ORIFLAME CELEBRATES 40 YEAR ANNIVERSARY

Cosmetics in Russia
10th September 2007
Russia

Oriflame entered Russia over 15 years ago and became the second company
with 100% foreign capital. "Russian market remains our powerhouse
and our main priority.

We are strongly intended to take leading positions in direct sales
in Russia and countries in the vicinity," claimed Johan Rosenberg,
Oriflame’s general director for Russia at a press-conference devoted
to 40 year anniversary of the company.

The jubilee year was estimated as extremely successful for the direct
seller. Q2 2007 sales value reported ~@269.6m and growth over the
same period of 2006 amounted to 25%. Operating profit reached ~@37.7m.

Oriflame has presence in 53 countries worldwide.

However, Russia, Baltic states and other countries of the former
Soviet Union provide impressive 55% of the total company sales. In
2006 Oriflame unveiled its turnover in Russia to be equal to ~@382.4m,
while the number of consultants reached 1.1m. According to the company
estimations, its share of the local market is 5.4% boosted by 16m of
consumers. Oriflame’s awareness rate in Russia is astonishing 98%,
while purchase rate is 30%. Euromonitor claims Oriflame Russia is the
second large cosmetic company in the local market with 13.2% share of
total colour cosmetics sales, 8.4% of skin care and 5.8% of perfumery.

Though Oriflame is a direct selling company, it started in Russia as a
wholesaler distributing its products to an array of points of sales,
including pharmacies. In 1995 retail sales were quite a success and
the company decided to transfer to the system of direct sales. 1996
was declared as the year of official entrance of Oriflame to Russia.

The first service center was opened in Saint Petersburg in March and
the second center was opened in April 1996. The events aroused great
interest of 28000 people and about 27000 agreed to work as beauty
consultants. In 1996 sales value hiked by 400% as compared to 1995. The
consultants chain quickly proliferated to Russian regions. In 1997
an affiliate was opened in Kazan, while in 1998 seven more trading
centers were launched Russia-wide.

The results of 1998 economic crisis were drastic: instead of planned
£6m, sales value reported negligible £600,000. However, all trading
centers were retained. Oriflame reconsidered price policy and
introduced a one-time grant of $1000 for achieving a director position.

At present the company comprises 14 affiliates (Moscow,
Saint-Petersburg, Nizhni Novgorod, Kazan, Voronezh, Yekaterinburg, Ufa,
Yaroslavl, Samara, Novosibirsk, Krasnodar, Khabarovsk, Irkutsk, Omsk),
4 service centers (Saratov, Chelyabinsk, Perm, Rostov-on-Don), offices
in Krasnoyarsk and Volgograd, representative companies in Byelorussia,
Kazakhstan, Armenia, Gergia, Azerbain, Mongolia, Moldova and Ukraine.

In Ukraine Oriflame established its office in 1992 to sell over
550 skus of brand name products. Just like in Russia, in Ukraine
Oriflame started from retail and shifted to direct sales completely in
1997. At present seven service centers in Kiev, Lvov, Odessa, Donetsk,
Dnepropetrovsk, Kharkov and Simferopol and over 500 small service
point Ukrainian-wide supply for over 150,000 beauty consultants.

Oriflame company was established in 1967 to reach ~@900m sales value
and ~@121.6m operating profit in 2006 with 18% growth as compared to
2005. 6000 people personnel and over 2m beauty consultants contribute
to make Oriflame in the top-five of the largest international direct
sellers. 857 skus of cosmetics and perfumery, including 200 novelties
of 2006, are available for Oriflame consumers. Last year they bought
300m items. The company capitalization is equal to $2bln.

Russia contributes a substantial part to Oriflame success. 42% of
the company sales are made in Russia.

Though Oriflame is present at 53 countries all over the world, over
50% of the company’s beauty consultants work in Russia and countries
in the vicinity.

–Boundary_(ID_8I2hDLi6kPptoL2rvk9W2w)- –