Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
A free translation from Portuguese
into English of Individual and Consolidated Interim Financial Information prepared in Brazilian currency in accordance with accounting
practices adopted in Brazil and in accordance with International Financial Reporting Standards (IFRS), issued by International Accounting
Standards Board (IASB).
NATURA &CO
HOLDING S.A. (“Natura &Co”) was incorporated on January 21, 2019 under the Brazilian laws and is engaged in holding investments
in other entities in the cosmetics, fragrances and personal hygiene business through the development, manufacturing, distribution and
sales of related products. Natura &Co and its subsidiaries is referred to as the “Company”.
The brands
under management by the Company include "Natura", “Avon”, "The Body Shop" and "Aesop". In addition
to using the retail market, e-commerce, business-to-business (B2B) and franchises as product sales channels, its subsidiaries are engaged
in the direct sales channel, carried out mainly by Consultants from Natura and Avon brands.
|
2.
|
MANAGEMENT STATEMENT AND BASIS FOR PRESENTATION OF THE FINANCIAL STATEMENTS
|
Statement
of conformity
The Company's
and its subsidiaries interim financial information, contained in the Quarterly Information Form (“ITR”) for the three-month
period ended March 31, 2021, comprise the individual and consolidated interim financial information, prepared and presented according
to Technical Standard CPC 21 (R1) – Interim Financial Statement/ IAS 34 - Interim Financial Reporting, the accounting practices
adopted in Brazil, which comprise the rules of the Brazilian Securities and Exchange Commission (“CVM”) and the standards
of the Brazilian Accounting Standards Committee (“CPC”). The Technical Standard CPC 21 (R1) – Interim Financial Statement,
issued by the International Accounting Standards Board (“IASB”), as well as the accounting practices adopted in Brazil, which
comprise the rules of the Brazilian Securities and Exchange Commission (“CVM”) and the standards of the Brazilian Accounting
Standards Committee (“CPC”) and in accordance with the International Financial Reporting Standards (“IFRS”) and
by the statements from the Brazilian Corporation Law “IAS 34 – Interim Financial Reporting”.
The interim
financial information presents all the relevant information specific to the interim financial information, and only that, which is consistent
with that used by Management.
Basis
of presentation
The individual
and consolidated interim financial information was prepared based on the historical cost, except for derivative financial instruments,
financial investments and recognized in other current and non-current assets that were measured at fair value, and are expressed in thousands
of Brazilian Reais (“R$”), rounded to the nearest thousand, as well as the disclosure of amounts in other currencies, when
necessary, were also expressed in thousands. Items disclosed in other currencies are duly identified, whenever applicable.
The individual
and consolidated interim financial information was approved by the Board of Directors and authorized for issuance on the meeting held
on May 11, 2021.
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
The main accounting
policies applied in the preparation of this interim financial information are consistent with those applied and disclosed in note 3 to
the Company's financial statements for the year ended December 31,2020, except for the rules and changes effective as of January 1st,
2021, which has not undergone any significant changes on the individual and consolidated financial information of the Company. Therefore,
it should be read in conjunction with the last annual financial statement.
The same policies
are applicable for the three-month comparative period ended March 31, 2020.
|
3.1
|
Hyperinflationary economy
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
Information
on the hyperinflationary economy was presented in the Company's 2020 annual financial statements in note 3.2.3.
In the three-month
period ended March 31, 2021, as a result of the application of CPC 42 / IAS 29, the Company's subsidiaries had a negative impact on net
income for the period in the amount of R$ 57,501 (R$ 11,106 on March 31, 2020), of which, it was partially offset by the effects of converting
the income statement at the exchange rate on the period's end date, instead of the average monthly exchange rate, totaling a positive
impact in the amount of R$ 14,845 (positive impact of R$ 4,351 on March 31, 2020). The capital reserve and the profit reserve were also
impacted, thus generating an increase of R$ 27,399 and R$ 15,853, respectively (R$ 14,989 and R$ 2,138 on March 31, 2020, respectively).
Investments in subsidiaries
Investments in subsidiaries did not
change compared to December 31, 2020. The information regarding the consolidation was presented in the Company's 2020 annual financial
statements in note 3.3.
|
4.
|
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
|
The
preparation of the individual and consolidated interim financial information requires
management to make certain judgments and use assumptions and estimates based on experience and other factors considered relevant, which
affect the values of assets and liabilities and which may present results that differ from actual results. The effects arising from revisions
to accounting estimates are recognized in the period of the revision.
The
areas that require a higher level of judgment and have greater complexity, as well as the areas in which assumptions and estimates are
significant for the interim financial information, was presented in note 5 of the Company's financial
statements for the year ended December 31, 2020.
There
were no significant changes in the estimates and assumptions used in the preparation of the interim
financial information for the three-month period ended March 31, 2021, as well as in the calculation
methods used, in relation to those presented in note 5 of the Company's financial statements for the
year ended December 31, 2020, issued on March 4, 2021, except for the analysis of the potential
impacts of Covid-19 (note 5.3).
|
5.
|
FINANCIAL RISK MANAGEMENT
|
|
5.1.
|
General considerations and policies
|
The information regarding the general
considerations and polices was presented in note 6.1 of the Company’s financial statements for the year ended December 31, 2020.
|
5.2.
|
Financial risk factors
|
The information regarding the financial
risk factors was presented in note 6.2 of the financial statements for the year ended December 31, 2020.
The Company and the subsidiaries are
exposed to market risks arising from their business activities. These market risks mainly comprise possible fluctuations in exchange and
interest rates.
To hedge the current balance sheet
positions of the Company and its subsidiaries from market risks, the following derivative financial instruments are used, which are comprised
of the balances presented below, as of March 31, 2021 and December 31, 2020:
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Fair value (level 2)
|
Description
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
“Financial” derivatives
|
2,200,113
|
1,857,869
|
“Operating” derivatives
|
(12,393)
|
(11,092)
|
Total
|
2,187,720
|
1,846,777
|
b)
Foreign currency risk
The information regarding the foreign
currency risk factors was presented in note 6.2 (b) of the Company’s financial statements for the year ended December 31, 2020.
As of March 31, 2021, the company and
the consolidated balance sheets include accounts denominated in foreign currency, which expose the Company and its subsidiaries to foreign
exchange risks, which together represent a total liability of R$ 4,607,563 (R$ 4,261,151 as of December 31, 2020). These accounts, consisting
of loans and financing in their entirety, are protected with swap type derivatives.
Derivatives instruments to hedge foreign
currency risk
The information regarding the derivative
instruments to hedge foreign exchange rate risk was presented in note 6.2 (c) of the Company’s financial statements for the year
ended December 31, 2020.
As of March 31, 2021, and December
31, 2020, the derivative balances are composed as follows:
Financial derivatives
Consolidated
|
Principal (notional) amount
|
Curve Value
|
Fair value
|
Gain (loss)
|
Description
|
March 31, 2021
|
December 31,2020
|
March 31, 2021
|
December 31,2020
|
March 31, 2021
|
December 31,2020
|
March 31, 2021
|
December 31,2020
|
Swap contracts: (a)
|
|
|
|
|
|
|
|
|
Asset position:
|
|
|
|
|
|
|
|
|
Long position - U.S. dollar
|
2,576,517
|
2,576,890
|
4,605,565
|
4,262,004
|
4,950,278
|
4,683,900
|
344,712
|
421,897
|
|
|
|
|
|
|
|
|
|
Liability position:
|
|
|
|
|
|
|
|
|
CDI floating rate:
|
|
|
|
|
|
|
|
|
Short position in CDI
|
2,576,517
|
(2,576,890)
|
2,599,288
|
2,630,911
|
2,751,675
|
(2,803,797)
|
152,387
|
(172,885)
|
|
|
|
|
|
|
|
|
|
Forward contracts (NDF):
|
|
|
|
|
|
|
|
|
Liability position:
|
|
|
|
|
|
|
|
|
Post-fixed CDI rate:
|
|
|
|
|
|
|
|
|
Short position at interbank rate
|
1,578,606
|
1,409,102
|
(3,520)
|
(5,457)
|
1,510
|
(22,234)
|
5,030
|
(16,778)
|
Total net derivative financial instruments:
|
1,578,606
|
1,409,102
|
2,002,757
|
1,625,636
|
2,200,113
|
1,857,869
|
197,355
|
232,234
|
|
a)
|
Swap transactions consist of swapping the exchange rate fluctuation for a correction related to a percentage
of the fluctuation of the Interbank Deposit Rate (post-fixed CDI), in the case of Brazil.
|
For the derivatives held by the Company
and its subsidiaries as of March 31, 2021 and December 31, 2020, as the contracts are directly with financial institutions and not through
stock exchanges, there are no margin deposits to guarantee these operations.
Operating derivatives - Consolidated
As at March 31, 2021 and December 31,
2020, the subsidiaries held derivative financial instruments of the forward type with the objective of hedging from foreign currency risk
of operating cash flows (such as import and export operations):
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Principal (notional) amount
|
Fair value
|
Description
|
March 31,
2021
|
December 31, 2020
|
March 31,
2021
|
December 31, 2020
|
Net position - GBP and USD
|
1,152,123
|
1,585,280
|
(9,610)
|
(7,670)
|
Forward contracts
|
147,542
|
165,830
|
(2,783)
|
(3,422)
|
Total derivative instruments, net
|
1,299,665
|
1,751,110
|
(12,393)
|
(11,092)
|
Sensitivity analysis
In
the sensitivity analysis related to the foreign exchange exposure risk, Management of the Company and its subsidiaries believes that it
is important to consider, in addition to the assets and liabilities with exposure to fluctuations in exchange rates recorded in the balance
sheet, the fair value of the financial instruments entered into by the Company and its subsidiaries
to hedge certain exposures on March 31, 2021 and December 31, 2020, as set forth in the table below:
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Borrowings and financing in foreign currency in Brazil (a)
|
(4,598,561)
|
(4,246,692)
|
Receivables in foreign currency in Brazil
|
274,595
|
236,782
|
Trade accounts payable in foreign currencies in Brazil
|
(9,002)
|
(14,459)
|
Fair value of financial derivatives
|
4,947,494
|
4,680,478
|
Net asset exposure
|
614,526
|
656,109
|
|
a)
|
Excluding transaction costs.
|
This analysis considers only financial
assets and liabilities recorded in Brazil in foreign currency, since exposure to the foreign exchange rate variation in other countries
is close to zero due to the strong currency and effectiveness of its derivatives, and it is considered that all other variables, especially
interest rates, remain constant and do not consider any impact of the forecasted purchases and sales.
The following table shows the projection
of the incremental loss that would have been recognized in profit or loss for the subsequent year if the current net foreign exchange
exposure remains static, based on the following scenarios:
|
Consolidated
|
Parity - R$ vs US$
|
5.6973
|
5.6666
|
4.2499
|
2.8333
|
|
Scenario
|
Scenario I
|
Scenario II
|
Scenario III
|
Operation/Instrument
|
Real
|
Probable
|
Depreciation 25%
|
Depreciation 50%
|
Assets denominated in US$
|
|
|
|
|
Fair value of “financial” derivatives
|
4,947,494
|
4,920,823
|
3,690,617
|
2,460,412
|
Trade accounts receivable recorded in Brazil in foreign currency
|
274,595
|
273,115
|
204,836
|
136,558
|
|
|
|
|
|
Liabilities denominated in US$
|
|
|
|
|
Borrowings and financing in Brazil in foreign currency (a)
|
(4,598,561)
|
(4,573,771)
|
(3,430,328)
|
(2,286,886)
|
Accounts payable registered in Brazil in foreign currency
|
(9,002)
|
(8,954)
|
(6,715)
|
(4,477)
|
Impact on net income and equity
|
|
(3,313)
|
(156,116)
|
(308,919)
|
The probable scenario considers future
US dollar rates for a 90 days-term. According to quotations obtained at the Brazilian Stock Exchange (“B3”) on March 31, 2021
and in line with the first maturities of financial instruments with exchange exposure, R$5.67 / US$ 1.00. Scenarios I and II consider
a decrease in the US dollar of 25% (R$4.25 / US$ 1.00) and 50% (R$2.83 / US$1.00), respectively. Management uses the probable scenario
in the assessment of possible changes in the exchange rate and presents the referred scenario in compliance with IFRS 7- Financial Instruments:
Disclosures (CPC 40 - Instrumentos Financeiros: Divulgações)
The Company and its subsidiaries do
not use derivative financial instruments for speculative purposes.
Derivative instruments
designated for hedge accounting
The information regarding the Derivative
instruments designated for hedge accounting was presented in note 6.2 (c) of the Company’s financial statements for the year ended
December 31, 2020.
The outstanding positions of derivative
financial instruments designated as cash flow hedge on March 31, 2021 are set forth below.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
Cash flow hedge
instrument – Consolidated
|
|
|
|
|
|
Other comprehensive income
|
|
Hedge instrument
|
Notional currency
|
Notional value
|
Curve Value
|
Fair
value
|
Accumulated contract gain (loss)
|
Gain in the 3-month period ended March 31, 2021
|
Currency Swap – US$/R$
|
Currency
|
BRL
|
2,576,020
|
2,005,750
|
2,198,088
|
192,338
|
(56,684)
|
Forward contract (The Body Shop)
|
Currency
|
BRL
|
1,008,552
|
(9,140)
|
(9,438)
|
(9,438)
|
(4,035)
|
Forward contract (Natura Indústria)
|
Currency
|
BRL
|
11,865
|
-
|
517
|
517
|
1,219
|
Total
|
|
|
3,596,437
|
1,996,610
|
2,189,167
|
183,417
|
(59,500)
|
The changes in cash flow hedge reserve
recorded in OCI are shown below:
|
Consolidated
|
Cash flow hedge balance as at December 31, 2019
|
42,729
|
Change in the fair value of hedge instrument recognized in OCI
|
248,684
|
Tax effects on fair value of hedge instrument
|
(83,802)
|
Cash flow hedge balance as at March 31, 2020
|
207,611
|
|
|
Cash flow hedge balance as at December 31, 2020
|
159,077
|
Change in the fair value of hedge instrument recognized in OCI
|
(59,500)
|
Tax effects on fair value of hedge instrument
|
19,845
|
Cash flow hedge balance as at March 31, 2021
|
119,422
|
The Company designates as cash flow
hedge derivative financial instruments used to offset variations arising from foreign currency exposure in the market value of debts contracted
in a currency other than the functional currency.
c)
Interest rate risk
The information regarding the interest
rate risk was presented in note 6.2 (d) of the Company’s financial statements for the year ended December 31, 2020.
Sensitivity analysis
On March 31, 2021, there are borrowings,
financing and debentures contracts denominated in foreign currency that are linked to interest swap contracts, changing the liability
index rate to the CDI variation. Accordingly, the risk of the Company and its subsidiaries becomes the exposure to the variation of the
CDI. The following table presents the exposure to interest rate risks of transactions related to CDI, including derivative transactions
(borrowings, financing and debentures in Brazil were considered in full, given that 98.8% of the amount is related to the CDI):
|
Company
|
Consolidated
|
Total borrowings and financing - in local currency (note 19)
|
(524,106)
|
(9,426,119)
|
Operations in foreign currency with derivatives related to CDI (a)
|
-
|
(4,584,772)
|
Short-term investments (notes 6 and 7)
|
389,250
|
5,306,413
|
Net exposure
|
(134,856)
|
(8,704,478)
|
|
a)
|
Refers to transactions involving derivatives related to CDI to hedge borrowings and financing arrangements
raised in foreign currency in Brazil.
|
The sensitivity analysis considers
the exposure of borrowings and financing, net of short-term investments, linked to CDI (notes 6 and 7).
The following tables show the projection
of incremental loss that would have been recognized in profit or loss for the following period, assuming that the current net liability
exposure is static and the following scenarios:
Company
|
Description
|
Risk
|
Probable scenario
|
Scenario II
|
Scenario III
|
Net liability
|
Rate increase
|
2,406
|
5,460
|
8,514
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
Consolidated
|
Description
|
Risk
|
Probable scenario
|
Scenario II
|
Scenario III
|
Net liability
|
Rate increase
|
(38,871)
|
(88,207)
|
(137,543)
|
The probable scenario considers future
interest rates for 90 days-term, according to B3 quotations for the expected dates of the first maturities of financial instruments with
exposure to interest rates, calculated on March 31, 2021. Scenarios II and III consider an increase in interest rates by 25% (4.13% per
year) and 50% (4.95% per year), respectively, over a CDI rate of 3.30% per year.
d)
Credit risk
The information regarding the credit
risk was presented in note 6.2 (e) of the Company’s financial statements for the year ended December 31, 2020.
e) Liquidity
risk
The information regarding the liquidity
risk was presented in note 6.2 (f) of the Company’s financial statements for the year ended December 31, 2020.
