Interim report 1 January 2013 3 months ended 2013 Local currency sales increased by 3% and Euro sales decreased by 5% to 294.6m ( 309.4m). Number of active consultants increased by 2%. Adjusted* operating margin was 7.8% (9.1%) resulting in an adjusted* operating profit of 23.1m ( 28.0m). Currency movements had a negative effect of approx. 230 bps on the operating margin. Adjusted* net profit amounted to 9.4m ( 18.4m) and adjusted* EPS amounted to 0.17 ( 0.32). Cash flow from operating activities amounted to -9.3m ( 18.4m). At the end of August Oriflame announced measures to drive sales in EMEA and enhance efficiency in the Group. Fourth quarter update: The underlying sales in the fourth quarter 2013 to date is in line with prior year in local currency. 9 months ended 2013 Local currency sales remained stable compared to prior year and Euro sales decreased by 4% to 1,035.5m ( 1,078.7m). Adjusted* operating margin was 9.2% (11.0%) resulting in an adjusted* operating profit of 95.6m ( 118.9m). Adjusted* net profit amounted to 57.2m ( 84.2m) and adjusted* EPS amounted to 1.03 ( 1.48). Cash flow from operating activities amounted to 48.4m ( 105.8m). * Adjusted for restructuring costs of 3.6m CEO Magnus Brännström comments Our key growth markets in Asia, Latin America, Africa and the Middle East continue to perform very well, representing more than 30% of sales in the quarter. However, sales growth for the Group of 3% in the third quarter shows that the sales development in our main markets in CIS and Europe continues to be volatile, as the initiatives to increase sales and efficiency are yet to translate into benefits. Fourth quarter sales in local currency have started in line with prior year and the positive sales force momentum from the third quarter has continued. 1
Sales and earnings FINANCIAL SUMMARY ( Million) 3 months ended 9 months ended 2013¹ Change 2013¹ Change LTM, Oct 12 Sep 13¹ Year End Sales 294.6 309.4 (-5%) 1,035.5 1,078.7 (4%) 1,446.1 1,489.3 Gross margin, % 69.6 69.0 70.0 69.7 70.9 70.7 EBITDA 26.9 34.7 (22%) 114.5 140.1 (18%) 178.6 204.2 Adj. operating profit 23.1 28.0 (18%) 95.6 118.9 (20%) 151.8 175.1 Adj. operating margin, % 7.8 9.1 9.2 11.0 10.5 11.8 Adj. net profit before tax 13.1 24.5 (47%) 74.8 104.9 (29%) 122.8 152.9 Adj. net profit 9.4 18.4 (49%) 57.2 84.2 (32%) 94.5 121.5 Adj. EPS, 0.17 0.32 (48%) 1.03 1.48 (30%) 1.68 2.13 Cash flow from operating activities (9.3) 18.4 (150%) 48.4 105.8 (54%) 126.3 183.7 Net interest-bearing debt 330.5 276.9 19% 330.5 276.6 19% 330.5 214.0 Net interest-bearing debt at hedged values 310.0 234.8 32% 310.0 234.8 32% 310.0 179.2 Active consultants*, 000 2,998 2,934 2% 2,998 2,934 2% 2,998 3,422 ¹Adjusted for restructuring costs of 3.6m +3% Local currency sales 7.8% Adj. operating margin Three months ended 2013 Sales in local currencies increased by 3% and Euro sales amounted to 294.6m compared to 309.4m in the same period prior year. Sales development in local currencies was impacted by a 1% increase in productivity while the number of active consultants in the quarter increased by 2% to 3.0m (2.9m). Unit sales were down by 6%, more than offset by a positive price/mix effect of 9%. Local currency sales increased by 21% in Asia and 19% in Latin America, while CIS & Baltics decreased by 3% and EMEA was constant. Gross margin improved to 69.6% (69.0%) and the adjusted operating margin (adjusted for 3.6m in restructuring costs) amounted to 7.8% (9.1%). The improvement in gross margin was driven by price increases, largely offset by currency movements. Operating margin was also affected by negative leverage on administrative expenses. The margin effect from consultant price increases related to the improved CIS Success Plan was offset by the corresponding increase in selling expenses. Currency movements had approximately 230 bps negative effect on the operating margin. Adjusted net profit amounted to 9.4m ( 18.4m) and adjusted earnings per share amounted to 0.17 ( 0.32). The result was affected by net financing costs of 10.0m compared to 3.5m last year, mainly an effect of higher net losses on currency exchange. The total tax charge during the quarter amounted to 3.7m ( 6.1m). The tax rate was impacted by the losses on exchange as well as the restructuring charge. Cash flow