New Russian production plant – commissioning completed, Divestment of factories completed, Russian tax case – negative first level court decision

Commissioning process in Noginsk production plant completed

Oriflame is pleased to announce the completion of the commissioning process for
the new production facility in Noginsk, Russia. Production of personal and hair
care products has started and will gradually be ramped up during the coming
quarters. Equipment for production of colour cosmetics is currently moved from
previous factory in Krasnogorsk to the new facility in Noginsk, where all
production will be integrated, enabling Oriflame to optimise logistics and
business processes, while ensuring production close to the large and important
markets in the CIS.

“Oriflame is proud to increase its presence in Russia through this €150 m
investment into the new facilities in Noginsk. This is an important milestone
for Oriflame’s business and long-term commitment to the region, as it further
improves the service to our Consultants while creating employment opportunities
in Russia and in particular in the Noginsk area”, Magnus Brännström, CEO and
President, comments.

Divestment of production plants in Sweden and Russia completed

The transactions relating to divestment of the manufacturing sites in Ekerö,
Sweden and Krasnogorsk, Russia are completed. As mentioned in connection to the
third quarter results, the Swedish factory was divested through a local
management buy-out, where Oriflame retains the ownership of selected production
equipment. The Krasnogorsk factory was sold to the Russian retail company X5
Retail Group. The total cash effect from both divestments amounts to €38 m, of
which the main part relates to Krasnogorsk.

Negative first level court decision on Russian tax case

As previously announced in August and in the quarterly announcement, following
several years of ongoing tax investigation in Russia, Oriflame has received an
official claim of RUB 1.0 bn (approximately €17.5 m) from the authorities
relating to royalty payments including income tax, VAT and penalty for the years
2009 and 2010. Despite confirmations from several local and international
experts of adopted tax practices, which have been submitted to the court,
Oriflame regrets to inform that the first level of tax court decision, as
announced today, was not in favour of the company. The decision is surprising
and disappointing as such court decision implies that there is no recognition of
royalty charged for commercial values that are created elsewhere in the Group
and that are necessary for the local Russian entity to carry out its operations.
Due to the current uncertainty of the situation, Oriflame has decided to
recognise the full Rouble amount of the claim for income tax, VAT and penalty
related to the royalty (net of tax losses carried forward, which were not
recognised as deferred tax assets, but can be used to reduce the claim amount),
which will impact profit and loss of the Group in Q4 2014 with the equivalent of
approximately €16 m.

Oriflame remains confident in its tax practice in Russia as confirmed and
supported by local and international experts, and will now continue the
litigation process up to the Supreme Court and considers initiating
international investment arbitration.

For additional information, please contact:
Gabriel Bennet, CFO, Oriflame                                    +41 79 826 3713
Johanna Palm, Director Investor Relations, Oriflame      +46 765 422 672

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 €1.4 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 Stockholm Exchange.