Management monitors the Company’s
and its subsidiaries liquidity level considering the expected cash flows in exchange for unused credit facilities, as shown in the following
table:
|
Company
|
Consolidated
|
|
March 31,
2021
|
December 31, 2020
|
March 31,
2021
|
December 31, 2020
|
Total current assets
|
1,121,559
|
988,266
|
17,739,096
|
18,734,820
|
Total current liabilities
|
(571,114)
|
(566,230)
|
(15,006,149)
|
(16,159,586)
|
Total net working capital
|
550,445
|
422,036
|
2,732,947
|
2,575,234
|
As of March 31, 2021, the carrying
amount of financial liabilities, measured using the amortized cost method, considering interest payments at a floating rate and the value
of debt securities reflecting the forward market interest rates, may be changed due to the variation in floating interest rates. Their
corresponding maturities, considering that the Company and its subsidiaries are in compliance with covenants, are shown below:
Company
|
Less than one year
|
One to five years
|
Over five years
|
Total expected cash flow
|
Interest to be accrued
|
Carrying amount
|
Borrowings, financing and debentures
|
526,956
|
-
|
-
|
526,956
|
(2,850)
|
524,106
|
Leases
|
5,621
|
-
|
-
|
5,621
|
-
|
5,621
|
Consolidated
|
Less than one year
|
One to five years
|
Over five years
|
Total expected cash flow
|
Interest to be accrued
|
Carrying amount
|
Borrowings, financing and debentures
|
3,595,200
|
10,637,144
|
1,224,196
|
15,456,540
|
(1,445,649)
|
14,010,891
|
Leases
|
1,230,813
|
2,654,332
|
537,304
|
4,422,449
|
(501,836)
|
3,920,613
|
Payables to related parties, trade accounts payable and supply chain finance
|
6,555,155
|
-
|
|
6,555,155
|
-
|
6,555,155
|
The Body Shop's up to £70 million
(seventy million pounds) credit line, existing on December 31, 2020, was liquidated during the first quarter of 2021.
The Company monitors the evolution
of the Covid-19 pandemic in the markets in which it operates, acting to minimize impacts on the operations and on the equity and financial
position of the Company and its subsidiaries, and implementing appropriate measures to guarantee the continuity of operations, protect
cash, improve liquidity, and promote the health and safety of all.
During the three-month period ended
March 31, 2021, Management assessed the possible impacts of the main risks and uncertainties that could affect the interim information
presented herein. In Brazil, the increase in the transmission rate and in the number of deaths in 2021 led to the adoption of more restrictive
measures of circulation and operation of non-essential activities. In this scenario, the Company and its subsidiaries maintained
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
their focus on operating in a digital
environment, allowing them to offset the impact of closing stores, by increasing sales through e-commerce and direct sales. However, gradual
decreases in restrictions in markets in which the Company and its subsidiaries operate, mainly in Europe and Asia, have been permitted
by local authorities, allowing physical stores to resume operating, even with some level of restriction, benefiting this segment of business.
In view of this scenario, the Company
reviews the recoverability expectations of its financial and non-financial assets in the preparation of this interim information, considering
the most recent information available and reflected in the Company's business plans. In the three-month period ended March 31, 2021, no
deterioration was identified in the Company's liquidity, its cash position or leverage that could impact the compliance with financial
covenants.
Additionally, Management has revised
its projections of future results since the end of the year ended December 31, 2020, not identifying deviations from these projections
or in the market assumptions associated with the impairment test carried out on December 31, 2020 that indicated the need to carry out
an additional impairment test of goodwill and other long-lived intangible assets.
The
Company’s capital management objectives are to ensure that the Company and its subsidiaries are
continuously capable of offering return to its shareholders and benefits to other stakeholders, in addition to maintaining an ideal capital
structure to reduce this capital cost.
The Company monitors capital based
on the financial leverage ratios. This ratio corresponds to the net debt divided by equity. The net debt corresponds to total borrowings
and financings (including short and long-term borrowings and financings, as shown in the consolidated statement of financial position),
deducted from cash and cash equivalents and short-term investments (except for “Crer Para Ver” funds).
The information regarding the general
considerations and polices of the group companies (Natura, Avon, TBS and Aesop) was presented in note 6.1 of the financial statements
for the year ended December 31, 2020.
The carrying amounts and fair values
of the Company’s financial instruments as at March 31, 2021 and December 31, 2020 are presented below:
Company
|
|
|
|
Carrying amount
|
Fair value
|
|
Note
|
Classification by category
|
Fair value hierarchy
|
March 31, 2021
|
December 31, 2020
|
March 31, 2021
|
December 31, 2020
|
Financial assets
|
|
|
|
|
|
|
|
Cash and cash equivalent
|
6
|
|
|
|
|
|
|
Cash and banks
|
|
Amortized cost
|
Level 2
|
1,661
|
1,501
|
1,661
|
1,501
|
Certificate of bank deposits
|
|
Amortized cost
|
Level 2
|
506,700
|
504,198
|
506,700
|
504,198
|
|
|
|
|
508,361
|
505,699
|
508,361
|
505,699
|
Short-term investments
|
|
|
|
|
|
|
|
Exclusive investment funds
|
7
|
Fair value through
profit or loss
|
Level 2
|
387,589
|
340,999
|
387,589
|
340,999
|
|
|
|
|
|
|
|
|
Accounts receivables – related parties
|
31.1
|
Amortized cost
|
Level 2
|
200,425
|
115,952
|
200,425
|
115,952
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
Borrowings in local currency
|
19
|
Amortized cost
|
Level 2
|
(524,106)
|
(515,966)
|
(524,106)
|
(515,966)
|
Trade accounts payable, supply chain finance and related parties
|
20/31.1
|
Amortized cost
|
Level 2
|
(5,621)
|
(16,887)
|
(5,621)
|
(16,887)
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
Consolidated
|
|
|
|
Carrying amount
|
Fair value
|
Note
|
Classification by category
|
Fair value hierarchy
|
March 31, 2021
|
December 31, 2020
|
March 31, 2021
|
December 31, 2020
|
Financial assets
|
|
|
|
|
|
|
|
Cash and cash equivalent
|
6
|
|
|
|
|
|
|
Cash and banks
|
|
Amortized cost
|
Level 2
|
3,056,712
|
4,436,123
|
3,056,712
|
4,436,123
|
Certificate of bank deposits
|
|
Amortized cost
|
Level 2
|
792,759
|
808,988
|
792,759
|
808,988
|
Repurchase transactions
|
|
Fair value through profit or loss
|
Level 2
|
476,888
|
576,108
|
476,888
|
576,108
|
|
|
|
|
4,326,359
|
5,821,219
|
4,326,359
|
5,821,219
|
Short term investments
|
7
|
|
|
|
|
|
|
Government bonds
|
|
Fair value through profit or loss
|
Level 1
|
754,676
|
864,940
|
754,676
|
864,940
|
Restricted cash
|
|
Fair value through profit or loss
|
Level 2
|
-
|
40,425
|
-
|
40,425
|
Financial treasury bill
|
|
Fair value through profit or loss
|
Level 2
|
505,740
|
505,152
|
505,740
|
505,152
|
Loan investment fund
|
|
Fair value through profit or loss
|
Level 2
|
970,345
|
817,253
|
970,345
|
817,253
|
Dynamo Beauty Ventures Ltd fund
|
|
Fair value through profit or loss
|
Level 3
|
28,487
|
16,104
|
28,487
|
16,104
|
Certificate of bank deposits
|
|
Fair value through profit or loss
|
Level 2
|
18,940
|
292,878
|
18,940
|
292,878
|
|
|
|
|
2,278,188
|
2,536,752
|
2,278,188
|
2,536,752
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
8
|
Amortized cost
|
Level 2
|
3,370,107
|
3,597,535
|
3,370,107
|
3,597,535
|
Judicial deposits
|
12
|
Amortized cost
|
Level 2
|
557,960
|
566,190
|
557,960
|
566,190
|
Carbon credits
|
14
|
Fair value through profit or loss
|
Level 2
|
4,327
|
4,097
|
4,327
|
4,097
|
Sublease receivables
|
14
|
Amortized cost
|
Level 2
|
378,083
|
357,538
|
378,083
|
357,538
|
Receivables from service providers
|
14
|
Amortized cost
|
Level 1
|
154,631
|
135,030
|
154,631
|
135,030
|
|
|
|
|
4,465,108
|
4,660,390
|
4,465,108
|
4,660,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“Financial” and “operating” derivatives
|
|
Fair value through profit or loss - hedging instrument
|
Level 2
|
2,189,167
|
1,873,764
|
2,189,167
|
1,873,764
|
“Financial” and “operating” derivatives
|
|
Fair value through profit or loss
|
Level 2
|
39,477
|
34,214
|
39,477
|
34,214
|
|
|
|
|
2,228,644
|
1,907,978
|
2,228,644
|
1,907,978
|
Financial liabilities
|
|
|
|
|
|
|
|
Borrowings, financing and debentures
|
19
|
|
|
|
|
|
|
Local currency borrowings
|
|
Amortized cost
|
Level 2
|
(9,426,119)
|
(9,591,809)
|
(4,773,460)
|
(9,466,921)
|
Foreign currency borrowings
|
|
Amortized cost
|
Level 2
|
(4,584,772)
|
(4,231,104)
|
(4,796,000)
|
(4,459,081)
|
|
|
|
|
(14,010,891)
|
(13,822,913)
|
(9,569,460)
|
(13,926,002)
|
|
|
|
|
|
|
|
|
Carbon credits
|
23
|
Fair value through profit or loss
|
Level 2
|
(5,019)
|
(5,560)
|
(5,019)
|
(5,560)
|
|
|
|
|
|
|
|
|
“Financial” and “operating” derivatives
|
|
Fair value through profit or loss - hedging instrument
|
Level 2
|
-
|
-
|
|
-
|
“Financial” and “operating” derivatives
|
|
Fair value through profit or loss
|
Level 2
|
(40,924)
|
(61,201)
|
(40,924)
|
(61,201)
|
|
|
|
|
(40,924)
|
(61,201)
|
(40,924)
|
(61,201)
|
|
|
|
|
|
|
|
|
Lease liabilities
|
18
|
Amortized cost
|
Level 2
|
(3,920,613)
|
(3,858,455)
|
(3,920,613)
|
(3,856,699)
|
Trade payables and supply chain finance operations
|
20
|
Amortized cost
|
Level 2
|
(6,555,155)
|
(6,774,205)
|
(6,555,155)
|
(6,774,205)
|
The information regarding the general
and political considerations of the companies of the Company was presented in the annual financial statements of 2020, in note 6.1.
The Company assesses that the balances
of cash and cash equivalents, trade accounts receivable, trade payable and other current liabilities are equivalent to their book values,
mainly due to the short-term maturities of these instruments.
The book values of
financial investments in Bank Deposit Certificates measured at amortized cost are close to their fair values due
to the fact that the operations are carried out at floating interest rates.
The book values of
borrowings, financing and debentures are measured at their amortized cost and disclosed at fair value, which does not differ materially
from the book values as the agreed interest rates are consistent with current
market rates.
The fair value of foreign exchange
derivatives (swap and forward) is determined based on future exchange rates on the balance sheet dates, with the resulting value discounted
to present value.
The fair value of the investment in
the Dynamo Beauty Ventures Ltd. Fund, classified at level 3 of the fair value hierarchy, is calculated based on information about the
net value of the investment in the Fund (NAV) calculated by the Fund manager based on valuation assumptions consistent with the accounting
practices adopted in Brazil and the IFRS, adjusted to reflect the fair value assumptions applicable to the nature of the Company's investment.
The Company's assessment takes into account inputs not observable in the model, in order to reflect the contractual restrictions on this
investment for early redemption and trading of the security in the market. The significant unobservable inputs used in measuring fair
value reflect a discount due to the lack of liquidity of the security, which represent the values that
the Company determined that market agents would take into account for these discounts when defining the investment price. An increase
of 1% in the applied discount (15.4%) would result in a reduction in the value of the investment by R$ 283.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
There was no transfer between measurement
levels in the fair value hierarchy in the three-month period ended March 31, 2021 for these assets and liabilities.
|
6.
|
CASH AND CASH EQUIVALENTS
|
|
Company
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
March 31,
2021
|
December 31,
2020
|
Cash and banks
|
1,661
|
1,501
|
3,056,712
|
4,436,576
|
Certificate of Bank Deposits (a)
|
506,700
|
504,198
|
792,759
|
808,988
|
Repurchase transactions (b)
|
-
|
-
|
476,888
|
576,108
|
|
508,361
|
505,699
|
4,326,359
|
5,821,672
|
|
a)
|
As of March 31, 2021, Certificate of Bank Deposits (“CDB”) short-term investments are remunerated
at an average rate of 102.8% of CDI (103.2% of CDI as of December 31, 20209) with daily maturities redeemable with the issuer itself,
without significant loss of value.
|
|
b)
|
Repurchase transactions are securities issued by banks with a commitment
by the bank to repurchase the securities, and by the client to resell the security, at a defined interest rate and within a predetermined
term, which are backed by public or private securities (depending on the financial institution) and are registered within the Central
of Custody and Financial Settlement of Securities (“CETIP”). As of March 31, 2021, repurchase operations are remunerated at
an average rate of 100.0% of CDI (100.0% of the CDI on December 31, 2020).
|
|
7.
|
SHORT-TERM INVESTMENTS
|
|
Company
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
March 31,
2021
|
December 31,
2020
|
Exclusive investment funds (a)
|
387,589
|
340,999
|
-
|
-
|
Loan investment funds(e)
|
-
|
-
|
970,345
|
817,253
|
Certificate of Bank Deposits (b)
|
-
|
-
|
18,940
|
292,878
|
Treasury bills (c)
|
-
|
-
|
505,740
|
505,152
|
Government bonds (LFT) (d)
|
-
|
-
|
754,676
|
864,940
|
Dynamo Beauty Ventures Ltd. Fund
|
-
|
-
|
28,487
|
16,104
|
Restricted cash
|
-
|
-
|
-
|
40,425
|
|
387,589
|
340,999
|
2,278,188
|
2,536,752
|
|
|
|
|
|
Current
|
387,589
|
340,999
|
2,249,701
|
2,520,648
|
Non-current
|
-
|
-
|
28,487
|
16,104
|
|
a)
|
The Company and subsidiaries concentrate most of their investments in an exclusive investment fund, which
holds interest in shares of the Essential Investment Fund.
|
The values of the quotas held by the
Company are presented under the heading “Exclusive Investment Fund” at the Parent Company. The financial statements of the
Exclusive Investment Fund, in which the group has exclusive participation (100% of the quotas), were consolidated, except for the quotas
of the Natura Institute, and the amounts of its portfolio were segregated by type of investment and classified as cash and marketable
securities, based on the accounting practices adopted by the Company. For the purposes of consolidated presentation, the fund balance,
as well as the positions of the other subsidiaries are presented according to the financial component.
|
b)
|
Investments in CDB classified as short-term investments are remunerated at an average rate of 113.0% of
the CDI (100.0% of the CDI as at December 31, 2020). As at March 31, 2021, the “Crer Para Ver” line within the exclusive fund
is R$ 63,665 R$ 57,609 as at December 31, 2020).
|
|
c)
|
As of March 31, 2021, investments in Treasury bills are remunerated at an average rate of 132.8% of the
CDI (136.61% as at December 31, 2020).
|
|
d)
|
As of March 31, 2021, investments in Government Bonds (LFT) are remunerated at an average rate of 104.9%
of the CDI (105.9% of the CDI on December 31, 2020).
|
|
e)
|
Mutual investment funds refer to the investments of Natura América Hispânica entities concentrated
in Argentina, Chile, Colombia and Mexico.
