of CO2) TOTAL Flying Kg of CO2

NDA

1.023.430

2.134.900

TOTAL Rail

Kg of CO2

NDA

6.287

8.424

TOTAL CO2 Flying/month

Kg of CO2/month

NDA

170.572

177.908

TOTAL CO2 Rail/month

Kg of CO2/month

NDA

1.048

702

Spain

GRI indicator

G4 – EN30

No data available for 2012 **In 2013, the Group started to work with a new travel agency in July 2013, so the emissions given at TOTAL Flying and TOTAL Rail are only for six months

Year ENVIRONMENT

Unit

Scope

2012

2013

2014

GRI indicator

Total environmental protection expenditures and investments Total of expenditures

£

UK

113.064

111.396

117.473

Total of expenditures

€

Spain

105.207

113.604

119.805

Total of investment

£

UK

59.500

61.500

64.000

G4 – EN31

70

Year ENVIRONMENTAL

Unit

Scope

2012

2013

2014

% from 17 out of 23 top suppliers of a close to 60% of retail products in Europe

Europe

Not req.

Not req.

13/17 40%sales

Europe

Not req.

Not req.

9/17 30% sales

ISO 14001construction contractors in Spain

% from total

Spain

5,00%

10,00%

10,00%

ISO 9001construction contractors in Spain

% from total

Spain

5,00%

10,00%

10,00%

GRI indicator

Percentage of suppliers with an env/H&S certificate ISO 14001

OHSAS 1801

G4-EN32 (Partial)

G4-EN32 (Partial)

Year ENVIRONMENT

Unit

Nºof grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms

Scope

Nº of Grievances

UK&Spain

2012

0

2013

0

2014

0

GRI indicator

G4-EN34

Labour Year LABOUR Workforce by Gender & Age Total nº 50 years old Male Female New Hires 50 years old Male Female Employee Turnover

Unit Number

Scope UK&Spain UK&Spain UK&Spain UK&Spain UK&Spain

Number Number %

2012 190 77 27 50 20,80

2013 250 101 40 61 22,08

2014 248 101 40 61 21,07

GRI indicator

Year LABOUR Workforce by Gender & Region Total workforce Spain Male Female Total workforce UK Male Female

Unit

Scope

2012

2013

2014

GRI indicator

Number Number Number Number Number Number Number

UK&Spain Spain Spain Spain UK UK UK

5.621 2.145 631 1514 3476 1268 2208

5.766 2.306 669 1637 3460 1267 2193

6.121 2.452 723 1729 3669 1361 2308

G4-LA1

GRI indicator

Year LABOUR

Unit

Scope

2012

2013

2014

NA(*)

NA

100

Joint management–worker health and safety committee Nº of workers represented by these committees, as a percentage of total workforce numbers at Store, Multistore, airport and regional level

%

UK&Spain

G4-LA5

(*) Non-Applicable

Year Injury rates, absenteeism etc. Grand Total RIDDOR Lost Time Minor Ill Health Major Incident RTA Incident Near Miss

Unit

Nº of incidences

LABOUR

Scope

UK&Spain

2012

2013

2014

423 16 0 29 NDA NDA NDA NDA

492 15 9 367 44 3 0 40

567 15 4 424 43 1 1 42

NDA

14

37

GRI indicator

G4-LA6

NDA - No Data Available

72

Year LABOUR

Unit

Scope

Average hours /nº employees

Spain

2012

2013(*)

2014

6,26

11,02

9,17

6,75

7,35

9,9

GRI indicator

Training hours Total hours delivered in Spain Total hours delivered in UK

G4 – LA9

UK

Year LABOUR

Unit

Scope

2012

2013(*)

2014

Spain

158*

175

532

350*

652 (retail mgt. & HQ)*

678

GRI indicator

Career performance and reviews Spain UK

Nº of employees

UK

G4 – LA11

• 2013 For the first time included Retail CSLs and managers in the UK. Year LABOUR

Unit

Scope

2012

2013

2014

Group Group Group Group

NA NA NA NA

NA NA NA NA

66.67% 33.3% 0,00% 0,00%

Group

NA

NA

22,00%

Group Group

NA NA

NA NA

78,00% 9

GRI indicator

Breakdown of the governance body composition % of men % of females % of minority groups % of 50 years old TOTAL Nº OF MEMBERS

