A letter from Juanjo Durán

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2 A letter from Juanjo Durán Thirty-five years ago someone had a vision. The vision of creating a business of production and distribution of gum base for different countries around the world. What started as something small has suddenly become, through the efforts and spirit of many associates, a leading global business. Today we have extensive knowledge, expertise and innovation that make us unique. We sell to over 80 countries and have over 400 varieties of gum base and other innovative products, such as Health in Gum. Our goal as a business is to respond most effectively to the needs of the confectionery and health product markets. Our strengths are backed by our 5 Principles, which we share with the rest of the Mars group: Quality, Responsibility, Mutuality, Efficiency and Freedom. Quality as a mark of our products and services. Responsibility to rely on the skills and talent of our associates. Efficiency in our operations. Mutuality with our customers and our environment. And, lastly, Freedom to conduct our business toward our vision of the future Cafosa. A vision of the future in which Cafosa is a strategic partner for our customers, innovating and working together to ensure that we offer the best products to build a world with more and better chewing. The talent and commitment of our 130 associates is our main driving force to make a better future. For this, in 2013, we have contributed with 197 hours of volunteer work to our local communities: We have provided nature and recreation outings for people with mental illness taking them to the zoo in Barcelona, we have collected food for disadvantaged families, we have cared for and made improvements to wooded areas near our factory But our influence goes beyond our nearby communities. We want our business to be sustainable and respectful of the planet. And we work tirelessly to achieve our goal. This year, our consumption has been greener than last year s. We have considerably reduced diesel fuel and water consumption, and volume of waste to landfill. We are very proud of the progress we have achieved and that is why we share these pages with you. I hope you enjoy reading them. Meanwhile, we will continue working to make even better progress this year. Sincerely, Juanjo Durán General Manager, CAFOSA GUM, S.A.U.

3 CAFOSA, your partner in innovation At Cafosa, we have a goal: to be able to make any chewing gum imaginable a reality, accompanying our customers in the process from the idea to the final product. And this is only possible through close collaboration, constant innovation, staying ahead of developments and trends in the market, and by being faithful to our principles. Our vision: To build a world with more and better chewing Because, as a company, we are not only responsible for making our business and those of our customers grow, but also for respecting our environment, making a difference to people and the planet. Cafosa is the leader in research and development of Gum Bases, the main ingredient in chewing gum, used in confectionery as well as in the nutraceutical and pharmaceutical industries. Founded in 1979 in Barcelona and now part of the Mars/Wrigley Group, we offer more than 400 varieties of products, from Santiga, Barcelona, and Shanghai, designed to meet the needs of our over 180 customers in over 80 countries. Our goal is to be a valued trusted partner for our customers, providing them with solutions that allow them to grow and differentiate themselves in the market. We are a strategic partner: 1 out of every 2 chewing gum manufacturers uses our Gum Bases, and 70% of pharmaceutical chewing gums use our products. % CHEWING GUM MANUFACTURERS USE OUR GUM BASES % OF THE PHARMACEUTICAL CHEWING GUMS USE OUR PRODUCTS 50% 70% Summary of our Principles in Action

4 Our Five Principles For us, the Five Principles are a business philosophy that we share with our associates, our suppliers, our customers... but also with non-governmental organizations, academic and research centers. They are a way of working aimed at creating a better future for all of us who, directly or indirectly, are part of Cafosa. Quality The consumer is our boss, quality is our work and value for money is our goal. Responsibility As individuals, we demand total responsibility from ourselves; as associates, we support the responsibilities of others. Mutuality A mutual benefit is a shared benefit; a shared benefit will endure. Efficiency We use resources to the fullest, waste nothing and do only what we can do best. Freedom We need freedom to shape our future; we need profit to remain free.

5 Our approach to business Our Five Principles of Quality, Responsibility, Mutuality, Efficiency and Freedom guide our approach to business. Since we are a family-owned private company, we are free to take a long-term perspective on making investments in tackling the challenges facing our business and planet, such as climate change and food security. Our Five Principles foster a culture of ethics and integrity that makes us feel proud to be Mars associates. With a business that continues to grow around the world, often in places where cultural norms may differ and regulations can be different from Mars standards, it is our Five Principles that serve as our guide.. Indeed, our associates incorporate these Five Principles in all their decisions. Summary of our Principles in Action

6 Our approach to sustainability We at Mars are proud of our growth and the benefits it provides, but we are also concerned about the impacts and vulnerability that are associated with our business and add to global challenges, such as climate change, water scarcity and deforestation. We want to help improve social and economic conditions of farming communities, protect the environment and address resource scarcity. The size of our company allows us to influence to make a positive difference in overcoming these challenges.