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
The composition of the securities that
make up the portfolio of the Essential Investment Fund, in which the Company and its subsidiaries hold 100% interest, on March 31, 2021
and December 31, 2019, is as follows:
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Certificate of Bank Deposits (CDB)
|
18,940
|
292,878
|
Repurchase transactions (cash and cash equivalent)
|
474,806
|
576,108
|
Financial bills
|
505,740
|
505,152
|
Government bonds (LFT)
|
754,676
|
864,940
|
|
1,754,162
|
2,239,078
|
|
8.
|
TRADE ACCOUNTS RECEIVABLE
|
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Trade accounts receivable
|
3,610,998
|
4,029,643
|
Allowance for expected credit losses
|
(240,891)
|
(432,108)
|
|
3,370,107
|
3,597,535
|
The maximum exposure to credit risk
at the interim accounting information date is the carrying amount of each aging range, net of the allowance for expected credit losses,
as shown in the aging list below:
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Current
|
2,226,860
|
1,988,583
|
Past due:
|
|
|
Up to 30 days
|
969,572
|
1,506,460
|
31 to 60 days
|
132,712
|
173,121
|
61 to 90 days
|
85,185
|
111,735
|
91 to 180 days
|
196,669
|
249,744
|
Allowance for expected credit losses
|
(240,891)
|
(432,108)
|
|
3,370,107
|
3,597,535
|
The changes in the allowance for expected
credit losses for the three-month period ended March 31, 2021 and 2020 are as follows:
|
Consolidated
|
Balance as at December 31, 2019
|
(107,995)
|
Acquisition of subsidiary
|
(270,187)
|
Additions
|
(209,933)
|
Write-offs (a)
|
182,333
|
Exchange variation
|
(42,573)
|
Balance as at March 31, 2020
|
(448,355)
|
|
|
Balance as at December 31, 2020
|
(161,922)
|
Additions
|
(225,417)
|
Write-offs/reversals (a)
|
165,325
|
Exchange variation
|
(18,877)
|
Balance as at March 31, 2021
|
(240,891)
|
|
a)
|
Refers to accounts overdue for more than 180 days which are written off when the Company has no expectation
of recovering the trade accounts receivable and sales of customer portfolio.
|
The following table shows trade accounts
receivable by exposure to doubtful accounts on March 31, 2021:
|
Consolidated
|
|
Trade accounts receivable
|
Allowance for expected credit losses
|
Current
|
2,226,860
|
(72,662)
|
Past due:
|
|
|
Up to 30 days
|
969,572
|
(28,332)
|
31 to 60 days
|
132,712
|
(20,690)
|
61 to 90 days
|
85,185
|
(18,306)
|
91 to 180 days
|
196,669
|
(100,901)
|
|
3,610,998
|
(240,891)
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Finished products
|
4,295,644
|
3,592,864
|
Raw materials and packaging
|
1,101,328
|
1,015,156
|
Consumables
|
191,771
|
170,188
|
Work in progress
|
39,238
|
36,025
|
Allowance for losses
|
(285,258)
|
(269,963)
|
|
5,342,723
|
4,544,270
|
The changes in the allowance for inventory
losses for the three-month period ended March 31, 2021 and 2020 are as follows:
|
Consolidated
|
Balance as at December 31, 2019
|
(185,232)
|
Acquisition of subsidiary
|
(332,350)
|
Additions (a)
|
(119,735)
|
Write-offs (b)
|
92,296
|
Exchange rate variation
|
(80,593)
|
Balance as at March 31, 2020
|
(625,614)
|
|
|
Balance as at December 31, 2020
|
(269,963)
|
Additions (a)
|
(120,888)
|
Write-offs (b)
|
131,870
|
Exchange rate variation
|
(26,277)
|
Balance as at March 31, 2021
|
(285,258)
|
|
a)
|
It refers to the recognition of net allowance for losses due to discontinuation, expiration and quality,
to cover expected losses on the realization of inventories, pursuant to the policy of the Company and its subsidiaries.
|
|
b)
|
Consist of write-offs of products discarded by the Company and its subsidiaries.
|
|
Company
|
Consolidated
|
|
March 31,
2021
|
December 31, 2020
|
March 31,
2021
|
December 31, 2020
|
ICMS on purchase of goods (a)
|
-
|
-
|
718,837
|
681,147
|
Taxes on purchase of goods – foreign subsidiaries
|
-
|
-
|
272,550
|
230,260
|
ICMS on purchases of PP&E
|
-
|
-
|
9,548
|
9,578
|
PIS and COFINS on purchase of goods (b)
|
-
|
-
|
772,916
|
780,841
|
Withholding income tax
|
20,353
|
23,637
|
20,353
|
23,637
|
Withholding PIS, COFINS and CSLL
|
-
|
-
|
3,451
|
1,669
|
Tax on Manufactured Products - IPI (c)
|
-
|
-
|
86,824
|
77,096
|
Other
|
-
|
-
|
230,452
|
199,333
|
|
20,353
|
23,637
|
2,114,931
|
2,003,561
|
|
|
|
|
|
Current
|
20,353
|
23,637
|
1,176,299
|
1,071,349
|
Non-current
|
-
|
-
|
938,632
|
932,212
|
|
a)
|
Tax credits related to the accumulated Brazilian tax on the circulation of goods, interstate and inter-municipal
transport and communication services (“ICMS”) were generated mainly by purchases, whose tax rate is higher than the average
sales and by the increase in exports. The recognition of these credits normally occurs through offsetting with sales operations in the
domestic market.
|
|
b)
|
The accumulated tax credits for PIS and COFINS basically arise from credits on purchases of raw materials
used in production. The realization of these credits normally occurs through offsetting with sales operations in the domestic market.
|
|
c)
|
The balance will be used to IPI payable in future operations of the Company's
subsidiaries.
|
|
11.
|
INCOME TAX AND SOCIAL CONTRIBUTION
|
The
effective rate calculated by the Company and its subsidiaries for
the three-month period ended March 31, 2021 was negative by 95% (13% on March 31, 2020). This percentage is based on the loss before tax
of R$ 95,208 million (R$ 730,136 on March 31, 2020) and on the income tax expense of R$ 90,093 million (R$ 94,803 on March 31, 2020).
The main components that cause the effective rate to deviate from the 34% nominal income tax rate are the tax losses of certain jurisdictions
that cannot be benefited by the deferred income tax asset, permanent effects related to income tax withheld at source originated in transactions
between group companies that cannot be used and the additional recognition of deferred income tax liabilities due to the announcement
made by the Government of England that the nominal rate would not be reduced from 19% to 17%. Excluding the adverse effects of the
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
reconciliation of items that resulted
mainly from tax jurisdictions in which the Company is currently unable to obtain an income tax benefit, the effective tax rate of the
Company would be approximately 29.5%.
The changes in deferred asset and liability
income tax and social contribution for the three-month period ended March 31, 2021 and 2020 were as follows:
|
Consolidated
|
|
Asset
|
Liability
|
Balance as at December 31, 2019
|
374,448
|
(450,561)
|
Effect on profit or loss
|
(30,857)
|
(33,472)
|
Acquisition of subsidiary
|
667,034
|
(728,274)
|
Reserve for grant of options and restricted shares
|
(39,435)
|
-
|
Effect on other comprehensive income
|
(83,802)
|
-
|
Currency translation effect
|
109,031
|
(292,603)
|
Balance as at March 31, 2020
|
996,419
|
(1,504,910)
|
|
|
|
Balance as at December 31, 2020
|
1,339,725
|
(1,288,045)
|
Effect on profit or loss
|
(22,222)
|
(26,190)
|
Reclass form asset to liability
|
(108,749)
|
108,749
|
Reserve for grant of options and restricted shares
|
528
|
7,097
|
Effect on other comprehensive income
|
1,051
|
(19,273)
|
Currency translation effect
|
60,363
|
30,812
|
Balance as at March 31, 2020
|
1,270,696
|
(1,186,850)
|
The judicial deposits held by the Company
and its subsidiaries as at March 31, 2021 and December 31, 2020 are as follows:
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Unaccrued tax lawsuits (a)
|
254,557
|
262,654
|
Accrued tax lawsuits (b)
|
255,385
|
252,961
|
Unaccrued civil lawsuits
|
7,318
|
9,671
|
Accrued civil lawsuits
|
2,354
|
2,189
|
Unaccrued labor lawsuits
|
13,601
|
14,166
|
Accrued labor lawsuits
|
24,745
|
24,549
|
Total judicial deposits
|
557,960
|
566,190
|
|
a)
|
The tax procedure related to these judicial deposits refer mainly to the ICMS-ST, disclosed in note 22.2.1,
contingent liabilities - possible risk of loss.
|
|
b)
|
The tax procedure related to these judicial deposits refer, substantially, to the sum of the amounts disclosed
in note 22.1.1, and the amounts presented in note 21.
|
The changes in balance of judicial
deposits for the three-month period ended March 31, 2021 and 2020 are as follows:
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Consolidated
|
Balance as at December 31, 2019
|
337,255
|
Acquisition of subsidiary
|
283,885
|
New deposits
|
4,867
|
Redemptions
|
(1,519)
|
Interests
|
1,383
|
Payments
|
(5,344)
|
Write-offs for expenses
|
(801)
|
Balance as at March 31, 2020
|
619,726
|
|
|
Balance as at December 31, 2020
|
566,190
|
New deposits
|
6,479
|
Redemptions
|
(14,609)
|
Interests
|
1,370
|
Payments / Write-offs for expenses
|
(1,048)
|
Exchange variance
|
(422)
|
Balance as at March 31, 2021
|
557,960
|
Besides to judicial deposits, the Company
and its subsidiaries have insurance policies to guarantee certain lawsuits. Details of these insurances are presented in note 33.
|
13.
|
NON-CURRENT ASSETS HELD FOR SALE
|
The assets classified as held for sale
were acquired in the acquisition process of Avon. The change in the balance for the three-month period ended March 31, 2021 and 2020 is
as follows:
|
Consolidated
|
Balance as at December 31, 2019
|
-
|
Avon acquisition (a)
|
186,518
|
Balance as at March 31, 2020
|
186,518
|
|
|
Balance as at December 31, 2020
|
181,279
|
Transfer to fixed assets (a)
|
(25,779)
|
Sale
|
(49)
|
Exchange rate variation
|
5,150
|
Balance as at March 31, 2021(b)
|
160,601
|
|
a)
|
During the first quarter of 2020, transfers occurred due to the resumption of activities in the Saudi
Arabian unit.
|
|
b)
|
The balance on March 31, 2021 is composed of assets located in Brazil and Spain (on December 31, 2020
it was composed of Saudi Arabia, Brazil and Spain).
|
|
14.
|
OTHER CURRENT AND NON-CURRENT ASSETS
|
|
Company
|
Consolidated
|
|
March 31,
2021
|
December 31, 2020
|
March 31,
2021
|
December 31, 2020
|
Advance for advertising and marketing
|
-
|
-
|
122,192
|
42,233
|
Advances to suppliers
|
-
|
-
|
326,252
|
257,099
|
Advances to employees
|
-
|
-
|
67,295
|
65,180
|
Advance and security deposit for rent (a)
|
-
|
-
|
212,311
|
169,958
|
Prepaid insurance expenses
|
-
|
-
|
212,011
|
200,074
|
Surplus pension plan (b)
|
-
|
-
|
752,230
|
683,425
|
Advances to customs broker - Import taxes
|
-
|
-
|
42,641
|
34,016
|
Sublease receivables (c)
|
-
|
-
|
378,083
|
357,538
|
Carbon credits
|
-
|
-
|
4,327
|
4,097
|
Receivables from service providers (d)
|
-
|
-
|
154,631
|
135,030
|
Other
|
1,210
|
2,127
|
135,173
|
195,138
|
|
1,210
|
2,127
|
2,407,146
|
2,143,788
|
|
|
|
|
|
Current
|
321
|
1,979
|
800,631
|
616,120
|
Non-current
|
889
|
148
|
1,606,515
|
1,527,668
|
|
a)
|
Mainly related to: (i) advances of rental agreements that were not included in the initial measurement
of lease liabilities / right-of-use of the subsidiary The Body Shop, in accordance with the exemptions on IFRS 16 / CPC 06(R2); and (ii)
security deposits for the rental of certain stores of the subsidiaries The Body Shop and Aesop, which will be returned by the landlord
at the end of the rental agreements.
|
|
b)
|
Pension plan arising from the acquisition of Avon (note 28.2).
|
|
c)
|
Refers to the sublease receivable from the New York office owned by Avon.
|
|
d)
|
Refers to receivables mainly arising from damage that occurred with carriers and insurance companies.
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Company
|
|
March 31,
2021
|
December 31,
2020
|
Investments in subsidiaries, net of losses
|
14,207,339
|
15,433,251
|
Goodwill from the acquisition of subsidiaries
|
13,934,798
|
11,511,028
|
Total
|
28,142,137
|
26,944,279
|
Information and changes in the balances
for the three-month period ended March 31, 2021 and 2020:
|
Natura Cosméticos S.A.
|
Avon Products, Inc.
|
Natura &Co International S.à r.l.
|
Total
|
Percentage of participation
|
100.00%
|
100.00%
|
100.00%
|
|
Equity of subsidiaries
|
7,805,623
|
(5,583,437)
|
6,196,885
|
8,419,071
|
Equity participation (capital deficit)
|
7,805,623
|
(5,583,437)
|
6,196,885
|
8,419,071
|
Fair value adjustment of acquired assets and liabilities
|
-
|
5,788,268
|
-
|
5,788,268
|
Goodwill
|
-
|
13,934,798
|
-
|
13,934,798
|
Total
|
7,805,623
|
14,139,629
|
6,196,885
|
28,142,137
|
Subsidiaries net income (loss) for the year
|
229,228
|
(396,539)
|
41,332
|
(125,979)
|
|
|
|
|
|
Balances as at December 31, 2020
|
6,929,074
|
14,373,448
|
5,641,757
|
26,944,279
|
Share of the profit (loss) of equity investees
|
229,228
|
(396,539)
|
41,332
|
(125,979)
|
Exchange rate variation and other adjustments in the conversion of investments of foreign subsidiaries
|
798,000
|
345,291
|
513,796
|
1,657,087
|
Unrealized losses on the revaluation of balances between companies
|
-
|
(182,571)
|
-
|
(182,571)
|
Hyperinflationary economy adjustment effect
|
41,064
|
-
|
-
|
41,064
|
Contribution of the Parent Company to stock option plans granted to subsidiaries executives and other reserves, net of tax effects
|
16,524
|
-
|
-
|
16,524
|
Effect on hedge accounting, net of tax effects
|
(39,655)
|
-
|
-
|
(39,655)
|
Distribution of dividends and interest on own equity
|
(168,612)
|
-
|
-
|
(168,612)
|
Balances as at March 31, 2021
|
7,805,623
|
14,139,629
|
6,196,885
|
28,142,137
|
.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
16.
