REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
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):
NATURA &CO HOLDING S.A.
Natura &Co
Holding S.A. (“Natura &Co”) was incorporated on January 21, 2019, with the purpose of holding interests in other companies,
whose main business is in the cosmetics, fragrance and personal hygiene segments, through the manufacturing, distribution, and sale of
their products. Natura &Co is headquartered in Brazil, in the city of São Paulo, State of São Paulo, at Avenida Alexandre
Colares, no 1.188, Vila Jaguará, CEP 05106-000. Natura &Co and its subsidiaries are hereinafter referred to as the “Company”.
Brands managed
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 sales channels for the products, the subsidiaries highlight
the performance of the direct sales channel carried out by the Natura, The Body Shop and Avon Consultant(s).
| 2. | MANAGEMENT STATEMENT AND BASIS OF PRESENTATION OF THE INTERIM ACCOUNTING INFORMATION |
The Company’s
interim accounting information, included in the Quarterly Information Form - ITR for the three-month period ended March 31, 2022, includes
the individual and consolidated interim accounting information prepared pursuant to Technical Pronouncement CPC 21 (R1) - Interim Statements,
approved by the Brazilian Accounting Committee (“CPC”) equivalent to International Accounting Standard (“IAS”)
34 - Interim Financial Reporting”.
The individual
and consolidated interim accounting information shows all relevant information specific to the interim accounting information and only
this information, which is consistent with that used by Management in its management.
The Company's
individual and consolidated interim accounting information was approved by the Board of Directors and authorized for publication at a
meeting held on May 4, 2022.
The individual
and consolidated interim accounting information was prepared based on historical cost, except for derivative instruments and short-term
investments recognized in other current and non-current assets recognized in other liabilities that were measured at fair value. The individual
and consolidated interim accounting information are expressed in thousands of Reais (“R$”), rounded to the nearest thousand,
as well as the disclosure of amounts in other currencies, when necessary, also made in thousands. The items disclosed in other currencies
are duly identified, whenever applicable.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The main accounting
policies applied in the preparation of this individual and consolidated interim accounting information are consistent with those applied
and disclosed in note 3 to the Company’s audited financial statements for the year ended December 31, 2021, issued on March 9, 2022,
except for the rules and changes effective as of January 1, 2022, which has not entailed any significant changes in the individual and
consolidated interim accounting information of the Company.
Additionally,
the Company adopted International Financial Reporting Standard (“IFRS”) 9, Financial Instruments, for hedge accounting on
January 1, 2022, replacing IAS 39, Financial Instruments (CPC 38), which the Company had elected to keep in force for hedge accounting
from the first-time adoption of IFRS 9 (CPC 48) on January 1, 2018. The transition to IFRS 9 was carried out prospectively and pre-existing
hedging relationships were treated as ongoing hedging relationships, without loss of effectiveness or designation in transition. The adoption
of IFRS 9 did not produce significant effects on the financial statements.
This individual
and consolidated interim accounting information should be read in conjunction with the latest annual financial statement.
The same accounting
policies are applicable for the three-month comparative period ended March 31, 2021 (except for the aforementioned rules and amendments,
which did not have a significant effect on the Company's individual and consolidated interim accounting information).
| 4. | CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS |
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 accounting
information, were presented in note 5 of the Company’s financial statements for the year ended December 31, 2021.
The estimates and assumptions used
in the preparation of the interim accounting information for the three-month period ended March 31, 2022 have not changed significantly.
| 5. | FINANCIAL RISK MANAGEMENT |
The information regarding the general
considerations and polices of the Company was presented in note 5.1 of the Company’s annual financial statements for the year ended
December 31, 2021, in note 6.1. and there are no changes for the three-month period ended March 31, 2022.
| 5.1 | Risks associated with the conflict between Russia and Ukraine |
In February 2022, Russia launched a
full-scale military invasion and is now engaged in a wide-ranging military conflict with Ukraine. In response, governments and authorities
around the world, including the United States, United Kingdom and the European Union, recently announced sanctions on certain sectors
and parts of industry in Russia. These and any additional sanctions, as well as any possible responses that may be provided by the governments
of Russia or other jurisdictions, could adversely affect the Company’s business.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
So far, the conflict resulted in the
suspension of The Body Shop and Aesop's operations in Russia and the Russian plant's exports to other countries in the region, which began
to be supplied by the Company’s unit in Poland. Avon, however, continues to supply its dealer network in Russia. Administrative
operations in Ukraine that were performed inside the Company’s facilities are temporarily idle considering the impossibility of
guaranteeing the safety of local workers. The Company cannot predict the duration of idleness, as this will depend on the remaining course
of the conflict and the establishment of safe and stable operational and logistical conditions. As of the date of this interim accounting
information, the Company confirms that the facilities, as well as the assets and inventories held therein, have not been damaged and are
in an adequate condition to be operated and sold as safety conditions improve.