7 This is our approach to sustainability: We prioritize the major impacts of our value chain. We scientifically implement the most credible measurement systems to measure these impacts. We set long-term goals. We track our progress internally and publicly. We define our objectives as it is necessary to solve the main problem rather than tackling what can be achieved in the short term. We want to help improve, protect the environment and address resource scarcity Summary of our Principles in Action

8 Our products As innovation leaders, at Cafosa, we know very well what the key to our business is: offering solutions that make it possible to develop any product, project or idea imaginable. And that s why we offer a wide variety of Gum Bases. Our Gum Base is the main ingredient for developing an infinite number of different chewing gums: from traditional chewing gums in any format to functional and medicated chewing gums. Our Gum Bases for the confectionery, pharmaceutical and nutraceutical industries Our Gum Bases come in 2 different formats: sheets and pellets (cylindrical and spherical) for developing any chewing gum imaginable: bubble gums and chewing gums in any format: including tablets, sticks, individual pieces, hollow balls and centre-filled gums.

9 Our powder excipient for the pharmaceutical and nutraceutical industries Medicated chewing gums are a highly effective oral drug delivery system for releasing active ingredients in the chewing action. It has been proven that chewing gum is an effective means of administering certain medications. Health in Gum is the alternative that Cafosa offers for elaborating medicated chewing gums. It is a directly compressible powder gum that contains a mix of Gum Base and sweeteners, to which the active ingredient (API) and ingredients such as flavorings and lubricants can be added. Health in Gum is also a great solution for sensitive APIs, since the production process for the gum does not require high temperatures and its humidity level is very low. Moreover, Health in Gum is specially designed for in-house use in pharmaceutical facilities and does not require specific chewing gum production machinery. It performs excellently using standard tableting equipment. Summary of our Principles in Action

10 Principles in action Principles in Action means putting the Five Principles into practice. As a responsible company, we can make a difference to people and the planet through our performance. Performance To make a difference in our community, we need good business performance. That s why we re constantly improving the quality, safety and efficiency of our operations. Safety A safe and productive workplace is essential for our business, so we strive to keep ours accident-free. Live Safe Project The Live Safe Project is an internal security prevention campaign in which our associates have participated providing photos where safe behavior, whether at work, home or anywhere else, is shown.

11 Efficiency and responsibility CSR Audit (Corporate Social Responsibility) performed by STR in (91% score). The audit is repeated every three years. Cafosa belongs to Sedex, a non-profit organization that works to promote responsible and ethical business practices in supply chains around the world. Being a member of Sedex allows us to share information transparently with our customers and suppliers. 100% of our suppliers have signed our code of conduct. We carry out a customers satisfaction survey every two years. Customer satisfaction (Out of 5 points) year year 2010: : 4.2 Summary of our Principles in Action

12 Quality Our number one priority is offering our customers safe products made with quality ingredients. After all, they will develop chewing gums that consumers can fully trust. We are convinced that continuous improvement of processes and products strengthens our position as the world leader in the Gum Base market. We measure the level of excellence in our activities and are committed to achieving our goals for continuous improvement. We use the most suitable models and techniques for this.

13 Certifications ISO 9001:2008 Quality Management Systems. ISO 14001:2004 Environmental Management Systems. FSSC 22000:2013 Food Safety Management System that combines ISO 22000:2005, ISO/TS :2009 and the additional requirements of FSSC Mars Quality and Food Safety Program in compliance with Mars standards. And most of the requirements for: International Food Standards (IFS). British Retail Consortium (BRC) Technical Standard and Protocol. Safe Quality Food (SQF) Our facilities, products and management systems meet the strictest requirements for pharma and GMPs. Summary of our Principles in Action

14 People Our primary aim is to attract and retain the best employees. Or better said, associates. Because that s how we like to define our relationship with the company. Each one of us is part of a business and has a responsibility based on a mutual relationship of maximum trust and respect. As a company, we don t just have the responsibility and the commitment to make our customers dreams come true, we also have the obligation to have a positive impact on the communities where we live and work. We are committed to continuous development of talent and leadership capabilities. We provide a wide range of learning and development opportunities to help associates to progress in their careers with us. Opportunities to develop and progress are based on capability and performance, never on age, gender, sexuality, ethnicity, religion or physical ability. Engagement This is an internal program that measures our associates commitment to and satisfaction with Cafosa through an annual survey. Based on the survey results, different areas for improvement are selected and developed throughout the year through different action plans chosen by each of the teams.