|
PROPERTY, PLANT AND EQUIPMENT
|
|
Consolidated
|
|
Useful
life range
(in
years)
|
December
31, 2020
|
Additions
|
Write-offs
|
impairment
|
Transfers
|
Exchange
rate variation
|
March
31,
2021
|
Cost:
|
|
|
|
|
|
|
|
|
Vehicles
|
2
to 5
|
79,227
|
523
|
(10,649)
|
-
|
6,908
|
2,835
|
78,844
|
Templates
|
3
|
187,852
|
-
|
-
|
-
|
28
|
41
|
187,921
|
Tools and accessories
|
3
to 20
|
85,678
|
1,983
|
(129)
|
-
|
707
|
(24,709)
|
63,530
|
Facilities
|
3
to 60
|
293,471
|
3
|
(402)
|
-
|
2,685
|
3,196
|
298,953
|
Machinery and accessories
|
3
to 15
|
1,819,693
|
2,442
|
(17,971)
|
-
|
27,396
|
(5,219)
|
1,826,341
|
Leasehold improvements
|
2
to 20
|
963,957
|
8,972
|
(8,695)
|
310
|
27,921
|
57,933
|
1,050,398
|
Buildings
|
14
to 60
|
1,899,176
|
892
|
(3)
|
-
|
(3,198)
|
67,124
|
1,963,991
|
Furniture and fixture
|
2
to 25
|
566,548
|
2,936
|
(1,590)
|
33
|
10,922
|
29,581
|
608,430
|
Land
|
-
|
661,613
|
-
|
(1,203)
|
-
|
-
|
12,855
|
673,265
|
IT equipment
|
3
to 15
|
543,772
|
15,603
|
(4,882)
|
-
|
28,679
|
24,103
|
607,275
|
Other assets
|
-
|
36,687
|
-
|
(891)
|
-
|
-
|
473
|
36,269
|
Projects in progress
|
-
|
408,385
|
70,844
|
(20,280)
|
-
|
(89,793)
|
18,953
|
388,109
|
Total cost
|
|
7,546,059
|
104,198
|
(66,695)
|
343
|
12,255
|
187,166
|
7,783,326
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
Vehicles
|
|
(33,042)
|
(5,869)
|
10,028
|
-
|
(5,898)
|
667
|
(34,114)
|
Templates
|
|
(166,536)
|
(2,203)
|
-
|
-
|
-
|
(41)
|
(168,780)
|
Tools and accessories
|
|
(39,159)
|
(9,501)
|
129
|
-
|
-
|
26,285
|
(22,246)
|
Facilities
|
|
(176,726)
|
(3,991)
|
389
|
-
|
(2,951)
|
(1,426)
|
(184,705)
|
Machinery and accessories
|
|
(578,762)
|
(44,557)
|
17,487
|
-
|
(1)
|
54,094
|
(551,739)
|
Leasehold improvements
|
|
(480,554)
|
(35,723)
|
9,703
|
-
|
(5,639)
|
(21,050)
|
(533,263)
|
Buildings
|
|
(179,729)
|
(21,368)
|
15
|
-
|
-
|
26,643
|
(174,439)
|
Furniture and fixture
|
|
(318,611)
|
(22,955)
|
3,542
|
-
|
(717)
|
(14,464)
|
(353,205)
|
IT equipment
|
|
(311,856)
|
(26,483)
|
5,415
|
-
|
(8,239)
|
(5,564)
|
(346,727)
|
Other assets
|
|
(26,027)
|
(5,783)
|
699
|
-
|
-
|
(2,925)
|
(34,036)
|
Total accumulated depreciation
|
|
(2,311,002)
|
(178,433)
|
47,407
|
-
|
(23,445)
|
62,219
|
(2,403,254)
|
Net total
|
|
5,235,057
|
(74,235)
|
(19,288)
|
343
|
(11,190)
|
249,385
|
5,380,072
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Consolidated
|
|
Useful life range
(in years)
|
December 31, 2019
|
Company acquisition
|
Additions
|
Write-offs
|
impairment
|
Transfers
|
Exchange rate variation
|
March 31,
2020
|
Cost:
|
|
|
|
|
|
|
|
|
|
Vehicles
|
2 to 5
|
45,578
|
25,789
|
260
|
(2,711)
|
-
|
2,163
|
11,302
|
82,381
|
Templates
|
3
|
192,556
|
-
|
-
|
(27)
|
-
|
4,322
|
25
|
196,876
|
Tools and accessories
|
3 to20
|
11,974
|
52,410
|
3,271
|
(283)
|
-
|
(1,034)
|
9,897
|
76,235
|
Facilities
|
3 to 60
|
309,772
|
1,431
|
5
|
(3,212)
|
-
|
2,359
|
9,347
|
319,702
|
Machinery and accessories
|
3 to 15
|
866,451
|
746,734
|
5,556
|
(726)
|
-
|
10,757
|
124,366
|
1,753,138
|
Leasehold improvements
|
2 to 20
|
615,103
|
58,548
|
6,844
|
(651)
|
385
|
14,830
|
90,324
|
785,383
|
Buildings
|
14 to 60
|
386,957
|
1,168,837
|
2,781
|
3,070
|
-
|
27,616
|
226,178
|
1,815,439
|
Furniture and fixture
|
2 to 25
|
397,727
|
32,566
|
4,658
|
(686)
|
1,823
|
6,543
|
71,943
|
514,574
|
Land
|
-
|
35,157
|
568,470
|
-
|
-
|
-
|
4,772
|
152,410
|
760,809
|
IT equipment
|
3 to 15
|
297,228
|
112,369
|
2,300
|
(402)
|
-
|
9,536
|
52,303
|
473,334
|
Other assets
|
-
|
-
|
40,090
|
-
|
-
|
-
|
-
|
11,343
|
51,433
|
Projects in progress
|
-
|
156,011
|
78,965
|
53,621
|
(402)
|
-
|
(53,107)
|
22,132
|
257,220
|
Total cost
|
|
3,314,514
|
2,886,209
|
79,296
|
(6,030)
|
2,208
|
28,757
|
781,570
|
7,086,524
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
Vehicles
|
|
(16,924)
|
-
|
(6,712)
|
1,231
|
-
|
(2,093)
|
(2,945)
|
(27,443)
|
Templates
|
|
(175,938)
|
-
|
(1,975)
|
-
|
-
|
-
|
(77)
|
(177,990)
|
Tools and accessories
|
|
(3,255)
|
-
|
(11,346)
|
-
|
-
|
-
|
(1,748)
|
(16,349)
|
Facilities
|
|
(167,362)
|
-
|
(7,125)
|
282
|
-
|
-
|
(2,351)
|
(176,556)
|
Machinery and accessories
|
|
(416,736)
|
-
|
(49,636)
|
154
|
-
|
(161)
|
(11,782)
|
(478,161)
|
Leasehold improvements
|
|
(267,371)
|
-
|
(28,910)
|
-
|
-
|
25
|
(40,355)
|
(336,611)
|
Buildings
|
|
(101,785)
|
-
|
(26,380)
|
-
|
-
|
-
|
(3,089)
|
(131,254)
|
Furniture and fixture
|
|
(193,973)
|
-
|
(22,270)
|
465
|
-
|
(25)
|
(37,787)
|
(253,590)
|
IT equipment
|
|
(197,281)
|
-
|
(23,927)
|
10
|
-
|
-
|
(17,477)
|
(238,675)
|
Other assets
|
|
-
|
-
|
(3,097)
|
-
|
-
|
-
|
(515)
|
(3,612)
|
Total accumulated depreciation
|
|
(1,540,625)
|
-
|
(181,378)
|
2,142
|
-
|
(2,254)
|
(118,126)
|
(1,840,241)
|
Net total
|
|
1,773,889
|
2,886,209
|
(102,082)
|
(3,888)
|
2,208
|
26,503
|
663,444
|
5,246,283
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Consolidated
|
|
Useful life range (years)
|
December 31, 2020
|
Additions
|
Write-offs
|
Reversal (provision) of impairment
|
Transfers
|
Other changes including exchange rate variation
|
March 31, 2021
|
Cost
|
|
|
|
|
|
|
|
|
Software
|
2.5 to 10
|
2,059,150
|
8,527
|
(8,827)
|
11
|
64,666
|
32,395
|
2,155,922
|
Trademarks and patents (Defined useful life)
|
20 to 25
|
894,578
|
-
|
-
|
-
|
-
|
49,779
|
944,357
|
Trademarks and patents (Indefinite useful life)
|
-
|
5,747,057
|
-
|
-
|
-
|
-
|
448,833
|
6,195,890
|
Goodwill Avon
|
-
|
13,299,849
|
-
|
-
|
-
|
-
|
634,949
|
13,934,798
|
Goodwill Emeis Brazil Pty Ltd,
|
-
|
142,090
|
-
|
-
|
-
|
-
|
11,452
|
153,542
|
Goodwill The Body Shop
|
-
|
1,946,741
|
800
|
-
|
-
|
-
|
203,422
|
2,150,963
|
Goodwill acquisition of TBS stores
|
-
|
1,456
|
-
|
-
|
-
|
-
|
-
|
1,456
|
Relationship with retail clients
|
10
|
2,785
|
-
|
-
|
-
|
-
|
235
|
3,020
|
Key money (indefinite useful life)
|
-
|
26,769
|
-
|
-
|
-
|
-
|
1,689
|
28,458
|
Key money (Defined useful life)
|
3 to 18
|
10,860
|
2,500
|
-
|
-
|
(5,555)
|
(186)
|
7,619
|
Relationship with franchisees and sub franchisees and sales representatives (e)
|
14 to 15
|
2,959,519
|
-
|
-
|
-
|
-
|
180,831
|
3,140,350
|
Technology developed (by acquired subsidiary)
|
-
|
1,595,041
|
-
|
-
|
-
|
-
|
78,428
|
1,673,469
|
Other intangible assets
|
-
|
108,275
|
28,754
|
-
|
-
|
(57,431)
|
60,795
|
140,393
|
Total cost
|
|
28,794,170
|
40,581
|
(8,827)
|
11
|
1,680
|
1,702,622
|
30,530,237
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
|
Software
|
|
(1,022,498)
|
(89,404)
|
8,061
|
-
|
3,955
|
11,554
|
(1,088,332)
|
Trademarks and patents
|
|
(100,043)
|
(13,882)
|
-
|
-
|
-
|
(3,409)
|
(117,334)
|
Key money
|
|
(8,871)
|
(185)
|
6
|
-
|
1,667
|
(450)
|
(7,833)
|
Relationship with retail clients
|
|
(2,839)
|
(75)
|
-
|
-
|
-
|
(210)
|
(3,124)
|
Relationship with franchisees and sub franchisees and sales representatives
|
|
(419,061)
|
(75,493)
|
-
|
-
|
-
|
(31,903)
|
(526,457)
|
Technology developed
|
|
(319,009)
|
(82,477)
|
-
|
-
|
-
|
(16,882)
|
(418,368)
|
Other intangible assets
|
|
(4,721)
|
(309)
|
-
|
-
|
-
|
(57,735)
|
(62,765)
|
Total accumulated amortization
|
|
(1,877,042)
|
(261,825)
|
8,067
|
-
|
5,622
|
(99,035)
|
(2,224,213)
|
Net total
|
|
26,917,128
|
(221,244)
|
(760)
|
11
|
7,302
|
1,603,587
|
28,306,024
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Consolidated
|
|
Useful life range (years)
|
December 31, 2019
|
Acquisition of subsidiary
|
Additions
|
Write-offs
|
Reversal (provision) of impairment
|
Transfers
|
Other changes including exchange rate variation
|
March 31,
2020
|
Cost
|
|
|
|
|
|
|
|
|
|
Software
|
2.5 to 10
|
1,313,090
|
291,239
|
27,299
|
(31)
|
-
|
72,445
|
116,469
|
1,820,511
|
Trademarks and patents (Defined useful life)
|
20 to 25
|
116,805
|
517,592
|
-
|
-
|
-
|
-
|
161,815
|
796,212
|
Trademarks and patents (Indefinite useful life)
|
-
|
2,171,585
|
1,893,224
|
-
|
-
|
-
|
-
|
1,002,860
|
5,067,669
|
Goodwill Avon
|
-
|
-
|
10,973,474
|
-
|
-
|
-
|
-
|
3,039,790
|
14,013,264
|
Goodwill Emeis Brazil Pty Ltd,
|
-
|
100,237
|
-
|
-
|
-
|
-
|
-
|
12,740
|
112,977
|
Goodwill The Body Shop
|
-
|
1,434,369
|
-
|
7,824
|
-
|
-
|
-
|
307,880
|
1,750,073
|
Goodwill acquisition of TBS stores
|
-
|
1,456
|
-
|
-
|
-
|
-
|
-
|
-
|
1,456
|
Relationship with retail clients
|
10
|
1,987
|
-
|
-
|
-
|
-
|
-
|
282
|
2,269
|
Key money (indefinite useful life)
|
-
|
17,801
|
-
|
-
|
-
|
-
|
5,595
|
2,191
|
25,587
|
Key money (Defined useful life)
|
3 to 18
|
12,447
|
-
|
-
|
-
|
(80)
|
(3,145)
|
4,829
|
14,051
|
Relationship with franchisees and sub franchisees and sales representatives
|
14 to 15
|
602,958
|
1,876,169
|
-
|
-
|
-
|
-
|
659,983
|
3,139,110
|
Technology developed (by acquired subsidiary)
|
-
|
-
|
1,131,573
|
-
|
-
|
-
|
-
|
320,159
|
1,451,732
|
Other intangible assets
|
2 to 10
|
110,288
|
-
|
14,665
|
-
|
-
|
(63,534)
|
10,801
|
72,220
|
Total cost
|
|
5,883,023
|
16,683,271
|
49,788
|
(31)
|
(80)
|
11,361
|
5,639,799
|
28,267,131
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
|
|
Software
|
|
(649,347)
|
-
|
(81,653)
|
43
|
-
|
(3,634)
|
(28,471)
|
(763,062)
|
Trademarks and patents
|
|
(44,108)
|
-
|
(8,285)
|
-
|
-
|
-
|
(5,578)
|
(57,971)
|
Key money
|
|
(2,197)
|
-
|
(97)
|
-
|
-
|
178
|
(3,489)
|
(5,605)
|
Relationship with retail clients
|
|
(1,939)
|
-
|
(52)
|
-
|
-
|
-
|
(232)
|
(2,223)
|
Relationship with franchisees and sub franchisees and sales representatives
|
|
(95,772)
|
-
|
(67,166)
|
-
|
-
|
-
|
(30,938)
|
(193,876)
|
Technology developed
|
|
-
|
-
|
(62,191)
|
-
|
-
|
-
|
(10,331)
|
(72,522)
|
Other intangible assets
|
|
(13,159)
|
-
|
1,390
|
-
|
-
|
-
|
(2,574)
|
(14,343)
|
Total accumulated amortization
|
|
(806,522)
|
-
|
(218,054)
|
43
|
-
|
(3,456)
|
(81,613)
|
(1,109,602)
|
Net total
|
|
5,076,501
|
16,683,271
|
(168,266)
|
12
|
(80)
|
7,905
|
5,558,186
|
27,157,529
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Consolidated
|
|
Useful life in Years (a)
|
December 31, 2020
|
Additions
|
Write-offs
|
Transfers (b)
|
Exchange rate variation
|
March 31,
2021
|
Cost
|
|
|
|
|
|
|
|
Vehicles
|
3
|
157,867
|
13,860
|
(7,386)
|
-
|
2,947
|
167,288
|
Machinery and equipment
|
3 to 10
|
53,048
|
2,011
|
(17,431)
|
-
|
2,729
|
40,357
|
Facilities
|
3 to 10
|
1,616,833
|
77,660
|
(158,871)
|
-
|
(35,032)
|
1,500,590
|
IT equipment
|
10
|
30,000
|
181
|
(790)
|
-
|
2,671
|
32,062
|
Retail stores
|
3 to 10
|
3,338,104
|
120,586
|
(251,695)
|
3,888
|
255,374
|
3,466,257
|
Tools and accessories
|
3
|
3,187
|
-
|
-
|
-
|
(1,079)
|
2,108
|
Total cost
|
|
5,199,039
|
214,298
|
(436,173)
|
3,888
|
227,610
|
5,208,662
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
Vehicles
|
|
(63,422)
|
(14,360)
|
6,231
|
-
|
(237)
|
(71,788)
|
Machinery and equipment
|
|
(21,045)
|
(3,130)
|
8,819
|
-
|
(804)
|
(16,160)
|
Facilities
|
|
(399,765)
|
(66,538)
|
51,278
|
-
|
(6,768)
|
(421,793)
|
IT equipment
|
|
(19,161)
|
(1,467)
|
787
|
-
|
(1,759)
|
(21,600)
|
Retail stores
|
|
(1,291,346)
|
(170,393)
|
263,647
|
-
|
(90,222)
|
(1,288,314)
|
Tools and accessories
|
|
(2,253)
|
(230)
|
1,626
|
-
|
(186)
|
(1,043)
|
Total accumulated depreciation
|
|
(1,796,992)
|
(256,118)
|
332,388
|
-
|
(99,976)
|
(1,820,698)
|
Net total
|
|
3,402,047
|
(41,820)
|
(103,785)
|
3,888
|
127,634
|
3,387,964
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Consolidated
|
|
Useful life in Years (a)
|
December 31, 2019
|
Acquisition of subsidiary
|
Additions
|
Write-offs
|
Transfers (b)
|
Exchange rate variation
|
March 31,
2020
|
Cost
|
|
|
|
|
|
|
|
|
Vehicles
|
3
|
40,018
|
42,467
|
38,836
|
(202)
|
-
|
10,382
|
131,501
|
Machinery and equipment
|
3 to 10
|
15,578
|
14,034
|
517
|
-
|
-
|
6,831
|
36,960
|
Facilities
|
3 to 10
|
784,900
|
489,740
|
74,070
|
(4,380)
|
-
|
152,815
|
1,497,145
|
IT equipment
|
10
|
283
|
18,429
|
827
|
-
|
-
|
4,575
|
24,114
|
Retail stores
|
3 to 10
|
2,350,377
|
-
|
102,663
|
(6,272)
|
(2,451)
|
530,027
|
2,974,344
|
Tools and accessories
|
3
|
2,803
|
-
|
-
|
-
|
-
|
603
|
3,406
|
Total cost
|
|
3,193,959
|
564,669
|
216,913
|
(10,854)
|
(2,451)
|
705,233
|
4,667,469
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
Vehicles
|
|
(8,109)
|
-
|
(11,450)
|
138
|
-
|
(1,274)
|
(20,695)
|
Machinery and equipment
|
|
(4,317)
|
-
|
(3,391)
|
-
|
-
|
(1,427)
|
(9,135)
|
Facilities
|
|
(97,190)
|
-
|
(68,396)
|
2,852
|
-
|
(21,248)
|
(183,982)
|
IT equipment
|
|
(214)
|
-
|
(4,857)
|
-
|
-
|
(648)
|
(5,719)
|
Retail stores
|
|
(463,332)
|
-
|
(138,496)
|
5,066
|
(178)
|
(113,105)
|
(710,045)
|
Tools and accessories
|
|
(936)
|
-
|
(230)
|
-
|
-
|
(233)
|
(1,399)
|
Total accumulated depreciation
|
|
(574,098)
|
-
|
(226,820)
|
8,056
|
(178)
|
(137,935)
|
(930,974)
|
Net total
|
|
2,619,861
|
564,669
|
(9,906)
|
(2,798)
|
(2,629)
|
567,298
|
3,736,495
|
|
a)
|
The useful lives applied refer to the term of the contracts in which the Company and its subsidiaries
are sure that it will use the assets underlying the lease contracts according to the contractual terms.
|
|
b)
|
Refers to key money related to store rentals. This amount is transferred from right of use to intangible
assets when a new commercial agreement with the lessor is not yet signed.