As of the date of the interim accounting
information, there are no material impacts of the above matter on the Company's consolidated interim accounting information, due to the
Company's limited operations in Russia and Ukraine, which together represent less than 5% of consolidated net revenue.
Regarding operations in Russia, on
the date of this interim accounting information, no significant impacts were identified that affect the business model for the management
of financial assets or the classification of these assets. Additionally, there are no indications of a significant increase in the expected
credit loss associated with operations, considering the maintenance of receivables collection levels and the increase in cash transactions
(considering the reduction in credit operations as a result of restrictions imposed locally and of credit card processing companies in
the country).
Considering the maintenance of collection
levels and sales operations for the local market in Russia, as well as the inexistence of significant restrictions that affect the Company's
ability to carry out the management and cash movement necessary to maintain its operations, there is no significant risk of liquidity
related to these events that affect this interim accounting information. Similarly, market risks associated with the transaction, including
interest rate, currency and other price risks, including raw materials, did not significantly affect the Company's financial assets, considering
the supply of production to the market. from the Russian manufacturing units and the expectation of recoverability of the amounts in the
normal course of business.
Regarding the operations in Ukraine,
the suspension of sales in March and the reduction in the collection of outstanding receivables resulted in an increase in the provision
for losses on accounts receivable on March 31, 2022. This effect, however, is not material for this consolidated interim accounting information.
Additionally, considering the absence of restrictions imposed on the movement of cash and cash equivalents, raising funds in the normal
course of business and for making payments and receipts, at the date of the interim accounting information, there are no significant impacts
on the liquidity of the operations in this location.
As a result of the developments of
the conflict in the quarter, there were still no impacts resulting from possible breaches of covenants or losses related to derecognition
and/or modification of financial instruments or reclassification of cash flow hedge reserve amounts as a result of loss of effectiveness
of derivatives recognized by hedge accounting or by the loss of expectation that transactions evaluated as highly probable will actually
occur.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
The Company's Management is continuously
monitoring developments to assess any possible future impacts that may arise as a result of the ongoing crisis, including the impairment
of financial and non-financial assets, which Management assesses based on the best available information.
The Company continues to monitor the
effects of the Covid-19 pandemic in the markets it operates, especially with regards to restrictive measures adopted by these jurisdictions.
The Crisis Committee continuously analyzes the situation and acts to minimize impacts on the operations and on the equity and financial
position of the Company, with the objective of implementing appropriate measures, ensuring the continuity of operations, hedge cash, improve
liquidity and promote the health and safety of all. We observed a reduction on the market restrictions during the first quarter of 2022,
when compared to the end of 2021 and the first quarter of 2021. During the first quarter of 2022 we did not identify any material impacts
on the Company’s financial position and will continue to monitor potential future impacts.
| 5.3 | Market risks including foreign exchange risk and interest
rate |
In order to hedge the current balance
sheet positions of the Company against market risks, the following derivative instruments are used and consist of the balances in the
following table, as of March 31, 2022 and December 31, 2021:
| |
Consolidated |
| Description |
March 31, 2022 |
December 31, 2021 |
| Financial derivatives |
(912,108) |
516,386 |
| Operating derivatives |
(9,327) |
251 |
| Total |
(921,435) |
516,637 |
As of March 31, 2022 and December 31,
2021, the financial derivatives balances are composed as follows:
Financial derivatives
| Consolidated |
Fair value |
Gains (losses) of fair value adjustment |
| Description |
March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
| Swap agreements(a) |
|
|
|
|
| Asset portion: |
|
|
|
|
| Dollar purchased position |
5,583,407 |
6,881,981 |
512,863 |
978,350 |
| |
|
|
|
|
| Liability portion: |
|
|
|
|
| Post-fixed CDI Rate: |
|
|
|
|
| Position sold in CDI |
(6,489,996) |
(6,348,442) |
(786,341) |
(823,887) |
| |
|
|
|
|
| Forward contracts (NDF): |
|
|
|
|
| Liability position: |
|
|
|
|
| Post-fixed CDI Rate: |
(8,562) |
(137) |
(1,482) |
(137) |
| Short position at interbank rate |
3,043 |
(17,016) |
(191) |
94 |
| Total derivative instruments, net: |
(912,108) |
516,386 |
(275,151) |
154,420 |
| a) | Swap transactions consist of swapping the exchange rate variation for a correction related to a percentage
of the fluctuation of the Certificate of bank deposits (post-fixed CDI), in the case of Brazil. |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
Below are the changes in net derivatives
balances for the year ended December 31, 2021 and for the three-month period ended March 31, 2022:
| |
Consolidated |
| Balance as of December 31, 2020 |
1,846,777 |
| Losses from swap and forward derivative contracts |
441,554 |
| Payment of funds due to settlement of derivative transactions – operational activity |
(1,570,584) |
| Proceeds received due to settlements – financing activity |
9,040 |
| Translation adjustment |
(210,150) |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| Balance as of December 31, 2021 |
516,637 |
| Losses from swap and forward derivative contracts |
(974,949) |
| Payment of funds due to settlement of derivative transactions – operational activity |
(13,144) |
| Proceeds received due to settlements – financing activity |
(3,738) |
| Translation adjustment |
(446,241) |
| Balance as of March 31, 2022 |
(921,435) |
For derivative financial instruments
held by the Company on March 31, 2022 and December 31, 2021 and 2020, due to the fact that the contracts are executed directly with financial
institutions and not through stock exchanges, there are no margins deposited as collateral of these operations.