Number

G4 – LA12

Year LABOUR

Unit

Employees’ age groups by category Total nº of employees Total Nº A: HQ Directors & Managers Male 50 years old Number B: HQ Admin & Professional Male 50 years old C: HQ Junior Male 50 years old D: Sales & Ops Managers Male 50 years old E: Sales & Ops Staff Male 50 years old

Number Number Number Number

Unit

Scope

2012 1,74% 2,28% 0,37% 0,28%

2013 2,05% 2,19% 0,43% 0,40%

2014 1,76% 2,07% 0,46% 0,49%

Number Number Number Number Number Number

0,28% 0,53% 0,21% 0,93% 0,21% 0,39%

0,24% 0,59% 0,31% 1,08% 0,07% 0,28%

0,20% 0,36% 0,33% 0,98% 0,10% 0,26%

0,71% 1,17% 3,66% 3,56% 0,85% 1,10%

1,25% 1,18% 3,40% 3,40% 0,97% 1,14%

1,34% 1,80% 3,45% 3,35% 1,08% 1,37%

9,61% 23,07% 9,14% 19,27% 4,82% 11,71%

9,26% 22,30% 8,65% 19,67% 4,86% 12,57%

8,85% 21,29% 8,81% 19,33% 5,95% 12,74%

UK&Spain

Number Number Number Number Number Number Number Number Number Number Number Number

GRI indicator

Year LABOUR Woman/Men Remuneration Ratio Category A Spain Category A UK Category B Spain Category B UK Category C Spain Category C UK Category D Spain Category D UK Category E Spain Category E UK

Unit

Scope

2012

2013

2014

GRI indicator

1,22 1,29 0,82 1,15 1 1,06 1 1,07 1 1,02

0,83 1,26 0,92 1,11 1 1,06 1 1,05 1 1,02

0,83 1,25 1,18 1,12 1 1,06 1 1,03 1 1,01

G4 – LA13

Spain/UK

women salary/men salary

Spain UK Spain UK Spain UK Spain UK Spain UK

74

Year LABOUR&HR

Unit

Scope

2012

2013

2014

GRI indicator

25

27

32

25

27

32

G4-LA16/ G4-HR12

25

27

32

Grievances (HR) Total Labour or H. Rights received Number

Addressed from total

UK&Spain

Resolved from total

Human rights Year HUMAN RIGHTS

Unit

Scope

2012

2013

2014

UK&Spain

0

0

0

GRI indicator

Agreements and Contracts Number of agreements or contracts that contain human rights clauses

Nº or %

Number of agreements or contracts that underwent human rights screening

G4 – HR1 UK&Spain

0

0

0

Year HUMAN RIGHTS

Unit

Scope

2012

2013

2014

Total Hours of Human Rights training

Hrs

UK&Spain

0

0

0

Number of employees

Number of employees

GRI indicator

Human Rights Employee Training

G4 – HR2 UK&Spain

0

0

0

The Company does not specifically provide training relating to Human Rights. Issues relating to areas of discrimination in employment practices may be covered as part of other training programmes but is provided as necessary and not as a company-wide training initiative.

Year HUMAN RIGHTS

Unit

Scope

2012

2013

2014

Number of incidents

UK&Spain

0

0

0

GRI indicator

Incidents Number of incidents of discrimination

G4 – HR3

75

Year HUMAN RIGHTS

Unit

Scope

2012

2013

2014

UK&Spain

0

0

0

GRI indicator

Child and forced Labour Risk of child labour Type & Name of stores or suppliers exposed to child labour risk

G4 – HR5

Risk of forced or compulsory labour Operations and suppliers identified as having significant risk for incidents of forced or compulsory labour

G4 – HR6 UK&Spain

0

0

0

Year HUMAN RIGHTS

Unit

Scope

2012

2013

2014

GRI indicator

%

UK&Spain

100

100

100

G4 – HR7

Human Rights Employee Training %of security personnel trained in the organization’s human rights policies or procedures that arerelevant to operations

Year LABOUR&HR

Unit

Scope

2012

2013

2014

GRI indicator

25

27

32

25

27

32

G4-LA16/ G4-HR12

25

27

32

Grievances (HR) Total Labour or H. Rights received

Number

Addressed from total

UK&Spain

Resolved from total

Social Year SOCIAL

Unit

Scope

2012

2013

2014

Training

Recommunicated int.email

Policy being updated

Spain

100%

100%

NA

UK

99%

100%

NA

Number and percentage of Senior Managers that have received training on anti.corruption Spain UK

%

GRI indicator

G4-SO4

76

Year SOCIAL

Unit

Scope

2012

2013

2014

GRI indicator

(Report public legal cases regarding corruption brought against the organization)

Number of incidents

Spain&UK

0

0

0

G4-SO5.d

Number of corruption cases reported through the whistle blowing line (Spain)

Number of reports received

Spain

NDA

7

4

G4-SO5.a

Number of corruption cases reported through the whistle blowing line (UK)

Number of reports received

UK

NDA

22

27

G4-SO5.a

Confirmed cases of corruption

Year SOCIAL Total monetary value of financial and in-kind political contributions

Unit

Scope

2012

2013

2014

GRI indicator

€

Spain and UK /Global?

