LOREAL_Registration_Document_2017

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

The change in this caption in 2015 can be analysed as follows:

Reversals (used) (2)

Reversals (not used) (2)

31.12.2013 31.12.2014 Charges (2)

Other (1)

31.12.2015

€ millions

Provisions for restructuring Provisions for product returns

98.2

65.5

37.1

-36.4

-20.7 -46.6 -95.4

5.4

50.9

226.6 378.5 703.3

244.4 605.7 915.6

263.7 141.7 442.5

-172.9 -107.2 -316.5

20.7 45.4 71.5

309.3 590.2 950.4

Other provisions for liabilities and charges

TOTAL

-162.7

Mainly resulting from translation differences and €24.7 million relating to the dispute on IPI with the tax administration in Brazil (note 11.2.1.). (1) These figures can be analysed as follows: (2)

Charges

Reversals (used)

Reversals (not used)

€ millions

Other income and expenses s

37.1

-54.3

-30.0 -78.2

Operating profit s

387.1

-253.4

Financial (income)/expense s

-

-

-

Income tax s

18.3

-8.8

-54.5

Contingent liabilities and material ongoing disputes 11.2. Besides certain disputes arising in the ordinary course of its operations and for which the provisions set aside are considered to be appropriate by the Group (note 11.1.), L’Oréal is party to several material disputes, described below:

Tax disputes 11.2.1. Brazil - IPI indirect tax base challenged

Investigations carried out by the 11.2.2. competition authorities The national competition authorities in several European countries have launched investigations targeting the

L’Oréal received tax reassessment notices regarding the indirect IPI tax for fiscal years 2008, 2011, 2012 and 2013 totalling €561.3 million, including interest and penalties. The Brazilian tax authorities questioned the plant disposal price used to calculate the IPI tax base. After consulting with its tax advisors, L’Oréal considers that the Brazilian tax authorities’ position is unfounded and has challenged these notices. L’Oréal continues its legal proceedings with the tax and legal authorities. As a result, no provision has been recognised in this respect. India – Advertising, marketing and promotional costs challenged L’Oréal received several tax reassessment notices regarding fiscal years 2007/08 to 2013/14 for the most part concerning the tax deductibility of advertising, marketing and promotional expenses for a total amount of €117.5 million including interest and penalties. After consulting with its tax advisors, L'Oréal decided to contest these notices and continues the legal proceedings with the administrative and legal authorities. As a result, no provision has been recognised in this respect.

cosmetics industry in particular. a) Europe (excluding France) The proceedings are at different stages:

in Spain, the decision in first instance was appealed against s before the Court of Cassation and subsequently the Constitutional Court. In October 2016, the Constitutional Court dismissed the appeal lodged by L’Oréal España claiming breach of the fundamental rights of the defence. The Court of Cassation’s ruling is therefore final and binding. The competition authority is to recalculate the fine in light of the criteria adopted by the Court of Cassation; however, it cannot exceed the amount initially set by the competition authority. The Group maintains its provision for the full amount of the fine initially notified; in Greece, in its decision passed down on 4 October 2017, s the Greek competition authority condemned L'Oréal Hellas to pay a fine of €2.6 million for carrying out anti-competitive practices in 2005-2006. L’Oréal Hellas refuted all allegations of having engaged in anti-competitive practices with other luxury cosmetics manufacturers. L’Oréal Hellas appealed this decision on 4 December 2017. The total amount of the fine has been provisioned.

REGISTRATION DOCUMENT / L'ORÉAL 2017

272