| 5.4 | Financial derivative instruments designated for hedge accounting |
The positions of derivative instruments
designated as outstanding cash flow hedge on March 31, 2022 are set out below.
| |
Consolidated |
| |
Subject to hedging |
Notional currency |
Fair value |
Accumulated gains (losses) |
Gains (losses) for the 3-month period |
| Currency swap – US$/R$ |
Currency |
BRL |
(906,588) |
(393,609) |
(426,686) |
| Forward agreements (The Body Shop and Avon) |
Currency |
BRL |
(271) |
(271) |
(271) |
| Forward agreements (Natura) |
Currency |
BRL |
(26,445) |
(19,365) |
(19,373) |
| Forward agreements and swap (Avon) |
Currency |
BRL |
89 |
89 |
89 |
| Total |
|
|
(933,215) |
(413,156) |
(446,241) |
| 5.5 | “Operating” derivatives - Consolidated |
As of March 31, 2022 and December 31,
2021, the Company maintains forward derivative instruments, with the purpose of hedging the foreign exchange risk of operating cash flows
(such as import and export transactions):
| Description |
Fair value |
| March 31, 2022 |
December 31, 2021 |
| Net position in GBP and USD |
(69) |
(404) |
| Forward contracts |
(9,258) |
655 |
| Total of derivative instruments, net |
(9,327) |
251 |
The Company’s objectives in managing
its capital are to safeguard the Company’s ability to continue to provide returns to shareholders and benefits to other stakeholders,
in addition to maintaining an ideal capital structure to reduce this cost.
The Company monitors capital based
on the financial leverage ratios. This ratio corresponds to the net debt divided by Earnings Before Interest, Tax, Depreciation and Amortization
(“EBITDA”). The net debt corresponds to total borrowing and financing (including short and long-term borrowing and financing,
as shown in the consolidated balance sheet), deducted from cash and cash equivalents and short-term investments (except for “Crer
para Ver” funds and Dynamo Beauty Ventures Ltd. Fund).
The Company’s financial assets
and liabilities substantially encompass assets and liabilities classified as level 2 in the fair value estimate hierarchy, the assessment
of which is based on techniques that use, other than the prices quoted in level 1, other pieces of information adopted by the market in
a direct (i.e., as prices) or indirect (i.e., resulting from prices) manner. To measure the fair value, the carrying amount represents
an amount that is reasonably near to the fair value, as described below:
| (i) | the balances of cash and cash equivalents, trade accounts
receivables, accounts payable to suppliers and other current liabilities are equivalent to their carrying amounts, mainly due to the
short-term maturities of these instruments; |
| (ii) | the balances of the short-term investments measured at amortized
cost approximate their fair values as a result of the transactions to be conducted at floating interest rates; and b) measured at fair
value through profit or loss based on the rates agreed with the financial institutions considering the agreed rates among the |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
parties,
including market information that allows for such calculation;
| (iii) | the carrying amounts of borrowing, financing and debentures
are measured at their amortized cost and disclosed at fair value, which does not differ materially from the carrying amounts as the agreed
interest rates are consistent with current market rates; and |
| (iv) | the fair value of exchange rate derivatives (swap and forwards)
is determined based on the future exchange rates at the dates of the balance sheets, with the resulting amount being discounted at present
value. |
There was no transfer between measurement
levels in the fair value hierarchy in the three-month period ended March 31, 2022 for these assets and liabilities. Additionally, there
were no material effects in the quarter on the fair value of financial assets and liabilities as a result of the increase in price volatility
in markets affected by the conflict between Russia and Ukraine, counterparty risk in financial assets or inactivity of markets considered
in the valuation.