0

0

0

G4-SO6

Year SOCIAL Nº of legal actions for anticompetitive behavior, antitrust, and monopoly practices and their outcomes

Unit

Scope

2012

2013

2014

GRI indicator

Nº of legal actions

Spain&UK

0

0

0

G4-SO7

Year SOCIAL Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms

Unit

Scope

2012

2013

2014

GRI indicator

Nº of Grievances

Spain&UK

0

0

0

G4-SO11

77

Product Year PRODUCT Total number of incidents of noncompliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes

Unit

Scope

2012

2013

2014

GRI indicator

Nº of incidents

Spain&UK

0

0

0

G4-PR2

Year PRODUCT Total number of incidents of noncompliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

Unit

Scope

2012

2013

2014

GRI indicator

Nº of incidents

Spain&UK

0

0

0

G4-PR4

Year PRODUCT Total number of incidents of noncompliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes

Unit

Scope

2012

2013

2014

GRI indicator

Nº of incidents

Spain&UK

0

0

0

G4-PR7

GRI indicator

Year PRODUCT

Unit

Scope

2012

2013

2014

Complaints regarding breaches of customer privacy and losses of customer data.

0

0

0

Complaints received from outside parties and substantiated by the organization

Nº of complaints

Spain&UK

0

0

1

Complaints received from regulatory bodies

Nº of complaints

Spain&UK

0

0

0

Total number of identified leaks, thefts, or losses of customer data.

Nº of complaints

Spain&UK

0

0

0

G4-PR8

78

Year PRODUCT

Unit

Scope

2012

2013

2014

GRI indicator

Value and number of fines and non-monetary sanctions Total monetary value of significant fines

€

Spain&UK

0

0

0

Total number of nonmonetary sanctions

€

Spain&UK

0

0

0

Cases brought through dispute resolution mechanisms

€

Spain&UK

0

0

0

G4-PR9

79

3.2. Cross references tables. General Standard Indicators' Description Disclosure Strategy and Analysis Statement from the most senior decision-maker of the organization about the relevance of G4-1 sustainability to the organization and the organization’s strategy for addressing sustainability

G4-2

Description of the organizations' key impacts, risks, and opportunities.

Page/Section

Omissions

Future mitigation measure

0. Message From the CEO 1.4 Horizon: creating value 1.4.1 Risks Management 1.4.2 Investing in Efficiency 2.1 A commitment to sustainable management 2.1.1 Stakeholder engagement 2.1.3 Working towards a sustainable strategy 2.2 Respecting the environment 2.2.1 WDFG Environmental Management Overview 2.2.2 Energy Consumption and Emissions 2.2.3 Materials/2.2.4 Waste 2.2.5 Logistics 2.3 Our Team: The key of our success 2.3.1 Workforce balance and diversity 2.3.2 Being a Responsible Employer 2.3.3 Investing in Our talent 2.4.1 Fostering local community Development 2.4.2 Community support

Organizational Profile G4-3

Report the name of the organization.

0. Foreword and instructions for use

G4-4

Report the primary brands, products, and services.

1.1.1 A Global Group

G4-5

Report the location of the organization’s headquarters.

1.1.1 A Global Group

G4-6

Report the number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report.

1.1.1 A Global Group

80

General Standard Disclosure

Indicators' Description

Page/Section

G4-7

Report the nature of ownership and legal form.

1.1.1 A Global Group

G4-8

Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries).

1.1.1 A Global Group

G4-9

Scale of the organization, regarding total number of employees, total number of operations, net sales, total capitalization broken down in terms of debt and equity and quantity of products or services provided

1.2.1 Financial highlights 1.2.2 Product Sales Breakdown 1.2.3Workforce 3.1 Summary of Indicators table

G4-10

Workforce information: employment type and contract, total number by gender, supervised workers and significant variations in numbers.