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Consolidated
|
|
March 31,
2021
|
March 31,
2020
|
Amounts recognized in the statement of income for the three-month period ended March 31, 2021 and 2020:
|
|
|
Financial expense on lease
|
54,621
|
53,611
|
Amortization of right of use
|
256,118
|
226,820
|
Appropriation in the result of variable lease installments not included in the measurement of rental liabilities
|
15,172
|
8,229
|
Sublease revenue (expense)
|
(8,073)
|
6,143
|
Short-term rental expenses and low-value assets
|
27,480
|
20,505
|
Benefits granted by lessor related to Covid-19
|
(16,479)
|
-
|
Other lease-related expenses
|
11,426
|
9,290
|
Total
|
340,265
|
324,597
|
|
|
|
Amounts recognized in the financing cash flow statement activities:
|
|
|
Lease payments (principal)
|
301,420
|
227,506
|
Values recognized in the operating cash flow statement activities:
|
|
|
Lease payments (interest)
|
50,830
|
35,829
|
Variable lease payments, not included in the measurement of rental liabilities
|
3,524
|
2,813
|
Short-term and low-value assets leases payments
|
22,803
|
15,393
|
Lease-related payments
|
10,672
|
9,816
|
Total
|
389,249
|
291,356
|
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Current
|
1,120,817
|
1,059,661
|
Non-current
|
2,799,796
|
2,798,794
|
Total
|
3,920,613
|
3,858,455
|
Below are the changes in lease liability balances for the
three-month period ended March 31, 2021 and 2020:
|
Consolidated
|
Balance as at December 31, 2019
|
2,517,565
|
New leases
|
280,818
|
Acquisition of subsidiary
|
777,200
|
Reclassification Assets vs, Liabilities
|
12,322
|
Lease payments (principal)
|
(209,723)
|
Lease payments (interest)
|
(53,611)
|
Recognition of financial charges
|
53,611
|
Write-offs (a)
|
(4,641)
|
Exchange rate variation
|
554,437
|
Balance as at March 31, 2020
|
3,927,978
|
|
|
Balance as at December 31, 2020
|
3,858,455
|
New leases
|
225,690
|
Lease payments (principal)
|
(301,420)
|
Lease payments (interest)
|
(50,830)
|
Recognition of financial charges
|
54,621
|
Remeasurement
|
(68,265)
|
Write-offs (a)
|
(332,893)
|
Exchange rate variation
|
535,255
|
Balance as at March 31, 2021
|
3,920,613
|
|
a)
|
Refers mainly to the termination of contracts related to store leases.
|
The maturity analysis of the lease liability
non-current balance of are as follows:
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
2022
|
646,011
|
419,240
|
2023
|
580,123
|
408,977
|
2024
|
536,775
|
406,572
|
2025 onwards
|
1,036,887
|
1,564,005
|
Total
|
2,799,796
|
2,798,794
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
19.
|
BORROWINGS, FINANCING AND DEBENTURES
|
|
Ref.
|
Company
|
Consolidated
|
|
March 31, 2021
|
December 31, 2020
|
March 31, 2021
|
December 31, 2020
|
Raised in local currency:
|
|
|
|
|
|
Financing Agency for Studies and Projects FINEP
|
|
-
|
-
|
66,016
|
73,076
|
Debentures
|
A
|
-
|
-
|
4,012,521
|
4,042,515
|
BNDES
|
|
-
|
-
|
4,675
|
7,789
|
BNDES – FINAME
|
|
-
|
-
|
-
|
15
|
Promissory notes
|
B
|
524,106
|
515,966
|
786,159
|
773,949
|
Working capital – Mexico Operation
|
|
-
|
-
|
12,256
|
14,453
|
Working capital – The Body Shop Operation
|
C
|
-
|
-
|
-
|
500,835
|
Working capital – Avon Operation
|
|
-
|
-
|
216,425
|
145,495
|
Notes – Avon (1)
|
D
|
-
|
-
|
4,328,067
|
4,033,682
|
Total in local currency
|
|
524,106
|
515,966
|
9,426,119
|
9,591,809
|
|
|
|
|
|
|
Raised in Foreign currency:
|
|
|
|
|
|
BNDES
|
|
-
|
-
|
1,025
|
1,639
|
Representative debt securities (“Notes”) (1)
|
E
|
-
|
-
|
4,297,465
|
3,969,226
|
Resolution No 4131/62
|
F
|
-
|
-
|
286,282
|
260,239
|
Total in foreign currency
|
|
-
|
-
|
4,584,772
|
4,231,104
|
Grand total
|
|
524,106
|
515,966
|
14,010,891
|
13,822,913
|
|
|
|
|
|
|
Current
|
|
524,106
|
515,966
|
3,234,540
|
3,805,649
|
Non-current
|
|
-
|
-
|
10,776,351
|
10,017,264
|
|
|
|
|
|
|
Debentures
|
|
|
|
|
|
Current
|
|
-
|
-
|
2,139,149
|
2,169,786
|
Non-current
|
|
-
|
-
|
1,873,372
|
1,872,729
|
(1) Balances resulting from
the business combinations with Avon recorded at the estimated fair value.
Reference
|
Currency
|
Maturity
|
Charges
|
Effective interest rate
|
Guarantees
|
A
|
Real
|
August, 2024
|
Interest of 110.5% to 112% of CDI, and 1.75% + CDI, 1.00% + CDI and 1.15% + CDI, as maturing on September 2020; September 2021; September 2022 and August 2024,
|
113.8% - 113.9%
CDI + 1.15% -
CDI + 1.79%
|
None
|
B
|
Real
|
Until April, 2021
|
Interest of 3.25% p.a. + CDI
|
CDI + 3.30%
|
Approval of subsidiary Indústria e Comércio de Cosméticos Natura Ltda.
|
C
|
British
Pounds
|
March, 2021
|
Libor + interest of 2.00% p.a.
|
Libor + interest of 2.00% p.a.
|
Approval of subsidiary
Natura Cosméticos S.A.
|
D
|
Dollar
|
March, 2023 and March 2043
|
Interest of 7.00% p.a. and Interest of 8.95% p.a.
|
Interest of 7.00% p.a. and Interest of 8.95% p.a.
|
None
|
Changes in the balances of borrowings,
financings and debentures for the three-month period ended March 31, 2021 and 2020 are as follows:
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Company
|
Consolidated
|
Balance as at December 31, 2019
|
2,883,382
|
10,786,374
|
Assumed in a business combination
|
-
|
7,250,735
|
New borrowings and financing
|
-
|
451,127
|
Repayment
|
(1,816,900)
|
(1,923,345)
|
Accrued finance costs
|
20,283
|
281,534
|
Finance costs payment
|
(6,860)
|
(498,585)
|
Exchange rate variation (unrealized)
|
-
|
914,400
|
Translation effects (OCI)
|
-
|
2,070,826
|
Balance as at March 31, 2020
|
1,079,905
|
19,333,066
|
|
|
|
Balance as at December 31, 2020
|
515,966
|
13,822,913
|
New borrowings and financing
|
-
|
133,980
|
Repayment
|
-
|
(623,273)
|
Accrued finance costs
|
8,140
|
178,845
|
Finance costs payment
|
-
|
(324,814)
|
Exchange rate variation (unrealized)
|
-
|
401,366
|
Translation effects (OCI)
|
-
|
421,874
|
Balance as at March 31, 2021
|
524,106
|
14,010,891
|
The maturities of non-current portion
of borrowings, financing and debentures liabilities are as follows:
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
2022
|
602,046
|
586,002
|
2023
|
6,900,712
|
6,306,782
|
2024
|
3,273,593
|
3,124,480
|
Total
|
10,776,351
|
10,017,264
|
19.1
Main changes in borrowings and financing
i)
Debentures
The information regarding the Company’s
debentures issued was presented in note 20.1.i) of the financial statements for the year ended December 31, 2020.
The appropriation of costs related
to the issuance of debentures for the three-month period ended March 31, 2021 was R$ 832 (R$ 1,033 on March 31, 2020), recorded monthly
under financial expenses, in accordance with the effective interest rate method. Issuance costs to appropriate amounted to R$ 8,634 as
of March 31, 2021 (R$ 9,466 as of December 31, 2020).
ii) Promissory
notes
The information regarding the Company’s
promissory notes issued was presented in note 20.1.ii) of the financial statements for the year ended December 31, 2020.
Accrued costs related to the emission
of the Promissory Notes for the three-month period ended March 31, 2021 amounted to R$ 1,591 (R$ 1,798 on March 31, 2020), recorded monthly
in account of finance costs according to the effective interest rate method, As of March 31, 2021, the balance of issuance costs to be
appropriated is R$ 530 (R$ 2,121 on December 31, 2020).
iii) Working capital - The Body Shop
On December 31, 2019, The Body Shop
had a credit line of up to £ 70 million (seventy million pounds), corresponding to R$ 500,835 as at December 31, 2020, guaranteed
by Natura, which could be withdrawn in installments to meet The Body Shop short-term financing needs. This credit line was used during
the second quarter of 2020, for working capital and liquidity reinforcement with payment of annual interest of Libor + 2%, This credit
line was settled during the first quarter of 2021.
iv)
Debt Securities Representative ("notes") - Avon
The subsidiary
Avon has the following debt securities representative (“notes”) issued:
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
Notes - Avon
|
Main US$
|
Main R$
|
Annual percentage interest rate
|
Maturity
|
Unguaranteed
|
461,883
|
2,400,267
|
7.00%
|
March 15, 2023
|
Unguaranteed
|
216,085
|
1,122,929
|
8.95%
|
March 15, 2043
|
The effects of allocating fair values
from the business combination were added to the notes issued by Avon, which at March 31, 2021 amounted to R$ 474,493 (R$ 449,712 on December
31, 2020).
The restrictive clauses associated
with the debt contracts of the Company and its subsidiaries, establish the maintenance of minimum financial indicators resulting from
the ratio of the division of the net treasury debt by the EBITDA of the last 12 months, as well as non-financial indicators according
to each contract. As of March 31, 2021, and December 31, 2020, the Company and its subsidiaries are in compliance with such restrictive
clauses.
|
20.
|
TRADE ACCOUNTS PAYABLE AND SUPPLY CHAIN FINANCE
|
|
Company
|
Consolidated
|
|
March 31,
2021
|
December 31, 2020
|
March 31,
2021
|
December 31, 2020
|
Domestic trade accounts payables
|
2,501
|
4,748
|
5,257,761
|
5,462,377
|
Foreign trade accounts payables (a)
|
2,556
|
4,945
|
1,013,191
|
1,014,356
|
Subtotal
|
5,057
|
9,693
|
6,270,952
|
6,476,733
|
Supply chain finance (b)
|
-
|
-
|
284,203
|
297,472
|
Total
|
5,057
|
9,693
|
6,555,155
|
6,774,205
|
|
a)
|
Refers to imports mainly denominated in US dollars, Euros and British pounds.
|
|
b)
|
The Company and its subsidiaries have contracts signed with Banco Itaú Unibanco S.A. to structure
a “supply chain finance”, the operation with the Company’s main suppliers. Further details on these operations are included
in note 3.16 of the financial statements for the year ended December 31, 2020.
|
|
Company
|
Consolidated
|
|
March 31,
2021
|
December 31, 2020
|
March 31,
2021
|
December 31, 2020
|
ICMS (ordinary)
|
-
|
-
|
127,356
|
134,165
|
ICMS-ST provision (a)
|
-
|
-
|
60,783
|
61,521
|
Taxes on invoicing – foreign abroad
|
-
|
-
|
254,457
|
364,291
|
Withholding tax (IRRF)
|
-
|
828
|
144,911
|
131,368
|
Other taxes payable - foreign subsidiaries
|
-
|
-
|
56,078
|
48,365
|
Income tax on financial transactions
|
-
|
468
|
7,005
|
15,943
|
PIS and COFINS payable
|
78
|
11,857
|
78
|
11,857
|
INSS and service tax (ISS) payable
|
-
|
-
|
29,791
|
32,954
|
Others
|
23
|
-
|
90,354
|
94,357
|
|
101
|
13,153
|
770,813
|
894,821
|
|
|
|
|
|
Current
|
101
|
13,153
|
658,523
|
785,367
|
Noncurrent
|
-
|
-
|
112,290
|
109,454
|
|
a)
|
The Company's subsidiaries have discussions about the illegality of changes in state laws to charge ICMS-ST.
Part of the amount recorded as tax payable but not yet paid is being discussed in court by the Company’s subsidiaries, and in some
cases, the amounts are deposited in court, as mentioned in note 12.
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
22.
|
PROVISION FOR TAX, CIVIL AND LABOR RISKS
|
The Company's and its subsidiaries
management believes that, based on the elements existing on the base date of this interim accounting information, the provision for tax,
civil, labor, commercial and other risks is sufficient to cover possible losses on administrative and legal proceedings, as shown below:
|
22.1
|
Contingencies assessed as probable risk of loss
|
The changes in the tax, civil and labor provision and contingent
liabilities are presented below:
|
Consolidated
|
|
Tax
|
Civil
|
Labor
|
Business Combination
|
Total
|
Balance at the beginning of the period
|
931,771
|
78,397
|
251,339
|
797,693
|
2,059,200
|
Additions
|
48,378
|
34,552
|
16,903
|
-
|
99,833
|
Reversals
|
(21,890)
|
(29,541)
|
(13,850)
|
(11,017)
|
(76,298)
|
Payments
|
(2)
|
(5,147)
|
(7,607)
|
-
|
(12,756)
|
Inflation adjustment
|
2,926
|
272
|
1,798
|
5,802
|
10,798
|
Exchange rate variation
|
17,208
|
3,963
|
13,134
|
4,285
|
38,590
|
Transfers
|
(383)
|
-
|
(988)
|
-
|
(1,371)
|
Balance as at March 31, 2021
|
978,008
|
82,496
|
260,729
|
796,763
|
2,117,996
|
|
|
|
|
|
|
Current
|
59,389
|
-
|
-
|
-
|
59,389
|
Non-current
|
918,619
|
82,496
|
260,729
|
796,763
|
2,058,607
|
22.1.1
Tax
The consolidated tax contingencies
and classified as probable loss, mainly involve: (i) discussions about the illegality of changes in state laws to collection of ICMS,
and (ii) discussions related to the exclusion of IPI charges from the income tax calculation basis, withhold income tax, as well as several
lawsuits related to income tax and social contribution taxation. Part of the amount not paid is being discussed in court, and in some
cases, the amounts are deposited in court, as mentioned in note 12. The tax provision also includes attorneys' fees for the sponsorship
of tax proceedings, when applicable.
22.1.2
Civil, commercial and other
On March 31, 2021, the Company and
its subsidiaries are parties to commercial and other civil lawsuits and procedures, mainly related to indemnity claims. Provisions are
periodically reviewed based on the evolution of processes and the evolution of jurisprudence to reflect the best estimate.
a)
Talc-related disputes
The subsidiary Avon has been named
a defendant in numerous personal injury lawsuits filed in U.S. courts, alleging that certain talc products the Avon sold in the past were
contaminated with asbestos. Many of these actions involve a number of co-defendants from a variety of different industries, including
manufacturers of cosmetics and manufacturers of other products that, unlike the Avon’s products, were designed to contain asbestos.
On March 31, 2021, there were 109 individual cases pending against the Avon. During the three months ended March 31, 2021, 27 new cases
were filed, and 82 cases were dismissed, settled or otherwise resolved. The value of the settlements was not material, either individually
or in the aggregate, to the Avon’s results of operations for the three-month period ended March 31, 2021. Additional similar cases
arising out of the use of the Avon’s talc products are reasonably anticipated.
We believe that the claims asserted
against us in these cases are without merit. We are defending vigorously against these claims and will continue to do so. To date, the
Avon has not proceeded to trial in any case filed against it and there have been no findings of liability enforceable against the Company.
