Interim report 1 January 30 September 2013mb.cision.com/Main/1493/9496405/182138.pdf · 2013-11-12 · Interim report 1 January – 30 September 2013 3 months ended 30 September 2013

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


2 Excludes costs accounted for in the segments Manufacturing and Other.


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%




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%




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



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.

http://www.oriflame.com/

http://storm.zoomvisionmamato.com/player/oriflame/objects/9c18zfwg/

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


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. 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


14

Condensed consolidated interim statements of comprehensive income

€’000



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


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


profit or loss

(5,593) 5,606 (19,352) 7,468 (23,819) 3,002


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


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


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



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.

Documents

Interim report 1 January 30 September 2013mb.cision.com/Main/1493/9496405/182138.pdf · 2013-11-12 · Interim report 1 January – 30 September 2013 3 months ended 30 September 2013