Note 3 • Segment reporting

Operating segments

The Group has five main reportable segments, which consists of CIS & Baltics, EMEA, Latin America, Asia plus Manufacturing, as this is the structure of financial information reviewed by the Executive Committee. The purpose of the Group is selling cosmetics within the above organisation. The Group sales consists mainly of sales of Colour Cosmetics, Skin Care, Personal & Hair Care, Fragrances and Accessories & Wellness products. The segment Manufacturing is producing products mainly for the Group. Smaller quantities are produced for third parties as well. “All other segments” includes mail order business and licensee sales. The performance of each market and region is measured by the operating profit. Sales presented in the segment reporting are only revenues from external customers.

Unallocated items

Some costs and capital expenditure are not identified as part of any operating segment and are therefore not allocated. Examples of such items are cost for corporate staff, IT costs and general marketing costs. Net financing costs and total income tax expense are also not allocated.

The accounting policies of the reportable segments are the same as described in note 2.

Summarised financial information concerning the reportable segments is shown in the following tables:

As per 31 December 2010

€’000	CIS & Baltics	EMEA	Latin America	Asia	Manufacturing	All other segments	Total segments	Unallocated items	Total
Sales	861,035	407,931	84,146	143,629	4,388	12,467	1,513,596	–	1,513,596
Impairment Iran	–	–	–	(10,051)	–	–	(10,051)	–	(10,051)
Operating Profit	134,999	55,378	2,981	(41)	14,318	1,312	208,947	(51,596)	157,351
Net financing costs									(22,134)
Net profit before income tax									135,217
Total income tax expense									(17,680)
Net profit									117,537
Capital Expenditure	(12,074)	(2,796)	(706)	(3,606)	(38,063)	–	(57,245)	(10,834)	(68,079)
Depreciation & Amortisation	(6,163)	(2,201)	(1,201)	(1,960)	(6,387)	(34)	(17,946)	(7,583)	(25,529)
Segment Assets	354,614	144,303	36,995	61,155	169,580	33,638	800,285	(44,436)	755,849
Segment Liabilities	44,353	19,249	7,040	16,343	48,936	383	136,304	394,162	530,466
Goodwill	–	1,053	–	4,345	–	–	5,398	–	5,398

As per 31 December 2009

€’000	CIS & Baltics	EMEA	Latin America	Asia	Manufacturing	All other segments	Total segments	Unallocated items	Total
Sales	725,044	395,425	62,533	112,933	6,983	13,677	1,316,595	–	1,316,595
Operating Profit	106,787	58,369	1,295	9,138	(3,161)	1,461	173,889	(28,448)	145,441
Net financing costs									(28,188)
Net profit before income tax									117,253
Total income tax expense									(16,941)
Net profit									100,312
Capital Expenditure	(6,911)	(1,857)	(1,846)	(2,248)	(4,783)	–	(17,645)	(11,679)	(29,324)
Depreciation & Amortisation	(4,718)	(556)	(820)	(1,541)	(5,053)	(47)	(12,735)	(8,814)	(21,549)
Segment Assets	281,864	158,509	30,514	54,911	91,891	34,770	652,459	(37,219)	615,240
Segment Liabilities	39,630	23,364	6,269	14,481	45,067	418	129,229	327,890	457,119
Goodwill	–	1,053	–	4,345	–	–	5,398	–	5,398

Sales by major country

€ million	2010	2009
Russia	506.0	436.9
Oriflame Cosmetics SA, Luxembourg*	6.1	5.6
All other	1,001.5	874.1
Total	1,513.6	1,316.6

* Included OCSA Swiss Branch.

A major country is defined as one with total sales greater than 20 percent of consolidated sales.

The revenue information above is based on the sales performed by each location.

Non-current assets by major country **
€ million	2010	2009
Russia	90.7	56.1
Oriflame Cosmetics SA, Luxembourg*	19.0	18.2
All other	95.6	80.3
Total	205.3	154.6

* Included OCSA Swiss Branch.

** Non-current assets for segment reporting include property, plant and equipment, investment property and intangible assets only.

A major country is defined as one with total Non-current assets greater than 20 percent of consolidated Non-current assets.

Sales by product category

All reportable segments are deriving their revenues from the sale of cosmetics, which are divided in the following categories:

€ million	2010	2009
Colour Cosmetics	363.3	326.5
Skin Care	336.0	319.9
Personal & Hair care	301.2	262.0
Fragrances	322.4	260.7
Accessories & Wellness	190.7	147.5
Total	1,513.6	1,316.6

Major customers

Oriflame does not have any single customer for which revenues from transactions have exceeded 10 percent of the Group total sales.