from operating activities was -9.3m ( 18.4m), negatively affected by lower EBITDA and higher increase in working capital. The average number of full-time equivalent employees was 7,079 (7,249). Stable local currency sales Nine months ended 2013 Sales in local currencies remained stable and Euro sales amounted to 1,035.5m compared to 1,078.7m in the same period prior year. Sales development in local currencies was the result of a 2% increase in the number of active consultants and a corresponding decrease in productivity. Gross margin improved to 70.0% (69.7%) and adjusted operating margin amounted to 9.2% (11.0%). Margins were negatively impacted by currency movements and negative leverage. This was partly offset by positive price/mix effects. Adjusted net profit amounted to 57.2m ( 84.2m) and adjusted earnings per 2
share were 1.03 ( 1.48). Cash flow from operating activities amounted to 48.4m ( 105.8m), as a result of lower EBITDA and an increase in working capital while working capital decreased in the same period last year. * As earlier communicated, Oriflame is from the first quarter 2013 reporting one measure of the number of consultants active consultants - which is the number of Oriflame Consultants that have placed at least one order during the quarter. This number corresponds to what was previously called closing sales force. Active consultants is also the measure used for productivity calculations. Operational highlights New markets During the third quarter Oriflame started sales activities in Tunisia, Nigeria and Myanmar. Products and innovation During the quarter, Oriflame successfully launched Triple Core 3D Lipstick, a unique concept within the Company s largest brand Oriflame Beauty, and Colour Drop Lipstick within True Colour the entry level brand. In the Skin Care category, the brands within the upper mass price position Time Reversing and BioClinic showed a good performance. With the launch of Optimals Skin Youth, Oriflame continued the further development of its Optimals brand. A notable launch within the Fragrance category was Power Women, an elegant and modern fragrance, endorsed by the Russian celebrity Tina Kandelaki in the CIS. In the search for sustainable anti-ageing active ingredients, Oriflame is enhancing the capability to develop powerful anti-ageing ingredients that can boost and rejuvenate ageing skin. The technique, at the leading edge of skincare science, is highly sustainable and 100% traceable. It is for example used for the newly launched Ecollagen skincare product. Online The number of visitors to Oriflame s websites increased by 10% compared to the same quarter last year, with an increasing number of first-time visitors. The visits are spontaneous or prompted through e.g. social media, search engine optimization or product marketing initiatives and investment in these areas will continue. The pilot launch in Sweden and Norway during the second quarter 2013, enabling Oriflame Consultants to invite online customers to shop directly from the Oriflame site, is being evaluated and early results are encouraging. Oriflame also launched a pilot in the Moscow area after the close of the period. During the third quarter the number of online planning and training modules increased, with the aim to better monitor sales performance and consumer behaviour. Online highlights for the third quarter 2013: - Close to 90% of total orders are being placed online, and increasing. - The number of site visits from mobile platforms has tripled compared to the same period last year and visits originated from social media were up 8%. 3
GDC Noginsk LEED certified Service Service levels continued to improve in the third quarter as a result of enhanced planning systems, continuous process improvements and regional product sourcing initiatives. Inventory levels, have at the same time, been reduced year over year although the third quarter saw a seasonal increase, ahead of the major selling season. Build-up of the volumes processed in the new Group Distribution Centre (GDC) in Noginsk, Russia has reached a third of the total Russian volumes. Moreover, the certification of the GDC building reached a significant milestone with the confirmation of the LEED Silver Certification. With the distribution centre up and running, the