LOREAL_Registration_Document_2017

4 2017 Consolidated Financial Statements* NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Impact of changes in the scope 2.2. of consolidation in the cash flow statement In 2017, this item mainly related to the acquisitions of CeraVe and the assets of Four Star Salon Services, as well as the sale of The Body Shop to Natura. In 2016, this item mainly related to the acquisitions of Raylon, IT Cosmetics, Atelier Cologne and Thermes Saint-Gervais. In 2015, this item mainly related to the acquisition of Niely Cosmeticos. assets and liabilities held for sale On 9 June 2017, L’Oréal announced, following an extensive review of the strategic options for The Body Shop to ensure its best future development, having received a firm offer from Natura Cosmeticos SA to acquire The Body Shop and has entered into exclusive discussions with Natura. The sale contract to Natura Cosmeticos SA was signed on 27 June 2017. Discontinued operations and 2.3

After obtaining the necessary authorisations from the competent authorities, L'Oréal and Natura Cosmeticos SA finalised the definitive agreement to sell The Body Shop to Natura on 7 September 2017, in accordance with the terms of the project communicated on 9 June 2017. The Body Shop business has been accounted for as a business held for sale as of 30 June 2017. Consequently, The Body Shop business is shown within discontinued operations in the consolidated income statements and in the consolidated statements of cash flows for all periods presented. Transactions carried out between The Body Shop group companies and other consolidated companies have been eliminated. At 31 December 2016, The Body Shop was financed by Group cash for an amount of €53.3 million. Other intragroup transactions are not material. The notes to the income statements have been adjusted for The Body Shop business for all periods presented.

Income statements from discontinued operations (The Body Shop) 2.3.1.

2017 524.7 -15.7 -240.1

2016 920.8

2015 967.2

€ millions Net sales

Operating profit

35.6 25.3

55.3

Net profit from discontinued operations (1) 46.8 Of which - €13.7 million in profits generated during the period until the disposal. The effective sale of this business generated a disposal loss net of expenses amounting to (1) -€226.4 million, including a mechanical exchange loss of -€245.3 million.

Statements of cash flows from discontinued operations (The Body Shop) 2.3.2.

2017 -36.7 -24.4

2016 43.9 -51.8

2015 75.2 -99.5

€ millions

Net cash provided by operating activities Cash flows from investing activities Cash flows from financing activities

71.5 10.4

-3.5

6.5

NET CASH (USED IN) FROM DISCONTINUED OPERATIONS

-11.4

-17.8

Situation in Venezuela 2.4. Our subsidiaries in Venezuela were deconsolidated at 31 December 2015 for the following reasons: an increasingly difficult economic situation in the country; s constraints imposed by the government restricting our s operations and limiting our scope for taking and implementing operational decisions;

currency fluctuations making the operations of our s subsidiaries no longer material. The deconsolidation of our Venezuelan subsidiaries is reflected by a negative €107.2 million impact shown in Other non-recurring income and expenses in our 2015 consolidated financial statements. The situation did not improve in 2017 and our Venezuelan subsidiaries are currently accounted for using the cost model.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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