15 Interdepartmental projects Collaborative interdepartmental projects where associates can contribute a different point of view by getting involved in issues unrelated to their daily work. In 2013, 60% of Cafosa associates participated in such projects. Aula Cafosa Project that includes all activities that relate to the training and development of Cafosa associates. Healthy habits campaigns Campaigns to promote healthy eating habits among associates (cooking workshops, lectures by professionals, fruit day ). Make the Difference A global Mars program that recognizes and rewards the associates who put the Five Principles into practice on a daily basis. Any associate can be nominated for an award in the following categories: Innovation, Line Manager Excellence, People and Planet. In 2013, a Cafosa associate from R&D was shortlisted for the Global Make The Difference Awards in Washington thanks to an innovation project she developed. Summary of our Principles in Action

16 Volunteer projects Through signature programs such as the Mars Volunteer Program (MVP) and Mars Ambassador Program (MAP), our associates are given diverse opportunities to make a difference in the communities where they live and work. Mars Volunteer Program At the local level, these are some of the activities Cafosa associates have carried out in 2013: Food drives for needy families. Making improvements to the wooded area of Parque de Can Llobateres (near our factory), together with the labeling of flora, path maintenance and provision of a bird feeder to facilitate birdwatching. Trip to the Barcelona Zoo with residents of the Hogar-residencia, an organization with which the Hospital de Sant Joan de Déu collaborates. Volunteers accompanied these people (who have some type of mental illness) in this journey to integrate them in social recreational activities. 1 project año hours 2 projects año hours 34 % of staff took part. 2 projects año hours 36 % of staff took part.

17 Mars Ambassador Program This is a volunteer program for which any associate can apply to participate in different projects proposed by Mars in any country where Mars has an office. In 2013, for the first time, a Cafosa associate from Marketing and Corporate Affairs was selected to participate as a volunteer in this program. Together with three other Mars associates from other countries, she helped the Chicago Community Oral Health Forum to create a communication campaign to educate Chicagoans on the importance of maintaining good oral health. Summary of our Principles in Action

18 Planet We feel it is our obligation to help address the challenges we share with society. At Cafosa, we seek to create lasting mutual benefits for our business with our positive social impacts. The aim is to minimize our environmental footprint and help to create economic prosperity. Our commitment begins with the impacts of our factories and offices (our operations ), where we have direct control. We have set ambitious targets that we share with Mars to make our factories and offices sustainable in a generation. Making our business an activity that respects the planet is the key to the future for us, and we dedicate great efforts to the job of improving the environment. One of our main responsibilities as a company is to be respectful of the environment in which we work, to preserve it and to improve it. To do this, we ve implemented a series of actions:

19 Internal campaigns We promote a culture and a series of more responsible and sustainable practices. Less is More campaign The goal is to raise the awareness of associates about the importance of Corporate Social Responsibility (CSR), both in their work and private lives, in three areas: electricity consumption, recycling and water consumption. Use of recycled paper We have completely switched from using white paper to using recycled paper, both in offices and factory. Cleaning a wooded area Actions to make improvements to Can Llobateres a park near our facilities in Barberà del Vallès, Barcelona, labeling species of trees and shrubs, clearing paths and removing debris from the wooded area. Our commitment is to make our factories and offices sustainable in a generation Summary of our Principles in Action

20 Environment and sustainability We use fewer resources and minimize our impact on the environment. Over 2012 and 2013, we achieved the following: Reduction in diesel fuel consumption Reduction in water consumption Waste not disposed of in a landfill

21 2013 RESULTS % change from 2012 results Diesel fuel -62% 2013 RESULTS -74% * 2015 TARGET -25% Energy (GJ) +2% +13% ** -25% GHG (Tons CO 2 e) +21% +34% * -25% Water (m 3 ) -10% -21% * -25% -35% Waste to landfill (Tons) -93% *** 0 Waste to landfill * % CHANGE FROM 2007 ** % CHANGE FROM 2009 *** % CHANGE FROM 2010 Summary of our Principles in Action

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24 Cafosa s commitment Our associates, our customers, our community, all of us, we belong to Cafosa. For all of them, we want to be a model, to apply our values in everything we do and work day in and day out to strengthen our principles. Our goal is to offer products with added value, innovate constantly and collaborate closely with our customers. This is the path to continuously improving our products and services. This is the Cafosa philosophy.