| 6. | CASH AND CASH EQUIVALENTS |
| |
Parent |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
| Cash and banks |
4,658 |
4,289 |
2,558,682 |
3,349,398 |
| Certificate of bank deposits (a) |
- |
- |
31,005 |
7,639 |
| Repurchase operations (b) |
- |
- |
448,837 |
650,220 |
| |
4,658 |
4,289 |
3,038,524 |
4,007,257 |
| a) | As of March 31, 2022, investments in Certificate of Bank Deposits (“CDB”) bear interest at
an average rate of 107.7% of the CDI (103.0% as of December 31, 2021) with daily maturities redeemable with the issuer itself, without
significative loss of value. |
| b) | Repurchase operations 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 Agency for Custody and Financial Settlement
of Securities (“CETIP”). As of March 31, 2022, repurchase operations are remunerated at an average rate of 100.0% of CDI (100.0%
of the CDI as of December 31, 2021). |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
Parent |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
| Exclusive Investment fund(a) |
135,441 |
228,694 |
- |
- |
| Mutual investment funds (b) |
- |
- |
792,670 |
896,212 |
| Treasury bills (c) |
- |
- |
594,113 |
646,586 |
| Government securities (LFT) (d) |
- |
- |
111,370 |
435,898 |
| Fundo Dynamo Beauty Ventures Ltd. |
- |
- |
42,671 |
36,921 |
| Restricted cash |
- |
- |
37 |
44 |
| |
135,441 |
228,694 |
1,540,861 |
2,015,661 |
| |
|
|
|
|
| Current |
135,441 |
228,694 |
1,498,190 |
1,978,740 |
| Non-current |
- |
- |
42,671 |
36,921 |
| (a) | The Company concentrate most of its investments in an Exclusive Investment Fund, which holds interest
in shares of the Essential Investment Fund. |
The values of the shares held by the
Company are presented under the item “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 shares), were consolidated, except for the quotas of the
Instituto Natura, and the amounts of its portfolio were segregated by type of investment and classified as cash and short-term investments,
based on the accounting practices adopted by the Company. For the purposes of consolidated presentation, the exclusive investment fund
balance, as well as the positions of the other subsidiaries are presented according to the financial component.
The balance as of March 31, 2022, related
to the “Crer para Ver” line within the exclusive investment fund is R$ 98,050 (R$96,070 as of December 31, 2021).
| (b) | Mutual investment funds refer to the investments of some subsidiaries of the Company, which are concentrated
in the Natura entities of the Hispanic America mainly in Argentina, Chile, Colombia and Mexico. |
| (c) | As of March 31, 2022, investments in treasury bills are remunerated at an average rate of 116.6% of the
CDI (120.0% as of December 31, 2021). |
| (d) | As of March 31, 2022, investments in Government securities (LFT) are remunerated at an average rate of
101.4% of the CDI (102.0% of the CDI as of December 31, 2021). |
The breakdown of securities constituting
the Essential Investment Fund portfolio, regarding which the Company holds 100% interest, on March 31, 2022 and December 31, 2021 is as
follows:
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Certificate of bank deposits |
5,201 |
- |
| Repurchase operations (cash and cash equivalents) |
389,969 |
569,349 |
| Treasury bills |
594,113 |
646,586 |
| Government securities (LFT) |
104,163 |
428,865 |
| |
1,093,446 |
1,644,800 |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| 8. | TRADE ACCOUNTS RECEIVABLE |
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Trade accounts receivable |
3,305,502 |
3,930,340 |
| (-) Allowance for expected credit losses |
(412,035) |
(453,981) |
| |
2,893,467 |
3,476,359 |
Maximum exposure to credit risk on
the date of the financial statements is the carrying amount of each maturity date range, net of the allowance for expected credit losses.