However, nationwide trial results in similar cases filed against other manufacturers of cosmetic talc products have ranged from outright
dismissals to very large jury awards of both compensatory and punitive damages. Given the inherent uncertainties of litigation, we cannot
predict the outcome of all individual cases pending against the Company, and we are only able to make a specific estimate for a small
number of individual cases that have advanced to the later stages of legal proceedings. For the remaining cases, we provide an estimate
of exposure on an aggregated and ongoing basis, which takes into account the historical outcomes of all cases we have resolved to
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
date. Any accruals currently recorded
on the Avon’s balance sheet with respect to these cases are not material. However, any adverse outcomes, either in an individual
case or in the aggregate, could be material. Future costs to litigate these cases, which we expense as incurred, are not known but may
be significant, though some costs will be covered by insurance.
22.1.3
Labor
The Company and its subsidiaries as
of March 31, 2021 are parties to labor claims filed by former employees and service providers, mainly related to the payment of severance
pay, overtime, salary premiums and monies owed as a result of join liability and discussion about the recognition of any employment relationship.
None of these processes is individually relevant. Provisions are periodically reviewed based on the progress of lawsuits and history of
losses on labor claims to reflect the best estimate.
|
22.2
|
Contingencies assessed as possible risk of loss
|
The Company’s subsidiaries have
contingencies whose expectation of loss assessed by the Company's Management and supported by the legal advisors is classified as possible
and, therefore, no provision has been recorded. On March 31, 2021, the contingencies classified as possible loss probability totaled R$
9,493,430 (R$ 9,559,550 on December 31, 2020), in which R$ 796,763 (R$ 797,693 on December 31, 2020) were logged at the estimated fair
value resulting from the business combinations with Avon Products Inc., shown in the table above.
22.2.1
Tax
As of March 31, 2021, the tax cases
with possible losses totaling R$ 9,117,114 (R$ 9,205,601 at December 31, 2020).
Below are the most relevant
tax contingencies related to the following matters:
|
a)
|
Infraction notices in which the Brazilian Federal Revenue Office requires IPI tax debts, due to the alleged
non-observance of the minimum tax base, provided for in the legislation, when sales transactions destined to interdependent wholesalers.
Currently, tax assessment notices are pending judgment at the administrative court level, As at March 31, 2021, the total amount under
discussion is R$ 1,969,346 (R$ 1,963,984 as at December 31, 2020).
|
|
b)
|
Lawsuits in which the industrial establishment equivalence is discussed, as provided for in the Decree
nº 8,393/2015, which now requires IPI taxation of products listed in the referred legal provision in outbound transactions carried
out by interdependent wholesalers. As of March 31, 2021, the total amount under discussion classified as a possible loss is R$ 1,710,595
(R$ 1,660,532 as at December 31, 2020).
|
|
c)
|
Administrative and judicial processes that discuss the illegality of changes in Federal State laws regarding
the collection of ICMS and ICMS-ST, As at March 31, 2021, the total amount under discussion is R$ 1,567,560 (R$ 1,503,657 as of December
31, 2020).
|
|
d)
|
Infraction notices in which the Brazilian Federal Revenue Office requires IRPJ and CSLL tax debts to challenge
the tax deductibility of the amortization of goodwill generated in the context of a corporate reorganization between related parties.
Currently, the legality of the administrative decisions that rejected the motions for clarification presented to challenge the special
appeals dismissed is being discussed in the courts. As at March 31, 2021, the total amount under discussion classified as a possible loss
is R$ 1,399,423 (R$ 1,396,782 as at December 31, 2020).
|
|
e)
|
Infraction notices in which the Finance Department of the São Paulo Federal State requires the
collection of ICMS-ST, which was fully collected by the recipient of the goods, the distributor. Currently, the process is pending judgment
at the administrative court level. As of March 31, 2021, the total amount under discussion classified as a possible loss is R$ 530,825
(R$ 529,660 as at December 31, 2020).
|
|
f)
|
Infraction notices in which the Brazilian Federal Revenue Office requires IPI tax debts for disagreeing
with the tax classification adopted by the Company for some products. The tax assessment notices are awaiting judgment at the administrative
court level. As at March 31, 2021, the total amount in discussion classified as a possible loss is R$ 555,367 (R$ 524,500 as at December
31, 2020).
|
22.2.2
Civil, commercial and other
As of March 31, 2021, civil, commercial
and other lawsuits with possible losses total R$ 131,113 (R$ 133,302 on December 31, 2020).
Below are the most relevant contingencies
related to the following matters:
a)Shareholder
disputes
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
On February 14, 2019, a purported shareholder’s
class action complaint (Bevinal v, Avon Products, Inc., et al., No. 19-cv-1420) was filed in the United States District Court for the
Southern District of New York against the Avon and certain former officers of Avon. The complaint was subsequently amended and recaptioned
"In re Avon Products, Inc, Securities Litigation". The amended complaint is brought on behalf of a purported class consisting
of all purchasers or acquirers of Avon common stock between January 21, 2016 and November 1st, 2017, inclusive. The complaint
asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") based on allegedly
false or misleading statements and alleged market manipulation with respect to, among other things, changes made to Avon’s credit
terms for Representatives in Brazil. Avon and the individual defendants filed a motion to dismiss which the court denied. During 2020,
the parties reached an agreement on a settlement of this class action. The terms of settlement include releases by members of the class
of claims against Avon and the individual defendants and payment of R$ 75,352 ($ 14,500). Approximately R$ 10,393 ($ 2,000) of the settlement
was paid by the Avon (which represented the remaining deductible under the Avon’s applicable insurance policies) and the remainder
of the settlement was paid by Avon’s insurers. On August 31, 2020, the court granted preliminary approval of the settlement, and
on February 3rd, 2021, the court entered an order and judgment granting final approval of the settlement. This decision is
final.
22.2.3
Labor
As of March 31, 2021, contingencies
classified as possible loss, totaled R$ 245,203 (R$ 220,648 as of December 31, 2020). No lawsuit is individually significant.
The
updated amounts of PIS and COFINS installment refund requests calculated with the inclusion of ICMS in tax base, not recorded until March
31, 2021, amounts to R$ 133,769 (R$
133,397 on December 31, 2020), which refers to lawsuits still under discussion. Until the approval of this interim financial information,
individual and consolidated, the clarification motion with request for modulation of the effects of the decision opposed by the National
Treasury Attorney's Office is still pending judgment by the Brazilian Supreme Court. Further information on the judicial measures dealing
with this matter was disclosed in the Company's 2020 annual financial statements, in note 3.27.1.
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Pension and post-employment healthcare plans(a)
|
824,687
|
783,184
|
Deferred revenue from performance obligations with customers (b)
|
381,680
|
422,353
|
Provisions for incentives to consultants
|
309,539
|
292,034
|
Provisions for operating expenses (marketing / technology, etc.) (c)
|
501,170
|
535,276
|
Discontinued operations (d)
|
193,707
|
153,140
|
Provision for store renovation
|
28,764
|
99,702
|
Crer Para Ver (e)
|
68,215
|
75,508
|
Provisions for rentals (f)
|
77,152
|
70,598
|
Provision for restructuring (g)
|
86,697
|
68,954
|
Long-term incentives (h)
|
-
|
52,745
|
Provisions for apportionment of benefits and partnerships payable
|
11,757
|
10,005
|
Other provisions (i)
|
351,246
|
373,891
|
Carbon credit
|
5,019
|
5,560
|
Exclusivity contract
|
2,400
|
3,000
|
Total
|
2,842,033
|
2,945,950
|
|
|
|
Current
|
1,721,851
|
1,832,811
|
Non-current
|
1,120,182
|
1,113,139
|
|
a)
|
As of March 31, 2021, Avon's pension and post-retirement plans amounts to R$ 687,927 and Natura's post-employment
healthcare plans amounts to R$ 136,760 (R$ 134,194 as of December 31, 2020).
|
|
b)
|
Refers to the deferral of revenue related performance obligations of loyalty programs based on points,
sale of gift cards not yet converted into products and programs and events to honor direct selling consultants, of which R$ 277,196 related
Avon and R$ 104,484 related to Natura consolidated.
|
|
c)
|
Refers to the Group's operating provisions mainly due to spending on provision of technology services,
marketing and advertising, etc., to comply with the accrual basis.
|
|
d)
|
As of December 17, 2015, Avon has contracts that resulted in the separation of operations in the United
States, Canada and Puerto Rico. These transactions were closed on March 1st, 2016. From that date, contingent liabilities prior
to this transaction and related operations in the United States, Canada and Puerto Rico, are treated as discontinued operations. During
the three-month period ended March 31, 2021, Avon recorded R$ 28,748 as administrative expenses related to these provisions.
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
e)
|
Refers to Social program contribution for developing the quality of education.
|
|
f)
|
Refers to the (grace) period granted by lessors for the start of payment of rental of certain retail stores,
for rental agreements that were not included in the initial measurement of lease liabilities / right-of-use of the subsidiary The Body
Shop, in accordance with the exceptions permitted under IFRS 16 / (CPC 06 (R2)).
|
|
g)
|
Provision for costs directly related to the plan for changes in the organizational structure, mainly of
Avon and The Body Shop organizational structures.
|
|
h)
|
Refers substantially to the variable remuneration plans for Avon executives.
|
|
i)
|
Refers to provisions for insurance coverage, indemnities and long-term contractual obligations.
|
Post-employment
health care and Pension plan
|
a)
|
Defined benefit pension and postretirement plans (Avon)
|
|
b)
|
The actuarial valuation of defined benefit pension and post-retirement
plans is updated annually. The most recent valuation of the plan assets and the present value of the defined benefit obligation was performed
on December 31, 2020. The significant information and assumptions used in the valuation including revenue were presented in note 24 of
the Company’s 2020 annual financial statements.
|
|
c)
|
Post-employment healthcare plan (Natura Cosméticos)
|
The actuarial valuation of the post-employment
healthcare plan is updated on an annual basis. The information regarding the most recent evaluation of the post-employment healthcare
plan, as well as its significant assumptions and sensitivity analysis, were detailed in the Company's 2020 annual financial statements,
note 3.20.4.
24.1
Capital Stock
As at March 31, 2021, the capital stock
is R$ 12,395,686, consisting of 1,375,876,244 registered common shares, with no par value (R$ 12,377,999, composed by 1,375,158,636 on
December 31, 2020).
24.2
Policy for dividends and interest on equity distribution
The information regarding the Company’s
policy for the distribution of dividends and interest on shareholders' equity was presented in note 25.2 of the financial statements for
the year ended December 31, 2020.
24.3
Treasury shares
As of March 31, 2021, the “Treasury
shares” has the following composition:
|
Number of shares
|
Amount R$ (thousands)
|
Average price per share - R$
|
Balance as at December 31, 2020
|
316,701
|
11,667
|
38.04
|
Used
|
(729,736)
|
(34,042)
|
46.70
|
Acquisition
|
631,358
|
32,091
|
50.80
|
Balance as at March 31, 2021
|
218,323
|
9,716
|
44.50
|
The minimum and maximum cost of the
balance of treasury shares on March 31, 2021 are R$ 25.00 and R$ 52.44, respectively.
24.4
Capital reserve
The acquisition of the subsidiary Avon
resulted in the issuance of Natura &Co shares for the total subscription amount of R$ 13,274,894. Of this amount, R$ 3,397,746 were
allocated to the share capital account and the remainder amount of R$ 9,877,148 were allocated to the Company’s capital reserve.
This incorporation of shares was approved at the Company’s Board of Directors meeting held on January 3, 2020.
The approval of the capital increase
of R$ 2,000,000, approved on June 30, 2020, allocated the amount R$ 1,118 to the capital reserve.
The capital reserve had increased by
R$ 27,399, due to the effects of IAS 29 - Accounting in Hyperinflationary Economics (CPC 42), and a decrease of R$ 13,386 referring to
the changes of the stock option and restricted share plans.
The capital reserve as of March 31,
2021 amounted to R$ 11,066,148 (R$ 11,052,470 as at December 31, 2020).
As of March 31, 2021, the profit reserve
increased by R$ 13,665, of which: (i) increase of R$ 15,853 were due to
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
effects of IAS 29 (CPC 42), applied
to balances up to March 31, 2021, and (ii) decrease of R$ 2,188 due to the reclassification of capital reserve.
The profit reserve balance as of March
31, 2021 amounted to R$ 20,529 (R$ 6,864 on December 31, 2020).
|
24.6
|
Other comprehensive income
|
The information regarding the Company’s
other comprehensive income was presented in note 25,6 of the financial statements for the year ended December 31, 2020.
There was no change in the composition
of the operating segments and information by geographic area in relation to that disclosed in the financial statements for the year ended
December 31, 2020.
The revenue by segment is as follows
for the three-month ended March 31, 2021:
|
Ø
|
Avon International - 25%
|
|
Ø
|
TBS International - 14%
|
|
Ø
|
Aesop International - 6%
|
The following tables summarizes the
financial information related to the periods ended March 31, 2021 and 2020 and the year ended December 31, 2021.
25.1
Operating segments
|
March 31, 2021
|
|
Reconciliation to net income (loss) for the year
|
|
Net revenues
|
Performance assessed by the Company
|
Depreciation and amortization
|
Financial income
|
Financial expenses
|
Income tax
|
Net income (loss)
|
Natura &Co Latam
|
5,185,945
|
574,381
|
(213,329)
|
764,596
|
(867,170)
|
(82,272)
|
176,205
|
Avon International
|
2,363,473
|
6,027
|
(218,962)
|
247,756
|
(324,543)
|
(19,145)
|
(308,867)
|
TBS International
|
1,319,731
|
195,298
|
(190,658)
|
20,241
|
(44,659)
|
2,007
|
(17,771)
|
Aesop International
|
585,924
|
156,487
|
(73,246)
|
49
|
(18,960)
|
(18,741)
|
45,589
|
Corporate expenses
|
-
|
(74, 369)
|
(181)
|
6,302
|
(11,518)
|
28,058
|
(51,708)
|
Consolidated
|
9,455,073
|
857,824
|
(696,376)
|
1,038,944
|
(1,266,850)
|
(90,093)
|
(156,552)
|
|
March 31, 2020
|
|
Reconciliation to net income (loss) for the year
|
|
Net revenues
|
Performance assessed by the Company
|
Depreciation and amortization
|
Financial income
|
Financial expenses
|
Income tax
|
Net income (loss)
|
Natura &Co LATAM
|
4,162,335
|
339,848
|
(221,863)
|
1,292,228
|
(1,376,898)
|
(155,439)
|
(122,124)
|
Avon International
|
2,121,517
|
(41,618)
|
(183,887)
|
176,177
|
(361,617)
|
15,122
|
(395,823)
|
TBS International
|
893,243
|
133,550
|
(164,390)
|
30,117
|
(41,035)
|
(59,393)
|
(101,151)
|
Aesop International
|
340,899
|
77,966
|
(55,679)
|
10,580
|
(6,255)
|
(6,842)
|
19,770
|
Corporate expenses
|
-
|
(386,467)
|
-
|
51,082
|
(1,974)
|
111,749
|
(225,611)
|
Consolidated
|
7,517,994
|
123,279
|
(625,819)
|
1,560,184
|
(1,787,779)
|
(94,803)
|
(824,939)
|
|
March 31, 2021
|
December 31, 2020
|
|
Non-current assets
|
Total assets
|
Current liabilities
|
Non-current liabilities
|
Non-current assets
|
Total assets
|
Current liabilities
|
Non-current liabilities
|
Natura &Co Latam
|
18,943,250
|
28,910,176
|
8,895,176
|
9,858,504
|
20,228,016
|
27,644,907
|
12,410,585
|
9,060,600
|
Avon International
|
15,139,516
|
18,608,085
|
3,319,723
|
5,663,637
|
12,486,733
|
19,097,959
|
405,975
|
5,625,774
|
TBS International
|
8,527,768
|
10,589,369
|
1,718,567
|
1,915,092
|
7,821,884
|
10,474,191
|
2,291,459
|
1,812,991
|
Aesop International
|
1,467,637
|
2,329,230
|
496,420
|
658,274
|
1,395,628
|
2,148,869
|
488,662
|
618,531
|
Corporate
|
889
|
1,381,296
|
576,263
|
2,332
|
250,516
|
1,551,671
|
562,905
|
253,007
|
Consolidated
|
44,079,060
|
61,818,156
|
15,006,149
|
18,097,839
|
42,182,777
|
60,917,597
|
16,159,586
|
17,370,903
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
25.2
|
Revenue and non-current assets, by geographical area of operations
|
Non-current assets
|
Net revenues
|
Non – current assets
|
March 31,
2021
|
March 31,
2020
|
December 31,
2021
|
December 31,
2020
|
Asia
|
972,133
|
617,270
|
812,185
|
768,878
|
North America
|
1,509,298
|
1,101,545
|
6,858,676
|
5,939,728
|
Mexico
|
975,921
|
711,333
|
3,813,533
|
3,263,833
|
Other
|
533,377
|
390,212
|
3,045,143
|
2,675,896
|
South America
|
3,944,391
|
3,259,474
|
15,009,109
|
14,810,020
|
Brazil
|
2,307,665
|
2,163,994
|
12,550,928
|
12,159,245
|
Argentina
|
621,252
|
404,615
|
1,070,823
|
1,041,392
|
Other
|
1,015,474
|
690,865
|
1,387,358
|
1,609,383
|
Europe, Middle East and Africa (EMEA)
|
2,850,110
|
2,422,066
|
20,301,309
|
19,615,198
|
United Kingdom
|
1,017,744
|
899,433
|
17,844,743
|
17,059,017
|
Other
|
1,832,366
|
1,522,633
|
2,456,566
|
2,556,181
|
Oceania
|
179,141
|
117,639
|
1,097,781
|
1,048,953
|
Consolidated
|
9,455,073
|
7,517,994
|
44,079,060
|
42,182,777
|
No individual or aggregate
customer (economic group) represents more than 10% of the Company's revenues.