on-site works in Noginsk are presently concentrated on the development of the factory building and installations. The goal is to enable commissioning of the factory during the summer of 2014. In the Budapest GDC, Bosnia was successfully integrated in August, bringing the total number of markets served by this GDC to eleven. In the Warsaw GDC, the UK and Ireland were added in September. After the conclusion of the purchase transaction of the new Wellness production site in Roorkee, India, construction and installation works have started in order for the factory to be ready for production during 2014. Measures to drive sales and efficiency In a press release on 29 August Oriflame announced a number of proposed initiatives to be implemented in 2013 and early 2014. These initiatives aim to shorten time to market, increase the effectiveness of catalogues, sales campaigns and back-office functions, and find synergies of global indirect purchases. They are expected to drive sales as well as lead to annual cost savings in the range of 15-20m. Relating to this, Oriflame had restructuring costs amounting to 3.6m in the third quarter. 4
CIS & Baltics Key figures Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Sales, m 155.0 220.3 207.9 176.7 137.8 Sales growth in (7%) (4%) (8%) (12%) (11%) Sales growth in lc (11%) (7%) (6%) (8%) (3%) Op profit, m ¹ 23.4 39.8 33.1 25.4 19.0 Op margin 15.1% 18.1% 15.9% 14.4% 13.7% Active consultants, 000 1,486 1,768 1,926 1,737 1,411 ¹ Excludes costs accounted for in the segments Manufacturing and Other. This is in line with prior years. Countries Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, Russia, Ukraine. -3% local currency sales, +2% in Russia Development Local currency sales in the third quarter decreased by 3% as a result of a 5% decrease in the number of active consultants and a 2% increase in productivity compared to prior year. Euro sales were down by 11% to 137.8m ( 155.0m). Local currency sales in Russia increased by 2% in the quarter. Continued high churn of Oriflame Consultants in the highly penetrated and price sensitive Ukraine impacted the number of active consultants. Operating profit amounted to 19.0m ( 23.4m) and operating margin was 13.7% (15.1%). Margins were negatively affected by exchange rate movements and loss of leverage. The consultant price increases in connection to the improved Success Plan were offset by a corresponding increase in selling expenses. EMEA Key figures Q3 12 Q4 12 Q1 13 Q2 13 Q3 13¹ Sales, m 86.5 120.1 100.1 97.6 83.6 Sales growth in (7%) 4% (4%) (6%) (3%) Sales growth in lc (8%) 3% (3%) (4%) 0% Adj. op profit, m 2 9.5 24.5 13.1 14.9 10.5 Adj. op margin 11.0% 20.4% 13.1% 15.2% 12.6% Active consultants, 000 798 960 962 924 797 ¹Adjusted for restructuring costs of 0.5m 2 Excludes costs accounted for in the segments Manufacturing and Other. This is in line with prior years. Countries Algeria, Bosnia, Bulgaria, Croatia, Czech Rep., Egypt, Finland, Greece, Holland, Hungary, Kenya, Morocco, Macedonia, Montenegro, Nigeria, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Tanzania, Tunisia, Turkey, Uganda. Weak markets in Europe +160 bps Adj. operating margin Development Local currency sales in the third quarter remained stable as a result of a slight increase in productivity while the number of active consultants was unchanged. Euro sales decreased by 3% to 83.6m ( 86.5m). Sales decreased in several of the large Central- and Southern European markets while development in Middle East and Africa continued to be strong. 5
Adjusted operating margin improved to 12.6% (11.0%), mainly as a result of lower selling and marketing expenses. Adjusted operating profit improved to 10.5m ( 9.5m). Latin America Key figures Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Sales, m 28.3 25.8 24.8 29.9 31.2 Sales growth in 16% 18% 11% 24% 10% Sales growth in lc 5% 7% 10% 21% 19% Op profit, m ¹ 2.9 2.5 2.1 4.1 5.1 Op margin 10.1% 9.7% 8.4% 13.6% 16.3% Active consultants, 000 181 174 176 195 224 ¹ Excludes costs accounted for in the segments Manufacturing and Other. This is in line with prior years. Countries Chile, Colombia, Ecuador, Mexico, Peru. Strong sales and margin development Development Local currency sales in the third quarter increased by 19% as a result of