The following table shows trade accounts receivable by exposure to the allowance for expected credit losses as of March 31, 2022 and December
31, 2021:
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| |
Trade accounts receivable |
Allowance for expected credit losses |
Trade accounts receivable |
Allowance for expected credit losses |
| Current |
2,047,343 |
(78,713) |
2,488,412 |
(80,087) |
| Past due: |
|
|
|
|
| Up to 30 days |
801,915 |
(58,359) |
937,227 |
(68,782) |
| 31 to 60 days |
107,326 |
(43,130) |
140,757 |
(56,784) |
| 61 to 90 days |
92,944 |
(48,597) |
97,713 |
(49,731) |
| 91 to 180 days |
255,974 |
(183,236) |
266,231 |
(198,597) |
| |
3,305,502 |
(412,035) |
3,930,340 |
(453,981) |
The changes in the allowance for expected
credit losses for the three-month period ended March 31, 2022 and 2021 are as follows:
| |
Consolidated |
| Balance as of December 31, 2020 |
(432,108) |
| Additions, net of reversals |
(225,417) |
| Write-offs (a) |
435,511 |
| Translation adjustment |
(18,877) |
| Balance as of March 31, 2021 |
(240,891) |
| |
|
| Balance as of December 31, 2021 |
(453,981) |
| Additions, net of reversals |
(163,752) |
| Write-offs (a) |
166,017 |
| Translation adjustment |
39,681 |
| Balance as of March 31, 2022 |
(412,035) |
| 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 sale of customer portfolios. |
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Finished products |
4,255,597 |
4,619,237 |
| Raw materials and packaging |
1,179,530 |
1,166,681 |
| Auxiliary materials |
190,965 |
195,364 |
| Products in progress |
54,110 |
38,189 |
| (-) Allowance for inventory losses |
(562,405) |
(615,945) |
| |
5,117,797 |
5,403,526 |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
The changes in the allowance for inventory
losses for the three-month period ended March 31, 2022 and 2021 are as follows:
| |
Consolidated |
| Balance as of December 31, 2020 |
(602,314) |
| Additions, net of reversals (a) |
(120,888) |
| Write-offs (b) |
464,221 |
| Translation adjustment |
(26,277) |
| Balance as of March 31, 2021 |
(285,258) |
| |
|
| Balance as of December 31, 2021 |
(615,945) |
| Additions, net of reversals (a) |
(76,533) |
| Write-offs (b) |
58,330 |
| Translation adjustment |
71,743 |
| Balance as of March 31, 2022 |
(562,405) |
| a) | This 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. |
| b) | This consists of write-offs of products for which there is already an allowance for losses, where the
Company has no expectation of sales/realization. |
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021(*) |
| ICMS on purchase of goods (a) |
755,468 |
732,853 |
| Taxes on purchase of goods – foreign subsidiaries |
268,305 |
313,214 |
| ICMS on purchases of property, plant and equipment and purchase of goods |
12,101 |
12,138 |
| PIS and COFINS on purchase of property, plant and equipment and purchase of goods (b) |
972,532 |
984,737 |
| Withholding PIS, COFINS and CSLL |
1,671 |
1,673 |
| Tax on Manufactured Goods - IPI (c) |
125,826 |
114,179 |
| Other |
186,372 |
164,099 |
| |
2,322,275 |
2,322,893 |
| |
|
|
| Current(*) |
991,298 |
973,269 |
| Non-current |
1,330,977 |
1,349,624 |
(*) The income tax balances originally
presented on December 31, 2021 in this group were reclassified to the income tax and social contribution group in current assets for better
presentation. This reclassification does not affect the total current assets, only reclassification between lines of recoverable taxes
and income tax and social contribution.
| a) | Tax credits related to the 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 of sales. The Company expects
to realize these credits during the ordinary course of business through offsetting with sales operations in the domestic market. |
| b) | The accumulated tax credits of PIS and COFINS basically arise from credits on purchases of raw materials
used in the production and from purchase of property, plant and equipment, as well as credits arising out of the exclusion of ICMS from
the calculation basis of the PIS/COFINS. The realization of these credits normally occurs through offsetting with sales operations in
the domestic market. |
| c) | The balance will be used to offset IPI (Taxes over industrialized products) payable in future operations
of the Company. |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| 11. | INCOME TAX AND SOCIAL CONTRIBUTION |
The effective rate calculated
by the Company for the three-month period ended March 31, 2022 was 16% negative. This percentage is based on a loss before tax of R$ 520,098
and an income tax credit of R$ 82,488. The main components that cause the effective rate to deviate from the nominal income tax rate of
34% are different income by country, tax loss carryforwards from certain jurisdictions that cannot benefit from deferred income tax assets,
and permanent effects related to withholding income tax arising from transactions between group entities offset by favorable net permanent
items, including investment subsidies and other incentives.
The effective rate calculated
by the Company for the three-month period ended March 31, 2021 was negative by 95%. This percentage is based on a loss before tax of R$95,208
and income tax expense of R$90,093. The main components that cause the effective rate to deviate from the nominal income tax rate of 34%
are the tax losses of certain jurisdictions that cannot benefit from the deferred income tax assets, permanent effects related to the
income tax withheld at source originated in transactions between the group companies that cannot be used and the additional recognition
of deferred income tax liability arising from 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 reconciling items that resulted primarily from tax jurisdictions in which the Company
is currently unable to obtain an income tax benefit, the Company's effective tax rate would be approximately 29.5%.