|
Consolidated
|
Gross revenues:
|
March 31,
2021
|
March 31,
2020
|
Domestic market
|
3,171,074
|
3,013,326
|
Foreign market
|
8,755,602
|
6,581,207
|
Other sales
|
132,590
|
124,455
|
Subtotal
|
12,059,266
|
9,718,988
|
|
|
|
Returns and cancellations
|
(137,910)
|
(122,517)
|
Commercial discounts and rebates
|
(243,742)
|
(238,585)
|
Taxes on sales
|
(2,222,541)
|
(1,839,892)
|
Subtotal
|
(2,604,193)
|
(2,200,994)
|
Total revenue
|
9,455,073
|
7,517,994
|
|
27.
|
OPERATING EXPENSES AND COST OF SALES
|
Classified by function
|
Company
|
Consolidated
|
|
March 31,
2021
|
March 31,
2020
|
March 31,
2021
|
March 31,
2020
|
Cost of sales
|
-
|
-
|
3,322,467
|
2,878,722
|
Selling, marketing and logistics expenses
|
-
|
-
|
4,007,445
|
3,299,190
|
Administrative, R&D, IT and project expenses
|
24,616
|
9,978
|
1,627,686
|
1,266,091
|
Total
|
24,616
|
9,978
|
8,957,598
|
7,444,003
|
|
|
|
|
|
Classified by nature
|
|
|
|
|
Cost of sales
|
-
|
-
|
3,322,467
|
2,878,722
|
Raw material/packaging material/resale
|
-
|
-
|
3,008,015
|
2,621,813
|
Employee benefits expense (note 28)
|
-
|
-
|
135,340
|
111,295
|
Depreciation and amortization
|
-
|
-
|
54,410
|
37,860
|
Other
|
-
|
-
|
124,702
|
107,754
|
|
|
|
|
|
Selling, marketing and logistics expenses
|
-
|
-
|
4,007,445
|
3,299,190
|
Logistics costs
|
-
|
-
|
653,055
|
566,346
|
Employee benefits expense (note 28)
|
-
|
-
|
1,122,513
|
942,218
|
Marketing, sales force and other selling expenses
|
-
|
-
|
1,895,685
|
1,483,106
|
Depreciation and amortization
|
-
|
-
|
336,192
|
307,520
|
|
|
|
|
|
Administrative, R&D, IT and project expenses
|
24,616
|
9,978
|
1,627,686
|
1,266,091
|
Innovation expenses
|
-
|
-
|
65,037
|
167,210
|
Employee benefits expense (note 28)
|
21,833
|
5,042
|
724,965
|
458,124
|
Other administrative expenses
|
2,783
|
2,646
|
531,910
|
360,318
|
Depreciation and amortization
|
-
|
2,290
|
305,774
|
280,439
|
|
|
|
|
|
Total
|
24,616
|
9,978
|
8,957,598
|
7,444,003
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Company
|
Consolidated
|
|
March 31,
2021
|
March 31,
2020
|
March 31,
2021
|
March 31,
2020
|
Payroll, profit sharing and bonuses
|
14,409
|
4,156
|
1,470,600
|
1,141,927
|
Pension Plan
|
-
|
-
|
65,568
|
44,113
|
Share-based payments (note 31.4)
|
4,131
|
-
|
58,337
|
34,887
|
Charges on restricted shares (note 31.4)
|
1,045
|
-
|
(6,075)
|
(42,695)
|
Health care, food and other benefits
|
760
|
(2)
|
165,076
|
147,151
|
Charges, taxes and social contributions
|
102
|
27
|
180,560
|
136,792
|
INSS
|
1,386
|
861
|
48,752
|
49,462
|
Total
|
21,833
|
5,042
|
1,982,818
|
1,511,637
|
28.1
Share-based payment
The information regarding the Company’s
share-based payments was presented in note 29 of the financial statements for the year ended December 31, 2020.
The changes in the number of outstanding
stock options and their related weighted-average prices, as well as variations in the number of restricted stocks, are as follows:
|
Stock Option Plan and Strategy Acceleration Plan
|
|
Average exercise price per option1 - R$
|
Options (thousands)1
|
Balance as at December 31, 2020
|
16.49
|
17,245
|
Exercised
|
24
|
(718)
|
Balance as at March 31, 2021
|
15.56
|
16,527
|
|
Restricted shares
(thousands)1
|
Performance shares
(thousands)2
|
Balance as at December 31, 2020
|
6,960
|
637
|
Expired
|
(5)
|
-
|
Exercised
|
(1,272)
|
-
|
Balance as at March 31, 2021
|
5,683
|
637
|
|
a)
|
The number of restricted shares granted, expired and exercised are shown already considering the stock
split approved at the Extraordinary Shareholders Meeting held on September 17, 2019.
|
|
b)
|
The number of performance shares granted, expired and exercised are shown considering the split of shares
approved at the General Meeting on September 17, 2019.
|
Out of the 16,527 thousand options
existing as at March 31, 2021 (17,245 thousand options as at December 31, 2020), 7,437 thousand options (3,405 thousand options as of
December 31, 2020) can be exercised.
The expense related to the fair value
of the restricted options and shares, including the charges related to the restricted shares, recognized in the three-month period ended
March 31, 2021, according to the elapsed period for the acquisition of the right to exercise the restricted options and shares, amounted
to R$ 5,176 and R$ 52,262 on the company and consolidated (R$ 12,650 and R$ 31,966 as of March 31, 2020).
The outstanding stock options and the
restricted stock as at the end of the period have the following maturity dates and exercise prices:
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
As of March 31,
2021 - restricted shares
Grant date
|
Conditions for acquiring the rights from grant date
|
Exercise price - R$
|
Fair value – R$
|
Existing options
(thousands) ¹
|
Remaining contractual life (years)
|
Vested options (thousands)
|
March 17, 2014
|
4 years of service
|
26.25
|
4.27
|
82
|
0.9
|
82
|
March 16, 2015
|
From 2 to 4 years of service
|
13.60
|
4.85 to 5.29
|
160
|
1.9
|
160
|
July 28, 2015
(Strategy acceleration)
|
From 4 to 5 years of service
|
12.90
|
6.20 to 6.23
|
605
|
2.3
|
605
|
March 15, 2016
|
From 2 to 4 years of service
|
12.84
|
7.16 to 7.43
|
164
|
3.0
|
164
|
July 11, 2016
(Strategy acceleration)
|
From 4 to 5 years of service
|
11.41
|
6.84 to 6.89
|
1,925
|
3.3
|
1,925
|
March 10, 2017
|
From 2 to 4 years of service
|
12.59
|
6.65 to 6.68
|
564
|
4.0
|
564
|
March 10, 2017
(Strategy acceleration)
|
From 4 to 5 years of service
|
12.59
|
6.87 to 6.89
|
2,210
|
4.0
|
1,105
|
March 12, 2018
|
From 2 to 4 years of service
|
16.96
|
7.96 to 8.21
|
1,759
|
5.0
|
1,080
|
March 12, 2018
(Strategy acceleration)
|
From 3 to 5 years of service
|
12.16 to 16.96
|
8.21 to 9.67
|
3,800
|
5.0
|
950
|
April 12, 2019
|
From 3 to 4 years of service
|
23.54
|
11.71 to 11.82
|
1,811
|
6.0
|
545
|
April 12, 2019
(Strategy acceleration)
|
From 4 to 5 years of service
|
23.54
|
11.51 to 11.71
|
1,900
|
6.0
|
-
|
Between December 31, 2002 to May 09, 2017
|
1 year of service
|
0.01
|
19.80
|
65
|
-
|
65
|
Between March 14 to December 17, 2018
|
From 1 to 3 years of service
|
0.01
|
19.70
|
319
|
0.1
|
55
|
Between March 13 to December 16, 2019
|
From 1 to 3 years of service
|
0.01
|
19.58
|
1,046
|
1.1
|
33
|
June 8, 2020
|
1 year of service
|
0.01
|
16.86
|
117
|
0.4
|
104
|
|
|
|
|
16,527
|
|
7,437
|
¹ The number
of restricted shares and performance shares granted, expired and exercised are shown already considering the stock split approved at the
Extraordinary Shareholders Meeting held on September 17, 2019.
As of March 31,
2021 – Restricted shares
Grant date
|
Conditions for acquiring the rights from grant date
|
Existing stock
(thousands) 1
|
Fair value (R$)
|
Remaining contractual life (years)
|
Vested options
|
March 12, 2018 – Plan I
|
From 2 to 4 years of service
|
236
|
15.18 to 15.90
|
0.3 to 1.2
|
2
|
August 13, 2018 – Extraordinary Plan VI
|
From 1,6 to 3,6 years of service
|
25
|
12.24 to 13.13
|
0.3 to 1.2
|
5
|
April 12, 2019 – Plan I
|
From 2 to 4 years of service
|
485
|
21.62 to 22.53
|
0.3 to 1.2
|
6
|
April 12, 2019 – Plan II
|
From 1 to 3 years of service
|
156
|
22.14 to 22.85
|
0.3 to 1.2
|
7
|
March 27, 2020 – Co-Investment Plan
|
From 1 to 3 years of service
|
1,542
|
29.00
|
2.3
|
8
|
September 29, 2020 – Long-term Incentive Plan
|
From 3 to 4 years of service
|
3,239
|
73.46
|
2.7 to 3.7
|
9
|
|
|
5,683
|
|
|
37
|
¹ The number
of restricted shares and performance shares granted, expired and exercised are shown already considering the stock split approved at the
Extraordinary Shareholders Meeting held on September 17, 2019.
As of March 31, 2021 – Performance
shares
Grant date
|
Conditions for acquiring the rights from grant date
|
Existing shares
(thousands) ¹
|
Fair value (R$)
|
Remaining contractual life (years)
|
Undelivered shares
(thousands)
|
May 21, 2019
|
From 3 to 4 years of service as from the grant date and fulfilment of the performance conditions
|
637
|
23.10 to 45.70
|
1.5 to 2.5
|
-
|
|
|
637
|
|
|
-
|
¹ The number
of restricted shares and performance shares granted, expired and exercised are shown already considering the stock split approved at the
Extraordinary Shareholders Meeting held on September 17, 2019.
As of March 31, 2021, the market price
was R$ 48.14 per share, already considering the stock split (R$ 25.74 as of March 31, 2020).
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
28.2
Avon Products Inc, plans
Share-Based Compensation
Plans
Prior to being acquired by the Company,
Avon Products Inc, (“Avon”) had two share-based incentive plans, the 2013 Stock Incentive Plan (the “2013 Plan”)
and the Omnibus Incentive Plan 2016 (the "2016 Plan"), both plans approved by the shareholders, which provided for various types
of share-based incentive compensation awards, including stock options, restricted shares, restricted share units and performance restricted
share units. After the approval of the shareholders of the 2016 Plan in May 2016, there were no further awards made in the 2013 Plan.
Stock options and restricted shares
were issued in the 2016 Plan, and units of restricted shares and units of restricted performance were issued in the 2013 and 2016 Plans.
There were also outstanding stock options under prior shareholder-approved plans.
On January 3rd, 2020, after
the conclusion of the transaction with Natura &Co, equity compensation was either cancelled in exchange for the right to receive an
amount in cash or was converted into an award denominated in Natura &Co Shares. Subsequent to the Transaction, Avon joined the Natura
&Co Stock-Based Compensation Plan, so that the 2013 Plan and the 2016 Plan are no longer in effect.
Under the Natura &Co Stock-Based
Compensation Plan, Avon issued nominal cost options and performance stock units, Nominal cost options were granted in exchange for Avon
restricted stock units and performance restricted stock units and vested as a single tranche in line with the vesting date of the original
Avon awards. Nominal cost options will automatically exercise on vest date. Performance stock units generally vest after three years,
only upon the satisfaction of certain market and/or performance conditions.
Stock Options
Prior to being acquired by the Company,
Avon granted premium-priced stock options, in which the exercise price was equal to a 25% premium for both, respectively, from the closing
market price of Avon stock price at the date of grant. The premium-priced stock options vest on a three-year graded vesting schedule and
the fair value of each premium-priced stock option was estimated on the date of grant using a Monte-Carlo simulation.
On January 3rd, 2020, upon
the completion of the Transaction with Natura &Co, each outstanding stock option, whether or not then vested or exercisable, was automatically
canceled in exchange for the right to receive an amount in cash, without interest, equal to the number of Avon Common Shares underlying
such stock option immediately prior to the effective time of the Transaction multiplied by the excess, if any, of the per share cash-out
price over the exercise price per share. The “per share cash-out price” was the closing price of an Avon Common Share on the
NYSE on the Transaction’s closing date. No amount was payed upon cancellation of stock option with an exercise price per share that
is greater than the per share cash-out price.
Restricted Stock
Units (RSU) and Performance Restricted Stock Units (PRSU)
Prior to being acquired by the Company,
during the years 2019, 2018, 2017 and 2016, Avon granted, performance restricted stock units that would vest and settle after three years
based on the relative total shareholder return of Avon common stock against companies included in the S&P 400 index as of the date
of grant over a three year performance period ("2019 PRSUs", "2018 PRSUs", "2017 PRSUs" and "2016 PRSUs",
respectively). The fair value of the PRSUs was estimated on the date of grant using a Monte-Carlo simulation that estimates the fair value
based on Avon's share price activity, expected term of the award, risk-free interest rate, expected dividends and the expected volatility
of the stock.