a 23% increase in the number of active consultants and a decline in productivity of 5%. Euro sales increased by 10% to 31.2m ( 28.3m). All markets showed doubledigit sales growth. Operating profit increased to 5.1m ( 2.9m) resulting in an operating margin of 16.3% (10.1%). The margin improvement was driven by price increases and leverage on fixed cost. Asia Key figures Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Sales, m 37.6 42.4 45.9 52.5 39.6 Sales growth in 9% 6% 11% 20% 5% Sales growth in lc 8% 7% 22% 26% 21% Op profit, m ¹ 1.5 4.1 1.8 5.4 1.7 Op margin 3.9% 9.7% 4.0% 10.3% 4.2% Active consultants, 000 469 520 617 606 566 ¹ Excludes costs accounted for in the segments Manufacturing and Other. This is in line with prior years. Countries China, India, Indonesia, Myanmar, Pakistan, Sri Lanka, Thailand, Vietnam. +21% local currency sales Development Third quarter sales growth in local currencies was 21% as a result of a corresponding increase in the number of active consultants. Euro sales increased by 5% to 39.6m ( 37.6m). Sales momentum was particularly strong in India and Indonesia. Operating margin amounted to 4.2% (3.9%) mainly a result of improved leverage partly offset by negative impact of exchange rates. The operating profit was 1.7m ( 1.5m). 6
Sales, operating profit and consultants by region Sales ( Million) 3 months ended 2013 Change in Euro Change in lc CIS & Baltics 137.8 155.0 (11%) (3%) EMEA 83.6 86.5 (3%) 0% Latin America 31.2 28.3 10% 19% Asia 39.6 37.6 5% 21% Manufacturing 0.3 0.2 29% 33% Other 2.1 1.8 18% 8% Total sales 294.6 309.4 (5%) 3% Sales ( Million) 9 months ended LTM, 2013 Change in Euro Change in Lc Oct 12 Sep 13 Year end CIS & Baltics 522.4 579.7 (10%) (6%) 742.7 800.0 EMEA 281.2 293.9 (4%) (2%) 401.2 413.9 Latin America 85.9 74.8 15% 17% 111.7 100.6 Asia 138.1 122.4 13% 22% 180.5 164.8 Manufacturing 2.0 1.1 80% 79% 2.1 1.2 Other 5.9 6.8 (13%) (16%) 7.9 8.8 Total sales 1,035.5 1,078.7 (4%) 0% 1,446.1 1,489.3 Adj. operating profit ( Million) 3 months ended 9 months ended 2013 Change 2013 Change LTM, Oct 12 Sep 13 Year end CIS & Baltics 19.0 23.4 (19%) 77.5 96.8 (20%) 117.3 136.6 EMEA 10.5 1 9.5 11% 38.5 1 37.9 2% 63.0 1 62.4 Latin America 5.1 2.9 77% 11.2 6.2 82% 13.7 8.7 Asia 1.7 1.5 15% 8.9 7.5 18% 13.1 11.7 Manufacturing 2.9 2.7 9% 9.0 4.6 93% 10.6 6.2 Other (16.1) 2 (12.0) 34% (49.5) 2 (34.1) 45% (65.9) 2 (50.5) Total operating profit 23.1 3 28.0 (17%) 95.6 3 118.9 (20%) 151.8 3 175.1 Active consultants ( 000) 2013 Change Year end CIS & Baltics 1,411 1,486 (5%) 1,768 EMEA 797 798 0% 960 Latin America 224 181 23% 174 Asia 566 469 21% 520 Total 2,998 2,934 2% 3,422 1 Adjusted for restructuring costs of 0.5m 2 Adjusted for restructuring costs of 3.1m 3 Adjusted for restructuring costs of 3.6m 7
Cash flow & investments Cash flow from operating activities amounted to -9.3m ( 18.4m) as a result of lower operating profit and higher increase in working capital. The working capital development compared to last year was negatively affected by a higher inventory build-up as well as timing differences in trade receivables and payables. Cash flow used in investing activities amounted to -13.1m ( -16.2m). Financial position Net interest-bearing debt amounted to 330.5m compared to 276.9m at the end of the third quarter. The net debt/ebitda ratio was 1.9 (1.5) and interest cover amounted to 4.4 (6.1) in the third quarter 2013 and to 8.5 (7.9) for the last twelve months. Net interest-bearing debt at hedged values amounted to 310.0m ( 234.8m). The net debt at hedged values/ebitda ratio was 1.7 (1.2). Related parties There have been no significant changes in the relationships or transactions with related parties compared with the information given in the Annual Report. Personnel The average number of full-time equivalent employees for the quarter was 7,079 (7,249). Alignment of legal structure As announced in April 2013, the Oriflame Group is currently in a process of simplifying its corporate structure and improving its operational efficiencies by aligning its legal structure with the Group operations and to enable a change of domicile from Luxembourg to Switzerland within the next few years. An approval for the first step of this process will be sought at a separate Extraordinary General Meeting (EGM) planned to be held in conjunction with the Annual General Meeting to be held on 19 May 2014. A notice to the EGM with further details will be published at least 30 days in advance of such EGM. Fourth quarter update The underlying sales in the fourth quarter 2013 to date is in line with prior year in local currency. Long term targets Oriflame Cosmetics aims to achieve local currency sales growth of approximately 10 percent per annum and an operating margin of 15 percent. The business of the Group presents cyclical evolutions and is driven by a number of factors: Effectiveness of individual catalogues and product introductions Effectiveness and timing of recruitment programmes Timing of sales and marketing activities The number of effective sales days per quarter Currency effect on sales and results 8
Financial Calendar Year-end report 2013 will be published on 14 February 2014. First quarter report 2014 will be published on 8 May. Annual General Meeting 19 May Second quarter report 2014 will be published on 14 August. Third quarter report 2014 will be published on 7 November. Other A Swedish translation is available on www.oriflame.com. Conference call for the financial community The company will host a conference call on Tuesday, 12 November at 9.30 CET. Participant access numbers: Luxembourg: +352 2 786 0202 Sweden: +46 (0)8 506 443 86 Switzerland: +41 44 580 65 22 UK: +44 20 7153 9154 US: +1 877 423 0830 Confirmation code: 845586# The conference call will also be audio web cast in listen-only mode through Oriflame s website: www.oriflame.com or through http://storm.zoomvisionmamato.com/player/oriflame/objects/9c18zfwg/ 12 November 2013 Magnus Brännström Chief Executive Officer For further information, please contact: Magnus Brännström, Chief Executive Officer, Tel: +352 691 151 930 Gabriel Bennet, Chief Financial Officer, Tel: +41 798 263 713 Anders Ågren, VP Investor Relations, Tel: +46 765 422 353 Oriflame Cosmetics S.A. 24 Avenue Emile Reuter, L-2420, Luxembourg www.oriflame.com Company registration no B.8835 Founded in 1967, Oriflame is a beauty company selling direct in more than 60 countries. Its wide portfolio of Swedish, nature-inspired, innovative beauty products is marketed through approximately 3 million independent Oriflame Consultants, generating annual sales of around 1.5 billion. Respect for people and nature underlies Oriflame s operating principles and is reflected in its social and environmental policies. Oriflame supports numerous charities worldwide and is a Co-founder of the World Childhood Foundation. Oriflame is a Luxembourg company group with corporate offices in Luxembourg and Switzerland. Oriflame Cosmetics is listed on the Nasdaq OMX Nordic Exchange. 9
Consolidated key figures 3 months ended 9 months ended 2013 1 2013 1 LTM, Oct 12 Sep 13 1 Year end Gross margin, % 69.6 69.0 70.0 69.7 70.9 70.7 EBITDA margin, % 9.1 11.2 11.1 13.0 12.4 13.7 Adj. operating margin, % 7.8 9.1 9.2 11.0 10.5 11.8 Return on: - operating capital, % - - 30.3 38.0 30.3 38.0 - capital employed, % - - 27.8 30.8 27.8 30.8 Net debt / EBITDA (LTM) 1.9 1.5 1.9 1.5 1.9 1.0 Interest cover 4.4 6.1 6.7 8.2 8.5 9.7 Average no. of full-time equivalent employees 7,079 7,249 7,332 7,460 7,369 7,465 ¹Adjusted for restructuring costs of 3.6m. Definitions Operating capital Total assets less cash and cash equivalents and non interest-bearing liabilities, including deferred tax liabilities. Return on operating capital Operating profit divided by average operating capital. Capital employed Total assets less non interest-bearing liabilities, including deferred tax liabilities. Return on capital employed Operating profit plus interest income divided by average capital employed. Net interest-bearing debt Interest-bearing debt excluding front fees less cash and cash equivalents. Interest cover Operating profit plus interest income divided by interest expenses and charges. Net interest-bearing debt to EBITDA Net interest-bearing debt divided by EBITDA. EBITDA Operating profit before financial items, taxes, depreciation, amortisation and share incentive plan. 10