The changes in deferred income
tax and social contribution asset and liability for the three-month period ended March 31, 2022 and 2021, are as follows:
| |
Consolidated |
| |
Assets |
Liabilities |
| Balance as of December 31, 2020 |
1,339,725 |
(1,288,045) |
| Effect on income statement |
(22,222) |
(26,190) |
| Transfer between income tax and deferred social contribution – assets and liabilities |
(108,749) |
108,749 |
| Reserve for grant of options and restricted shares |
528 |
7,097 |
| Other comprehensive income impact |
1,051 |
(19,273) |
| Translation adjustment |
60,363 |
30,812 |
| Balance as of March 31, 2021 |
1,270,696 |
(1,186,850) |
| |
|
|
| Balance as of December 31, 2021 |
2,954,074 |
(994,041) |
| Effect on income statement |
253,225 |
2,847 |
| Transfer between deferred income tax and social contribution liabilities and assets |
(21,164) |
21,164 |
| Reserve for grant of options and restricted shares |
1,841 |
- |
| Other comprehensive income impact |
151,422 |
- |
| Translation adjustment |
(301,669) |
166,081 |
| Balance as of March 31, 2022 |
3,037,729 |
(803,949) |
Judicial deposits represent restricted
assets of the Company and are related to the amounts deposited and held in court until the resolution of the disputes to which they are
related. The judicial deposits held by the Company as of March 31, 2022 and December 31, 2021 are as follows:
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Unaccrued tax proceedings(a) |
274,919 |
273,295 |
| Accrued tax proceedings (b) |
277,778 |
266,828 |
| Unaccrued civil proceedings |
6,198 |
8,212 |
| Accrued civil proceedings |
2,372 |
2,821 |
| Unaccrued labor proceedings |
11,771 |
11,970 |
| Accrued labor proceedings |
22,096 |
22,158 |
| Total judicial deposits |
595,134 |
585,284 |
| a) | The tax proceedings related to these judicial deposits refer substantially to ICMS-ST. These are part
of the contingent liabilities - risk of possible loss disclosed in Note 22. |
| b) | The tax proceedings related to these judicial deposits refer, substantially, to the sum of the amounts
highlighted in Note 22, and the amounts provisioned according to Note 21. |
Changes in judicial deposits balances
for the three-month period ended March 31, 2022 and 2021 are as follows:
| |
Consolidated |
| Balance as of December 31, 2020 |
566,190 |
| New deposits |
6,479 |
| Redemptions |
(14,609) |
| Inflation adjustment |
1,370 |
| Payments / write-offs for expenses |
(1,048) |
| Translation adjustment |
(422) |
| Balance as of March 31, 2021 |
557,960 |
| |
|
| Balance as of December 31, 2021 |
585,285 |
| New deposits |
4,559 |
| Redemptions |
(459) |
| Inflation adjustment |
8,221 |
| Payments / write-offs for expenses |
(2,372) |
| Translation adjustment |
(100) |
| Balance as of March 31, 2022 |
595,134 |
In addition to judicial deposits, the
Company has contracted insurance policies for certain lawsuits.
| 13. | NON-CURRENT ASSETS HELD FOR SALE |
The assets classified as held for sale
were acquired in the acquisition process of its subsidiary Avon. The changes in the balance for the three-month period ended March 31,
2022 and 2021 are as follows:
| |
Consolidated |
| Balance as of December 31, 2020 |
181,279 |
| Transfer to property, plant and equipment, other assets and liabilities |
(25,779) |
| Sale |
(49) |
| Translation adjustment |
5,150 |
| Balance as of March 31, 2021 |
160,601 |
| |
|
| Balance as of December 31, 2021 |
52,921 |
| Transfers from property, plant and equipment, other assets and liabilities |
(53,691) |
| Translation adjustment |
770 |
| Balance as of March 31, 2022 |
- |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
As of December 31, 2021, the assets
held for sale included the property of the subsidiary Avon, located in Brazil and used by the Company for the distribution of products.
This property had been classified as a non-current asset held for sale considering the decision and formal approval by management at the
time of carrying out the sale of the asset and the identification of a buyer who contractually assumed the obligation to carry out the
transaction. However, the completion of the transaction was subject to aspects and circumstances such as those provided for in CPC 31
- Non-Current Assets Held for Sale (IFRS 5) outside the Company's control, which did not affect the Company's commitment to the sale plan
and classification as non-current assets held for sale.
In March 2022, in view of these circumstances
and with the end of the contractual term, the buyer chose not to renew the term for completion of the transaction, and the respective
balances were reclassified to property, plant and equipment. In the reclassification, the Company measured the non-current asset that
is no longer classified as held for sale at the lower of its’ carrying amount before the asset was classified as held for sale,
adjusted for the depreciation that would have been recognized had the asset not been classified as held for sale and its recoverable amount
at the date of the subsequent decision not to sell it.