1.2.3Workforce 2.3 Our Team: The key of our success (Intro) 2.3.2 Being a Responsible Employer 2.3.1 Workforce Balance and Diversity 3.3.1 Indicators Table

G4-11

Report the percentage of total employees covered by collective bargaining agreements.

G4-12 G4-13

G4-14

Describe the organization’s supply chain. Report any significant changes during the reporting period regarding the organization’s size, structure, ownership, or its supply chain. Report whether and how the precautionary approach or principle is addressed by the organization.

List externally developed economic, environmental and social charters, principles, or other initiatives to G4-15 which the organization subscribes or which it endorses. List memberships of associations (such as industry associations) and national or international advocacy organizations in which the organization holds a G4-16 position on the governance body, participates in projects or committees, provides substantive funding beyond routine membership dues or views membership as strategic Identified material aspects and boundaries List all entities included in the organization’s consolidated financial statements or equivalent G4-17 documents and advice if any entity included in the organization’s consolidated financial statements or equivalent documents is not covered by the report.

Omissions

Current WDFG reporting systems do not allow to obtain the quantitative data required by this indicator in relation to supervised workers.

Future mitigation measure

The company will develop its reporting systems in order to disclose this information in future reports.

3.3.1 Summary of Indicators Table 2.3.1 Workforce Balance and Diversity 2.2.5 Logistics 1.1.1 A Global Group 1.4.1 Risks Management 2.2.1 WDFG Environmental Management Overview 2.1.3 Working towards a Sustainable Strategy(ISO) 2.3.2 Being a Responsible Employer(OHSAS)

1.3.3 Relationships with brands 2.1.1 Stakeholder engagement

2.1.1 Stakeholder Engagement 1.1.2 Corporate Governance

81

General Standard Disclosure

Indicators' Description

Explain the process for defining the report content and the Aspect Boundaries and explain how the G4-18 organization has implemented the Reporting Principles for Defining Report Content. List all the material Aspects identified in the process G4-19 for defining report content. For each material Aspect, report the Aspect Boundary G4-20 within the organization. For each material Aspect, report the Aspect Boundary G4-21 outside the organization. Report the effect of any restatements of information G4-22 provided in previous reports, and the reasons for such restatements. Report significant changes from previous reporting G4-23 periods in the Scope and Aspect Boundaries. Stakeholder engagement Provide a list of stakeholder groups engaged by the G4-24 organization. G4-25

G4-26

G4-27

Report the basis for identification and selection of stakeholders with whom to engage. Report the organization’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the report preparation process. Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raised each of the key topics and concerns.

Page/Section

Omissions

Future mitigation measure

0. Foreword and instructions for use 3.3 Methodology and Scope 3.3 Methodology and Scope 3.3 Methodology and Scope 3.3 Methodology and Scope (1*) (1*)

2.1.1 Stakeholder Engagement 0. Foreword and Instructions for use 3.3 Methodology and Scope

2.1.1 Stakeholder Engagement

2.1.1 Stakeholder Engagement

Report profile 0. Foreword and Instructions for use 3.3 Methodology and Scope (2*) 0. Foreword and Instructions for use 3.3 Methodology and Scope

G4-28

Reporting period (such as fiscal or calendar year) for information provided.

G4-29

Date of most recent previous report (if any).

G4-30

Reporting cycle (such as annual, biennial).

3.3 Methodology and Scope

G4-31

Provide the contact point for questions regarding the report or its contents.

0. Foreword and Instructions for use

Report the ‘in accordance’ option the organization has chosen and the GRI Content Index for the chosen option. External verification information

0. Foreword and Instructions for use 3.2 GRI cross reference table NA

G4-32 G4-33

82

General Standard Disclosure Governance

G4-34

Indicators' Description

Page/Section

Report the governance structure of the organization, including committees of the highest governance body and identify any committees responsible for decisionmaking on economic, environmental and social impacts.