Quarterly Figures Financial summary Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 1 Sales, m 373.6 309.4 410.6 381.3 359.7 294.6 Gross margin, % 69.9 69.0 73.3 69.6 70.7 69.6 EBITDA, m 50.4 34.7 64.1 45.2 42.2 26.9 Adj. operating profit, m 43.2 28.0 56.2 38.0 34.5 23.1 Adj. operating margin, % 11.6 9.1 13.7 10.0 9.6 7.8 Adj. net profit before income tax, m 38.3 24.5 47.9 36.5 25.2 13.1 Adj. net profit, m 31.3 18.4 37.2 28.0 19.9 9.4 Adj. EPS, diluted, 0.55 0.32 0.65 0.50 0.36 0.17 Cash flow from op. activities, m 29.3 18.4 77.9 28.4 29.3-9.3 Net interest-bearing debt, m 288.0 276.9 214.0 236.9 314.9 330.5 Active consultants, 000 3,475 2,934 3,422 3,681 3,462 2,998 Sales, m Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 CIS & Baltics 199.8 155.0 220.3 207.9 176.7 137.8 EMEA 103.5 86.5 120.1 100.1 97.6 83.6 Latin America 24.2 28.3 25.8 24.8 29.9 31.2 Asia 43.6 37.6 42.4 45.9 52.5 39.6 Manufacturing 0.2 0.2 0.1 0.9 0.8 0.3 Other 2.3 1.8 1.9 1.6 2.3 2.1 Oriflame 373.6 309.4 410.6 381.3 359.7 294.6 Adj. operating profit, m Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 CIS & Baltics 34.3 23.4 39.8 33.1 25.4 19.0 EMEA 15.2 9.5 24.5 13.1 14.9 10.5 2 Latin America 2.0 2.9 2.5 2.1 4.1 5.1 Asia 3.4 1.5 4.1 1.8 5.4 1.7 Manufacturing 1.4 2.7 1.6 3.2 2.8 2.9 Other (13.0) (12.0) (16.3) (15.3) (18.1) (16.1) 3 Oriflame 43.2 28.0 56.2 38.0 34.5 23.1 1 Active consultants, 000 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 CIS & Baltics 1,872 1,486 1,768 1,926 1,737 1,411 EMEA 922 798 960 962 924 797 Latin America 169 181 174 176 195 224 Asia 513 469 520 617 606 566 Oriflame 3,476 2,934 3,422 3,681 3,462 2,998 Adj. operating margin, % Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 CIS & Baltics 17.1 15.1 18.1 15.9 14.4 13.7 EMEA 14.7 11.0 20.4 13.1 15.2 12.6 2 Latin America 8.3 10.1 9.7 8.4 13.6 16.3 Asia 7.8 3.9 9.7 4.0 10.3 4.2 Oriflame 11.6 9.1 13.7 10.0 9.6 7.8 1 ¹ Adjusted for restructuring costs of 3.6m ² Adjusted for restructuring costs of 0.5m ³ Adjusted for restructuring costs of 3.1m 11
Sales Growth in % Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 CIS & Baltics (0) (7) (4) (8) (12) (11) EMEA (2) (7) 4 (4) (6) (3) Latin America 15 16 18 11 24 10 Asia 21 9 6 11 20 5 Oriflame 2 (4) 0 (4) (4) (5) Cash Flow, m Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Operating cash flow 29.3 18.4 77.9 28.4 29.3 (9.3) Cash flow used in investing activities (20.6) (16.2) (21.7) (7.3) (16.9) (13.1) 12
Condensed consolidated interim income statements 000 3 months ended 9 months ended 2013 2013 LTM, Oct 12 Sep 13 Year end Sales 294,586 309,416 1,035,536 1,078,672 1,446,151 1,489,285 Cost of sales (89,416) (96,011) (310,705) (326,632) (420,346) (436,271) Gross profit 205,170 213,405 724,831 752,040 1,025,805 1,053,014 Other income 11,407 11,990 38,747 41,141 53,512 55,904 Selling and (108,774) (111,715) (389,815) (399,974) (540,581) (550,739) marketing expenses Distribution and (23,710) (27,823) (86,718) (90,315) (120,081) (123,678) Infrastructure Administrative (64,633) (57,850) (195,124) (183,998) (270,509) (259,382) expenses Operating profit 19,459 28,007 91,921 118,894 148,146 175,119 Analysis of operating profit: Adjusted operating 23,095 28,007 95,557 118,894 151,782 175,119 profit Restructuring (3,636) - (3,636) - (3,636) - Operating Profit 19,459 28,007 91,921 118,894 148,146 175,119 Financial income 10,845 11,761 29,338 24,082 26,813 21,557 Financial expenses (20,869) (15,310) (50,068) (38,030) (55,820) (43,782) Net financing costs (10,024) (3,549) (20,730) (13,948) (29,008) (22,225) Net profit before income tax 9,436 24,458 71,191 104,946 119,138 152,894 Total income tax (3,700) (6,069) (17,584) (20,736) (28,289) (31,442) expense Net profit 5,736 18,389 53,607 84,210 90,850 121,452 Adj. EPS: 3 months ended 9 months ended 2013 1 2013 1 LTM, Oct 12 Sep 13 1 Year end - basic 0.17 0.32 1.03 1.48 1.68 2.13 - diluted 0.17 0.32 1.03 1.48 1.68 2.13 Weighted avg. number of shares outstanding: - basic 55,577,918 57,082,004 55,764,142 57,054,857 56,106,178 57,071,517 - diluted 55,577,918 57,082,004 55,764,142 57,054,857 56,106,178 57,071,517 Total number of shares outstanding: - basic 55,600,653 57,121,134 55,600,653 57,121,134 55,507,725 57,121,134 - diluted 55,600,653 57,121,134 55,600,653 57,121,134 55,507,725 57,121,134 ¹Adjusted for restructuring costs of 3.6m 13