As a result of the reclassification,
the total amount transferred to property, plant and equipment, before the recognition of the additional depreciation referred to in the
previous paragraph, is R$54,791. The additional depreciation recognized in the income statement on transfer is R$6,001.
| 14. | OTHER CURRENT AND NON-CURRENT ASSETS |
| |
Parent |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
| Marketing and advertising advances |
- |
- |
124,305 |
80,078 |
| Supplier advances |
145 |
6,215 |
311,823 |
350,830 |
| Employee advances |
82 |
187 |
25,872 |
17,402 |
| Rent advances and guarantee deposit (a) |
- |
- |
147,433 |
172,465 |
| Advance insurance expenses |
19,092 |
- |
138,469 |
160,911 |
| Overfunded pension plan (b) |
- |
- |
873,720 |
1,043,799 |
| Customs broker advances - Import taxes |
- |
- |
42,130 |
60,739 |
| Sublease receivables (c) |
- |
- |
281,554 |
347,174 |
| Carbon credits |
- |
- |
10,543 |
11,479 |
| Receivables from service providers (d) |
- |
- |
142,760 |
162,268 |
| Other |
1,849 |
843 |
245,159 |
268,066 |
| |
21,168 |
7,245 |
2,343,768 |
2,675,211 |
| |
|
|
|
|
| Current |
20,324 |
6,397 |
875,685 |
912,160 |
| Non-current |
844 |
848 |
1,468,083 |
1,763,051 |
| a) | Mainly related to: (i) advances for lease agreements that were not included in the initial measurement
of lease liabilities / right-of-use of the subsidiary The Body Shop, in accordance with the exemptions of IFRS 16 / CPC 06(R2); and (ii)
security deposits for the rental of certain stores of the subsidiaries The Body Shop and Aesop, which will be returned by the landlord
at the end of the lease agreements. |
| b) | Pension plan arising from the acquisition of Avon. The variation in the period is due to the Brazilian
real appreciation in the period. |
| c) | Refers to the sublease receivable from the New York office owned by the subsidiary Avon. |
| d) | Refers to receivables mainly arising from damage that occurred with carriers and insurance companies. |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
Parent |
| |
March 31, 2022 |
December 31, 2021 |
| Investments in subsidiaries, net of losses |
23,739,247 |
28,281,178 |
Information on and changes in the balances
for the three-month period ended March 31, 2022 and for the fiscal year ended December 31, 2021 are as follows:
| |
March 31, 2022 |
| |
Natura Cosméticos S.A. (a) |
Avon Products, Inc. |
Natura &Co International S.à r.l. |
Total |
| Percentage of interest |
100.00% |
100.00% |
100.00% |
|
| Shareholders’ equity of the subsidiaries (unsecured liabilities) |
5,765,477 |
(4,212,189) |
5,437,266 |
6,990,554 |
| Shareholders’ equity interest (unsecured liabilities) |
5,765,477 |
(4,212,189) |
5,437,266 |
6,990,554 |
| Fair value adjustment of acquired assets and liabilities |
- |
4,131,821 |
- |
4,131,821 |
| Tax benefit from income tax of subsidiaries (b) |
- |
376,519 |
- |
376,519 |
| Goodwill |
- |
12,240,353 |
- |
12,240,353 |
| Total |
5,765,477 |
12,536,504 |
5,437,266 |
23,739,247 |
| Net income (loss) for the period of subsidiaries |
(64,017) |
(541,828) |
39,737 |
(566,108) |
| |
|
|
|
|
| Balances as of December 31, 2021 |
7,816,896 |
14,034,994 |
6,429,288 |
28,281,178 |
| Share of profit (loss) of equity investees |
(64,017) |
(541,828) |
39,737 |
(566,108) |
| Translation adjustment |
(1,668,375) |
(942,108) |
(1,031,759) |
(3,642,242) |
| Effect of hyperinflationary economy adjustment |
(39,995) |
(25,927) |
- |
(65,922) |
| Contribution by the controlling company for purchase option plans granted to executive officers of the subsidiaries and other reserves net of tax effects |
15,876 |
11,373 |
- |
27,249 |
| Hedge accounting net of tax effects |
(294,878) |
- |
- |
(294,878) |
| Other movement |
(30) |
- |
- |
(30) |
| Balance as of March 31, 2022 |
5,765,477 |
12,536,504 |
5,437,266 |
23,739,247 |