On January 3, 2020, upon the completion
of the Transaction with Natura &Co, each outstanding Restricted Stock Unit ("RSU") was converted into an award denominated
in Natura &Co Holding shares equal to the number of Avon Common Shares subject to each RSU immediately prior to the Transaction multiplied
by the Exchange Ratio of 0.30. In addition, each outstanding PRSU was converted into an award denominated in Natura &Co Holding Shares,
that is subject only to time-based vesting, equal to the number of Avon Common Shares subject to each PRSU immediately prior to the Transaction,
giving effect to market conditions that are deemed to be attained, multiplied by the Exchange Ratios of 0.30. The terms and conditions,
including service conditions but excluding market conditions, applicable to each RSU and PRSU will continue in full force and effect with
respect to the Company’s Nominal Cost Options.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
29.
|
FINANCE INCOME (EXPENSES)
|
|
Company
|
Consolidated
|
|
March 31,
2021
|
March 31,
2020
|
March 31,
2021
|
March 31,
2020
|
FINANCE INCOME:
|
|
|
|
|
Interest on short-term investments
|
4,042
|
6,088
|
41,439
|
35,418
|
Gains on monetary and exchange rate variations (a)
|
2,118
|
18,666
|
332,125
|
237,027
|
Gains on swap and forward transactions (c)
|
-
|
-
|
662,309
|
1,075,198
|
Gains on swap and forward derivatives mark to market
|
-
|
-
|
1,181
|
139,440
|
Monetary adjustment reversal on provision for tax risks and tax obligations
|
-
|
-
|
-
|
42,378
|
Debt structuring revenue for Avon acquisition
|
-
|
26,328
|
-
|
26,328
|
Other financial income
|
-
|
-
|
1,890
|
4,395
|
Subtotal
|
6,160
|
51,082
|
1,038,944
|
1,560,184
|
|
|
|
|
|
FINANCE EXPENSES:
|
|
|
|
|
Interest on financing
|
(8,140)
|
-
|
(178,845)
|
(253,094)
|
Interest on leases
|
-
|
-
|
(54,621)
|
(54,363)
|
Losses on monetary and exchange rate variations (b)
|
-
|
-
|
(676,879)
|
(1,198,575)
|
Losses on swap and forward transactions (d)
|
-
|
-
|
(259,907)
|
(148,150)
|
Losses on swap and forward derivatives mark to market
|
-
|
-
|
(1,763)
|
(84,407)
|
Adjustment of provision for tax, civil and labor risks and tax liabilities
|
-
|
-
|
(4,226)
|
(3,746)
|
Appropriation of funding costs (debentures and notes)
|
-
|
-
|
(2,630)
|
(2,831)
|
Interest on pension plan
|
-
|
-
|
(3,079)
|
(7,308)
|
Hyperinflationary economy adjustment (Argentina)
|
-
|
-
|
(36,585)
|
4,812
|
Other financial expenses
|
(2,594)
|
(1,975)
|
(48,315)
|
(40,117)
|
Subtotal
|
(10,734)
|
(1,975)
|
(1,266,850)
|
(1,787,779)
|
|
|
|
|
|
Net finance income (expenses), net
|
(4,574)
|
49,107
|
(227,906)
|
(227,595)
|
The breakdown set forth below is intended
to better explain the results of the foreign exchange rate hedging transactions entered into by the Company as well as its related items
recorded in the financial income (expenses) and shown in the previous table:
|
Company
|
Consolidated
|
|
March 31,
2021
|
March 31,
2020
|
March 31,
2021
|
March 31,
2020
|
(a) Gains on monetary and exchange rate variations
|
2,118
|
18,666
|
332,125
|
237,027
|
Gains on exchange rate variation on borrowings, financing and debentures
|
-
|
-
|
51,705
|
13,998
|
Exchange rate variation on imports
|
-
|
18,666
|
15,947
|
29,327
|
Exchange rate variation on export receivables
|
2,118
|
-
|
43,929
|
29,776
|
Exchange rate variation on accounts payable from foreign subsidiaries
|
-
|
-
|
90,679
|
74,349
|
Exchange variations of bank accounts in foreign currency
|
-
|
-
|
109,139
|
89,577
|
Adjustment of hyperinflationary economy
|
-
|
-
|
20,726
|
-
|
|
|
|
|
|
(b)
Losses on monetary and exchange rate variations
|
-
|
-
|
(676,879)
|
(1,198,575)
|
Losses on exchange rate variation on borrowings, financing and debentures
|
-
|
-
|
(455,338)
|
(937,885)
|
Exchange rate variation on imports
|
-
|
-
|
(10,920)
|
(19,034)
|
Exchange rate variation on export receivables
|
-
|
-
|
(23,639)
|
(2,044)
|
Exchange rate variation on accounts payable from foreign subsidiaries
|
-
|
-
|
(85,646)
|
(161,863)
|
Exchange rate variation on financing
|
-
|
-
|
(101,336)
|
(77,749)
|
|
|
|
|
|
(c) Gains on swap and forward transactions
|
-
|
-
|
662,309
|
1,075,198
|
Revenue from swap exchange coupons
|
-
|
-
|
116,757
|
47,167
|
Gains from exchange variations on swap instruments
|
-
|
-
|
545,552
|
1,028,031
|
|
|
|
|
|
(d) Losses on swap and forward transactions
|
-
|
-
|
(259,907)
|
(148,150)
|
Losses on exchange rate variation on swap instruments
|
-
|
-
|
-
|
-
|
Financial costs of swap instruments
|
-
|
-
|
(259,907)
|
(148,150)
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
30.
|
OTHER OPERATING INCOME (EXPENSES), NET
|
|
Company
|
Consolidated
|
|
March 31,
2021
|
March 1,
2020
|
March 31,
2021
|
March 31,
2020
|
Other operating income, net
|
|
|
|
|
Result on write-off of property, plant and equipment
|
-
|
-
|
10,135
|
1,491
|
ICMS-ST (a)
|
-
|
-
|
-
|
7,294
|
PIS/COFINS credits (b)
|
-
|
-
|
10,461
|
-
|
Tax contingencies
|
-
|
-
|
-
|
1,281
|
Other operating income
|
-
|
-
|
6,974
|
543
|
Total other operating income
|
-
|
-
|
27,570
|
10,609
|
|
|
|
|
|
Other operating expenses, net
|
|
|
|
|
Crer para Ver (c)
|
-
|
-
|
(8,795)
|
(8,360)
|
Expense on the sale of customer portfolio
|
-
|
-
|
(3,964)
|
-
|
Expenses related Avon acquisition
|
-
|
(147,824)
|
-
|
(297,110)
|
Transformation and integration plan (d)
|
-
|
-
|
(134,142)
|
(25,072)
|
Taxes contingencies
|
-
|
-
|
(1,880)
|
-
|
Other operating expenses
|
-
|
-
|
(4,221)
|
(32,617)
|
Total other operating expenses
|
-
|
(147,824)
|
(153,002)
|
(363,159)
|
Other operating income (expenses), net
|
-
|
(147,824)
|
(125,432)
|
(352,550)
|
|
a)
|
Refers to the requirement of ICMS tax substitution, for different Federal
States (details in note 22), During 2020, provision reversals were made due to the change in the loss estimate for some Federal States.
|
|
b)
|
Tax credits from prior periods related to the
change on PIS and COFINS taxation in 2019.
|
|
c)
|
Allocation to Natura Institute of operating profit from sales of the non-cosmetic product line “Crer
Para Ver”, specifically allocated to social projects aimed at the development of education quality.
|
|
d)
|
Expenses related to the implementation of the TBS transformation and integration Avon plan, which is based
on five pillars, namely: (1) renewal of the brand; (2) optimization of retail operations; (3) improvement of omni-channel; (4) improvement
of operating efficiency; and (5) organization redesign.
|
|
31.
|
RELATED-PARTY TRANSACTIONS
|
In the course of the Company's operations,
rights and obligations are generated between related parties, arising from administrative expenses and provision of services.
31.1
Receivables and payables with related parties
The Company had transactions with related
parties recognized as presented below:
|
Company
|
|
March 31,
2021
|
December 31,
2020
|
Current assets:
|
|
|
Natura Cosméticos S.A. (a)
|
191,154
|
108,953
|
Natura Cosméticos S.A. – Argentina (b)
|
2,050
|
1,870
|
The Body Shop International (b)
|
2,729
|
2,490
|
Aesop HK (b)
|
330
|
300
|
Aesop UK (b)
|
2,098
|
1,913
|
Aesop USA (b)
|
303
|
276
|
Emeis cosmetics (b)
|
165
|
150
|
Indústria e Comércio de Cosméticos Natura Ltda (b)
|
1,518
|
-
|
Natura Biosphera
|
78
|
-
|
Total current assets
|
200,425
|
115,952
|
|
|
|
Current liabilities:
|
|
|
Natura Cosméticos S.A. (b)
|
564
|
5,673
|
Indústria e Comércio de Cosméticos Natura Ltda, (b)
|
-
|
1,521
|
Total current liabilities
|
564
|
7,194
|
|
a)
|
Refers to interest on equity.
|
|
b)
|
Refers to the allocation of expenses related to the stock option and restricted stock plans.
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
31.2
Transactions with related parties
In the year ended December 31, 2020,
Natura &Co reimbursed the amount of R$ 148,274 of expenses regarding the transaction costs for the acquisition of Avon paid by its
subsidiary Natura Cosméticos. This reimbursement was registered in the profit or loss line item “Other revenues (expenses)”.
For the other transactions, they were not carried forward as income statement, as they refer to the transfer of expenses related to stock
option plans and restricted shares.
The
Company and its subsidiaries have a structure of internal controls to support the identification, monitoring and approving of transactions
between Related Parties.
31.3
Transactions with uncontrolled and unconsolidated related parties
Natura Institute holds shares in the
investment fund “Fundo de Investimento Essencial”. As at March 31, 2021, the balance is R$ 8,850 (R$ 3,414 on December 31,
2020).
On June 5, 2012, an agreement was entered
between Indústria e Comércio de Cosméticos Natura Ltda., and Bres Itupeva Empreendimentos Imobiliários Ltda.,
(“Bres Itupeva”), for the construction and leasing of processing center to distribution and warehousing of products (HUB),
in Itupeva (SP), In 2019, the Bres Itupeva granted its credits to BRC Securitizadora S/A, to which Natura makes monthly payments. Messrs.
Antônio Luiz da Cunha Seabra, Guilherme Peirão Leal and Pedro Luiz Barreiros Passos, members of the group of controlling
shareholders of Natura Cosméticos S.A., indirectly hold controlling interests in Bres Itupeva. The amount involved in the registered
transaction is recorded under “Right of Use” of "Buildings" in the amount of R$ 67,729 (R$ 39,346 under “Builds”
of Property, Plant and Equipment as at December 31, 2019) and in the three-month period ended March 31, 2021, the total amount paid as
rent was R$ 3,560 (R$ 13,086 for the year ended December 31, 2020).
The Company and Raia Drogasil S.A.
entered into a purchase and sale agreement and other covenants for selling products in Raia and Drogasil. Mr. Guilherme Peirão
Leal and Mr. Pedro Luiz Barreiros Passos, members of the Company, controlling group, indirectly hold shareholding interest in Raia Drogasil
S.A. This contract was finalised during the financial year 2020.
In the three-month period ended March
31, 2021, the Company and its subsidiary transferred to the Natura Institute, a donation associated with the net sales of products in
the Natura Crer Para Ver line, in the amount of R$ 10,000 (R$ 15,692 as at March 31, 2020).
The Company and its subsidiaries have
a structure of internal controls to support the identification, monitoring and approving of transactions between Related Parties.
|
31.4
|
Key management personnel compensation
|
The total compensation of the Company’s Management
is as follows:
|
March 31, 2021
|
March 31, 2020
|
|
Compensation
|
Compensation
|
|
Fixed
|
Variable
|
Total
|
Fixed
|
Variable
|
Total
|
|
(a)
|
(b)
|
(a)
|
(b)
|
Board of Directors
|
3,715
|
2,790
|
6,505
|
5,345
|
5,855
|
11,200
|
Executive Board
|
10,169
|
14,554
|
24,723
|
13,504
|
8,442
|
21,946
|
|
13,884
|
17,344
|
31,228
|
18,849
|
14,297
|
33,146
|
|
a)
|
The line item “Executive Board” includes the amount of R$ 255 referred to the amortization
of the Confidentiality and Non-Compete Agreement during the three-month period ended March 31, 2021 (R$ 255 in the three-month period
ended March 31, 2020).
|
|
b)
|
Refers to profit sharing regarding the Restricted Stock Plan and Strategy Acceleration Program, including
charges, as applicable, to be determined in the year. The amounts include additions to and/or reversals of provisions made in the previous
year, due to final assessment of the targets determined to the board members and officers, statutory and non-statutory, in relation to
profit sharing.
|
|
31.5
|
Share-based payments
|
Below is the breakdown of the Company officers and executives’
share-based payments compensation:
|
Grant of options
|
|
March 31, 2021
|
March 31, 2020
|
|
Stock option balance (number)1 (a)
|
Average fair value of stock options1 – R$
|
Average exercise price1 - R$ (b)
|
Stock option balance (number) 1 (a)
|
Average fair value of stock options1 – R$
|
Average exercise price1 - R$ (b)
|
Officers
|
13,849,189
|
16.32
|
15.56
|
13,535,439
|
8.39
|
16.28
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Restricted shares
|
|
March 31, 2021
|
March 31, 2020
|
|
Stock option balance (number)1 (a)
|
Average exercise price1 - R$ (b)
|
Stock option balance (number)1 (a)
|
Average exercise price1 - R$ (b)
|
Officers
|
531,631
|
40.15
|
752,133
|
19.47
|
|
1)
|
The number of stock options granted, expired and exercised and their respective fair values is shown already
considering the stock split approved at the Extraordinary Shareholders Meeting held on September 17, 2019.
|
|
2)
|
The number of restricted stock and performance shares granted, expired and exercised is shown already
considering the stock split approved at the Extraordinary General Meeting on September 17, 2019.
|
|
a)
|
Refers to the balance of the options and restricted shares vested and non-vested, not exercised, at the
reporting dates.
|
|
b)
|
Refers to the weighted-average exercise price of the option at the time of the stock option plans, adjusted
for interest based on the Extended Consumer Price Index (IPCA) through the end of the reporting period, The new Stock Option Plan implemented
in 2015, include no monetary adjustment.
|
|
32.1
|
Contracts related to supply of inputs
|
In the normal course of their business,
the Company's subsidiaries sign contracts with third parties for the acquisition of raw materials, production goods, transportation and
storage services and electricity to supply their operating activities.
The commitments assumed as of March
31, 2021 and December 31, 2020, according to the signed contracts, are shown below:
|
Consolidated
|
|
March 31,
2021
|
December 31,
2020
|
Less than one year
|
1,337,360
|
1,413,904
|
One to five years
|
966,535
|
872,767
|
Above five years
|
12,894
|
13,223
|
Total
|
2,316,789
|
2,299,894
|
The Company and its subsidiaries have
in place an insurance policy that considers principally risk concentration and materiality, taking into consideration the nature of its
activities and the guidance of its insurance advisors. As at March 31, 2021, insurance coverage is as follows:
Item
|
Type of coverage
|
Amount insured
|
March
31, 2021
|
December 31, 2020
|
Industrial complex and administrative sites
|
Any damages to buildings, facilities, inventories, and machinery and equipment.
|
6,140,394
|
5,658,558
|
Vehicles
|
Fire, theft and collision for the Company and subsidiaries vehicles.
|
284,812
|
258,416
|
Loss of profits
|
No loss of profits due to material damages to facilities buildings and production machinery and equipment.
|
1,894,813
|
1,894,813
|
Transport
|
Damages to products in transit.
|
106,353
|
97,934
|
Civil liability
|
Protection against error or complaints in the exercise of professional activity that affect third parties.
|
2,749,415
|
1,390,061
|
Environmental liability
|
Protection against environmental accidents that may result in environmental lawsuits
|
30,000
|
30,000
|
|
34.
|
ADDITIONAL INFORMATION RELATING TO THE STATEMENTS OF CASH FLOWS
|
The following table presents additional information on transactions
related to the cash flow statement:
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
|
Company
|
Consolidated
|
|
March 31,
2021
|
March 31,
2020
|
March 31,
2021
|
March 31,
2020
|
Non-cash items
|
|
|
|
|
Hedge accounting, net of tax effects
|
-
|
-
|
39,655
|
164,882
|
Net effect of acquisition of property, plant and equipment and intangible assets not yet paid
|
-
|
-
|
187,848
|
45,078
|
Consideration for acquisition of subsidiary
|
-
|
13,366
|
-
|
-
|
Promissory notes
On April 15, 2021, the Company and
its subsidiary Natura Cosméticos redeemed the total principal amount due under their respective promissory notes, equivalent to
R$ 500,000 of the Company and R$ 250,000 of Natura Cosméticos.
Absorption of losses
for the fiscal year 2020 by the capital reserve
On April 16, 2021, the Extraordinary
General Meeting approved the full absorption of the losses incurred on the year ended on December 31, 2020 in the amount of R$ 650,196,
through the capital reserve account related to the goodwill on the issue / sale of the Company's shares, as permitted by article 200 of
the Brazilian Corporation Law.
Credit
opening agreement
On April
23, 2021, The Body Shop International Limited, a subsidiary of Natura Cosméticos, contracted a facility agreement with UK
Export Finance and HSBC Bank PLC in the amount of GBP 100 million with guarantee from Natura &Co Holding and subsidiary Natura
Cosméticos.
Notes
On May 4, 2021, the subsidiary
Natura Cosméticos completed the offer of sustainability-linked notes to sustainability targets of 4.125% due on May 3, 2028 (the
"ESG Notes") in the total principal amount of US $ 1, 0 billion, these being guaranteed by Natura &Co. The Issuance will
have the following main characteristics: (i) redemption: the Company may redeem all or part of the Notes, under the terms to be established
in the documents related to the Issuance and the Offering of Notes; (ii) allocation of funds: the funds raised through the Issuance of
Notes will be used to refinance certain debts of the Company in the short and medium term, which includes the redemption of the 5,375%
senior notes due 2023 issued by the Company in 2018, according to the terms established in the deed dated February 1, 2028, between the
Company and the US Bank National Association Notes; (iii) guarantee: Natura &Co Holding will grant a personal guarantee, irrevocably
and unconditionally ("Guarantee") on the full and punctual payment (either on the maturity date, on the redemption, early maturity
or otherwise established) of the principal, premium, if any, and interest and all other amounts due under the terms of each of the Notes.
Hedge Instrument
Settlement
On May 10,
2021, the subsidiary Natura Cosméticos S.A. decided to settle the hedge instruments associated with the Bonds maturing in 2023,
which will be redeemed in advance. This operation generated a gross positive result in the amount of R$ 1,741,835 for the subsidiary
Natura Cosméticos.