Condensed consolidated interim statements of comprehensive income 000 3 months ended 9 months ended 2013 2013 LTM, Oct 12 Sep 13 Year end Net profit 5,736 18,389 53,607 84,210 90,849 121,452 Other comprehensive income Items that will not be reclassified subsequently to profit or loss: Revaluation reserve 93 119 (273) 282 (541) 13 Items that are or may be reclassified subsequently to profit or loss: Foreign currency translation differences for foreign operations (6,234) 5,549 (18,993) 7,428 (21,759) 4,663 Effective portion of changes in fair value of cash flow hedges, net of tax 641 57 (359) 40 (2,060) (1,661) Total items that are or may be reclassified subsequently to profit or loss (5,593) 5,606 (19,352) 7,468 (23,819) 3,002 Other comprehensive income for the period, net of tax (5,500) 5,725 (19,625) 7,750 (24,360) 3,015 Total comprehensive income for the period 236 24,114 33,982 91,960 66,489 124,467 14
Condensed consolidated interim statements of financial position 000 Assets, 2013 31 December,, Property, plant and equipment 253,191 251,584 240,049 Intangible assets 19,311 20,745 23,812 Investment property 967 999 1,026 Deferred tax assets 29,079 30,675 33,857 Other long-term receivables 1,176 1,605 1,620 Total non-current assets 303,724 305,608 300,364 Inventories 200,268 212,562 229,119 Trade and other receivables 80,868 84,808 87,862 Tax receivables 3,229 3,178 2,433 Prepaid expenses 58,333 44,375 44,537 Derivative financial assets 24,910 36,654 47,613 Cash and cash equivalents 71,622 106,246 66,652 Total current assets 439,230 487,823 478,216 Total assets 742,954 793,431 778,580 Equity Share capital 71,517 71,401 71,401 Treasury shares (41,235) - - Reserves (77,597) (56,403) (52,972) Retained earnings 197,343 237,860 200,618 Total equity 150,028 252,858 219,047 Liabilities Interest-bearing loans 397,483 316,374 339,725 Other long-term non-interest-bearing liabilities 3,227 3,173 668 Deferred income 487 527 594 Deferred tax liablilities 4,454 4,225 3,882 Total non-current liabilities 405,651 324,299 344,869 Current portion of interest-bearing loans 3,731 2,517 2,373 Trade and other payables 71,752 93,400 80,567 Tax payables 7,638 9,842 13,788 Accrued expenses 94,342 102,662 102,595 Derivative financial liabilities 4,649 4,235 7,577 Provisions 5,163 3,618 7,764 Total current liabilities 187,275 216,274 214,664 Total liabilities 592,926 540,573 559,533 Total equity and liabilities 742,954 793,431 778,580 15
Condensed consolidated interim statements of changes in equity 000 (Attributable to equity holders of the Company) Share capital Total reserves Retained earnings Total equity At 1 January 71,301 (63,495) 216,230 224,036 Net profit - - 84,210 84,210 Other comprehensive income Revaluation reserve - 282-282 Foreign currency translation differences for foreign operations - 7,428-7,428 Effective portion of changes in fair value of cash flow hedges, net of tax - 40-40 Total other comprehensive income for the period, net of income tax - 7,750-7,750 Total comprehensive income for the period - 7,750 84,210 91,960 Issuance of new shares 100 1,859-1,959 Share incentive plan - 914-914 Dividends - - (99,822) (99,822) At 71,401 (52,972) 200,618 219,047 At 1 January 2013 71,401 (56,403) 237,860 252,858 Net profit - - 53,607 53,607 Other comprehensive income Revaluation reserve - (273) - (273) Foreign currency translation differences for foreign operations - (18,993) - (18,993) Effective portion of changes in fair value of cash flow hedges, net of tax - (359) - (359) Total other comprehensive income for the period, net of income tax - (19,625) - (19,625) Total comprehensive income for the period - (19,625) 53,607 33,982 Issuance of new shares 116 132-248 Share incentive plan - 1,315-1,315 Share incentive plan 2010 (release) - (3,015) 3,015 - Dividends - - (97,139) (97,139) Purchase of treasury shares - (41,235) - (41,235) At 2013 71,517 (118,831) 197,343 150,029 16