1.1.2 Corporate Governance

Omissions

Future mitigation measure

Ethics and Integrity Describe the organization’s values, principles, G4-56 standards and norms of behaviour such as codes of 2.1.2 Ethical Behaviour conduct and codes of ethics. (1*) This indicator is not applicable as this is the first WDFG sustainability report

83

3.3. Methodology and Scope Until 2012, the Group reported its economic, environmental and social performance though the Autogrill sustainability reports (its parent company at the time). In 2013 the WDFG demerged from Autogrill and became a standalone company, publishing its annual financial report independently. This year, WDFG is publishing its first annual sustainability report for its 2014 activities, which posed a challenge as the Group is still developing its internal CSR reporting infrastructure. To define the content of this first sustainability report, World Duty Free Group has carried out a thorough analysis of its industry context and the concerns and interests of its main stakeholders regarding the Group’s relationship with society and the environment. This has allowed the Group to define the material aspects that should be considered in this document from those listed in the GRI G4 guidelines, and against which the Group should report its behaviour and future strategy. The activities carried out internally to determine the scope of the report and identify which aspects are material in the case of WDFG included:

•

Gathering information from the different Group Directors to identify which business activities may have an impact on the different aspects of sustainability and the Group’s risks and opportunities in the sustainability field, as well as identifying its key stakeholders and the interests they may have in the aspects identified

•

Analysing industry reports and media publications to assess the Group in its wider context and its general social concerns

•

Reviewing the results of different stakeholder satisfaction surveys to understand their opinions and behaviour

These actions have allowed the Group to: - identify its primary stakeholders, the aspects which concern them regarding the Group’s activities and the level of influence that the Group’s behaviour could have on their decisionmaking - identify its current interactions with and impacts on society and the environment in which it operates, the boundaries of these impacts depending on whether they are direct or indirect (through a third party) and the influence they have on the WDFG’s behaviour and decision-making. Every aspect has therefore been analysed for both its influence on stakeholder decisions and its impact on the Group’s behaviour and activities, and the result has been captured in the following materiality matrix to decide their priority:

The aspects represented in the top right quadrant are those considered material for World duty Free Group.

The matrix has allowed the Group to identify which aspects are material and hence should be

84

included in the sustainability report and which do not need to be included32. Cat Material aspect EC EN EN EN EN EN LA LA LA LA LA HR SO SO PR PR PR

Economic performance Materials Energy Effluents and Waste Compliance Transport Employment Labor/management relations Diversity and equal Equal Remuneration for opportunity Labour W&M Grievance Non-discrimination mechanisms Anti-corruption Compliance Customer H&S Product and service labelling Customer privacy

Aspect boundary W W&O W&O W&O W&O W&O W&O W W W W W&O W W O O W

request concessionaires to consider this issue in their bids to become airport tenants. That being said, the fact that the Group develops most of its activity within an existing airport infrastructure eliminates the need to build on undeveloped or green land space. This makes the Group’s impact on the biodiversity aspect almost nil and therefore insignificant to both the Group and its stakeholders. Once material aspects, boundaries and the Indicators and Disclosures on Management Approach (DMA) to be reported were defined, the following activities were carried out in order to gather information on the relevant indicators and produce the content of the report:

•

Owners of the information required for content were identified in the first stages of the sustainability report preparation and questionnaires were sent to those identified, requesting the relevant information as required by the GRI G4 indicators (general, economic, environmental, labour, etc.) with an explanation of the response and calculation methods, and with support contacts always available.

•

Information from the completed questionnaires was analysed and used to write the sustainability report. Any gaps detected were followed up.

CAT Category / Boundary: W –within O - outside of the organisation.

One example of a material aspect is Energy (an aspect in the environmental category). This aspect has been classified as material for its influence on both the Group’s and its stakeholders’ behaviour. The high electricity consumption required to maintain stores with comfortable lighting and temperature indirectly generates GHG emissions, contributing to climate change and incurring high costs to the Group. This has resulted in the Company taking action in several ways to improve the energy efficiency of it stores. This topic is also of increasing concern to airport authorities (a key stakeholder for WDFG) that aim to reduce their overall energy demand and carbon footprint, and subsequently

32

Only 17 aspects have been identified as material; however as one of the Group’s key values is transparency, it has also disclosed information about other aspects that were highlighted as relevant either for the Group or for its stakeholders.

WDFG has written this sustainability report using the information and context received from the questionnaires and materiality analysis, following the GRI guidelines to ensure quality of content as well as information balance, comparability, accuracy, timeliness, clarity and reliability. Due to the fact that this is the first sustainability report that the Group has published as an independent company, there were cases where

85

not all the information was available. The Group is working on a system to allow easy and accurate data compilation (especially in the UK and Spain), however this system is still being developed and therefore some of the data was not complete, or disclosed in different units from those required by the GRI guidelines. All the information that could not be obtained with the current recording methods has been identified and targeted to ensure that the Group develops the necessary mechanisms to compile the data and disclose complete information it in next year’s reports.

86