1
Interim report 1 January – 30 September 2013
3 months ended 30 September 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 30 September 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.”
2
Sales and earnings
FINANCIAL SUMMARY
(€ Million)
3 months ended
30 September
9 months ended
30 September
2013¹ 2012 Change 2013¹ 2012 Change
LTM,
Oct 12 –
Sep 13¹
Year End
2012
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
Three months ended 30 September 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).
Nine months ended 30 September 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
7.8%
Adj. operating margin
+3%
Local currency sales
Stable local
currency sales
3
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%.
4
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.
GDC Noginsk LEED certified
5
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.
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.
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.
-3% local
currency sales,
+2% in Russia
Weak markets in Europe
+160 bps
Adj. operating margin
6
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.
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 double-
digit 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.
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).
Strong sales and margin development
+21% local currency sales
7
Sales, operating profit and consultants by region
Sales
(€ Million)
3 months ended
30 September Change in
Euro
Change in
lc 2013 2012
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 30 September
LTM, Oct 12 –
Sep 13
Year end
2012 2013 2012
Change in
Euro
Change in
Lc
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
30 September
9 months ended
30 September
2013 2012 Change 2013 2012 Change
LTM, Oct
12 –
Sep 13
Year end
2012
CIS & Baltics 19.0 23.4 (19%) 77.5 96.8 (20%) 117.3 136.6
EMEA 10.51 9.5 11% 38.51 37.9 2% 63.01 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 23.13 28.0 (17%) 95.63 118.9 (20%) 151.83 175.1
Active consultants (´000)
30 September
Year end 2012 2013 2012 Change
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
8
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 2012. 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 2012.
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
9
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.
10
Consolidated key figures
3 months ended
30 September
9 months ended
30 September
20131 2012 20131 2012
LTM,
Oct 12 – Sep 131
Year end 2012
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.
11
Quarterly Figures
Financial summary Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’131
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 10.52
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 23.11
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 12.62
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 7.81
¹ Adjusted for restructuring costs of €3.6m ² Adjusted for restructuring costs of €0.5m
³ Adjusted for restructuring costs of €3.1m
12
€ 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)
13
Condensed consolidated interim income statements
€’000 3 months ended
30 September
9 months ended
30 September
2013 2012 2013 2012 LTM,
Oct 12 –
Sep 13
Year end
2012
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
marketing expenses
(108,774) (111,715) (389,815) (399,974) (540,581) (550,739)
Distribution and Infrastructure
(23,710) (27,823) (86,718) (90,315) (120,081) (123,678)
Administrative
expenses
(64,633) (57,850) (195,124) (183,998) (270,509) (259,382)
Operating profit 19,459 28,007 91,921 118,894 148,146 175,119
Analysis of
operating profit:
Adjusted operating
profit
23,095 28,007 95,557 118,894 151,782 175,119
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
expense
(3,700) (6,069) (17,584) (20,736) (28,289) (31,442)
Net profit 5,736 18,389 53,607 84,210 90,850 121,452
€
3 months ended
30 September
9 months ended
30 September
20131 2012 20131 2012
LTM, Oct 12 –
Sep 131
Year end
2012
Adj. EPS:
- 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
14
Condensed consolidated interim statements of comprehensive income
€’000
3 months ended 30 September
9 months ended 30 September
2013 2012 2013 2012
LTM,
Oct 12 – Sep 13
Year end 2012
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
15
Condensed consolidated interim statements of financial position
€’000
30 September,
2013
31 December,
2012
30 September,
2012
Assets
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
16
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 2012 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 30 September 2012 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 30 September 2013 71,517 (118,831) 197,343 150,029
17
Condensed consolidated interim statements of cash flows
€’000
3 months ended 30 September
9 months ended 30 September
2013 2012 2013 2012
Operating activities
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
property 100 (56) (74) (107)
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
18
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 30 September 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
2012. The condensed consolidated interim financial information was authorised for issue by the Directors on 11th 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 2012 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.