Condensed consolidated interim statements of cash flows 000 Operating activities 3 months ended 9 months ended 2013 2013 Net profit before income tax 9,436 24,458 71,191 104,946 Adjustments for: Depreciation of property, plant and equipment 5,709 5,642 17,977 16,324 Amortisation of intangible assets 1,113 1,030 3,274 3,945 Change in fair value of borrowings and derivatives financial instruments (301) 2,211 (3,538) 3,627 Deferred income (20) (36) (28) 83 Share incentive plan 632-1,315 914 Unrealised exchange rate differences 3,341 (2,300) 10,120 (12,722) Profit on disposal of property, plant and equipment, intangible assets and investment 100 (56) (74) (107) property Financial income (4,169) (4,388) (12,345) (12,667) Financial expenses 8,108 8,172 22,256 24,716 Operating profit before changes in working capital and provisions 23,949 34,733 110,148 129,059 Decrease/(increase) in trade and other receivables, prepaid expenses and derivative financial assets (4,818) 5,931 (14,750) (6,787) Decrease in inventories (20,428) (11,790) 273 43,302 Decrease in trade and other payables, accrued expenses and derivatives financial liabilities (5,208) (111) (21,308) (14,040) (Decrease)/increase in provisions 3,635 (623) 1,705 (974) Cash generated from operations (2,870) 28,141 76,068 150,560 Interest received 4,303 4,466 12,521 12,681 Interest and bank charges paid (7,741) (7,806) (22,262) (25,085) Income taxes paid (2,947) (6,383) (17,885) (32,404) Cash flow from operating activities (9,255) 18,418 48,442 105,752 Investing activities Proceeds on sale of property, plant and equipment, intangible assets and investment property 90 76 377 483 Purchases of property, plant, equipment and investment property (12,932) (15,408) (35,659) (47,099) Purchases of intangible assets (291) (882) (2,031) (2,403) Cash flow used in investing activities (13,133) (16,213) (37,313) (49,019) Financing activities Proceeds from borrowings 96,612 362 276,288 47,981 Repayments of borrowings (80,115) (25,710) (180,927) (79,189) Acquisition of subsidiary, net of cash acquired - - - (12) Proceeds from issuance of new shares 110 1,821 278 1,896 Acquisition of own shares - - (41,235) - Increase/(decrease) of finance lease liabilities (8) (12) (3) 49 Dividends paid (115) (7) (97,078) (99,690) Cash flow used in financing activities 16,484 (23,545) (42,677) (128,965) Change in cash and cash equivalents (5,904) (21,341) (31,548) (72,233) Cash and cash equivalents at the beginning of the period 78,864 87,086 106,171 136,940 Effect of exchange rate fluctuations on cash held (2,358) 312 (4,021) 1,349 Cash and cash equivalents at the end of the period net of bank overdrafts 70,602 66,057 70,602 66,057 17
Notes to the condensed consolidated interim financial information of Oriflame Cosmetics S.A. Note 1 Status and principal activity Oriflame Cosmetics S.A. ( OCSA or the Company ) is a holding company incorporated in Luxembourg and registered at 24 Avenue Emile Reuter, L-2420 Luxembourg. The principal activity of the Company s subsidiaries is the direct sale of cosmetics. The condensed consolidated interim financial information of the Company as at and for the nine months ended 2013 comprises the Company and its subsidiaries (together referred to as the Group ). Note 2 Basis of preparation and summary of significant accounting policies Statement of compliance The condensed consolidated interim financial information has been prepared by management in accordance with the measurement and recognition principles of International Financial Reporting Standards (IFRS) as adopted by the European Union ( EU ) and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December. The condensed consolidated interim financial information was authorised for issue by the Directors on 11 th November 2013. Changes in accounting policies The accounting policies applied by the Group in this condensed consolidated interim financial information are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December with the exception of new or revised standards endorsed by the EU, as explained below. Other new or amended IFRS standards The other new or amended IFRS standards, which became effective January 1, 2013, have had no material effect on the condensed consolidated interim financial information. Changes in presentation Condensed consolidated interim income statements Due to organisational changes, the Group has decided to present additional information related to the distribution and infrastructure costs in the condensed consolidated interim income statements. Therefore the distribution and infrastructure costs have been reclassified from Administrative expenses and Selling and Marketing expenses. Comparative figures have been presented accordingly. Copyright 2013 by Oriflame Cosmetics S.A. All rights reserved. 18