| a) | The investment balance in the direct subsidiary Natura Cosméticos S.A. includes goodwill arising
from the acquisitions of the indirect subsidiaries The Body Shop R$1,627,317 (R$2,150,963 as of March 31, 2021) and Aesop R$ 125,753 (R$153,542
as of March 31, 2021), according to note 18. |
| b) | Refers to a tax benefit provided for in the United Kingdom where entities with taxable income can use
credits from companies with tax losses as long as they are part of the same economic group and are in the same jurisdiction. This credit
originated in the business combination and is expected to be realized from the operations of the subsidiaries Aesop and The Body Shop
in the United Kingdom. |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
March 31, 2021 |
| |
Natura Cosméticos S.A.(a) |
Avon Products, Inc. |
Natura &Co International S.à r.l. |
Total |
| Percentage of interest |
100,00% |
100,00% |
100,00% |
|
| Shareholders’ equity of the subsidiaries (unsecured liabilities) |
7,805,623 |
(5,583,437) |
6,196,885 |
8,419,071 |
| Shareholders’ equity interest (unsecured liabilities) |
7,805,623 |
(5,583,437) |
6,196,885 |
8,419,071 |
| Fair value adjustment of acquired assets and liabilities |
- |
5,480,798 |
- |
5,480,798 |
| Tax benefit from income tax of subsidiaries (b) |
- |
307,470 |
- |
307,470 |
| Goodwill |
- |
13,934,798 |
- |
13,934,798 |
| Total |
7,805,623 |
14,139,629 |
6,196,885 |
28,142,137 |
| Net income (loss) for the period of subsidiaries |
229,228 |
(396,539) |
41,332 |
(125,979) |
| |
|
|
|
|
| Balances as of December 31, 2020 |
6,929,074 |
14,373,448 |
5,641,757 |
26,944,279 |
| Share of profit (loss) of equity investees |
229,228 |
(396,539) |
41,332 |
(125,979) |
| Translation adjustment |
798,000 |
345,291 |
513,796 |
1,657,087 |
| Unrealized losses on conversion of intercompany balances in foreign currency |
- |
(182,571) |
- |
(182,571) |
| Effect of hyperinflationary economy adjustment |
41,064 |
- |
- |
41,064 |
| Contribution by the controlling company for purchase option plans granted to executive officers of the subsidiaries and other reserves net of tax effects |
16,524 |
- |
- |
16,524 |
| Hedge accounting net of tax effects |
(39,655) |
- |
- |
(39,655) |
| Dividends and interest on own capital |
(168,612) |
- |
- |
(168,612) |
| Balance as of 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 ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| 16. | PROPERTY, PLANT AND EQUIPMENT |
| |
Consolidated |
| |
Useful life range (in years) |
December 31, 2021 |
Additions |
Write-offs |
Transfers |
Translation adjustment |
March 31, 2022 |
| Cost: |
|
|
|
|
|
|
|
| Vehicles |
2 to 5 |
38,902 |
- |
(3,361) |
- |
(13,476) |
22,065 |
| Tooling |
3 |
191,840 |
- |
- |
42 |
(160) |
191,722 |
| Tools and accessories |
3 to 20 |
110,998 |
1,049 |
- |
694 |
(44,028) |
68,713 |
| Facilities |
3 to 60 |
303,452 |
- |
(311) |
1,577 |
(11,447) |
293,271 |
| Machinery and accessories |
3 to 15 |
1,959,943 |
5,197 |
(9,841) |
43,921 |
(343,024) |
1,656,196 |
| Leasehold improvements |
2 to 20 |
1,128,504 |
5,416 |
(10,689) |
6,047 |
(145,948) |
983,330 |
| Buildings |
14 to 60 |
1,982,245 |
965 |
(67) |
47,401 |
(319,804) |
1,710,740 |
| Furniture and fixtures |
2 to 25 |
660,126 |
14,319 |
(11,300) |
8,599 |
(92,961) |
578,783 |
| Land |
- |
628,373 |
- |
- |
20,124 |
(65,398) |
583,099 |
| IT equipment |
3 to 15 |
634,580 |
8,139 |
(25,825) |
16,012 |
(117,585) |
515,321 |
| Other assets |
- |
31,636 |
- |
(43) |
- |
(1,742) |
29,851 |
| Projects in progress |
- |
561,488 |
91,477 |
(651) |
(81,045) |
(81,375) |
489,894 |
| Total cost |
|
8,232,087 |
126,562 |
(62,088) |
63,372 |
(1,236,948) |
7,122,985 |
| |
|
|
|
|
|
|
|
| Depreciation value: |
|
|
|
|
|
|
|
| Vehicles |
|
(9,457) |
(2,816) |
3,269 |
(17) |
10,255 |
1,234 |
| Tooling |
|
(174,164) |
(1,850) |
- |
- |
119 |
(175,895) |
| Tools and accessories |
|
(65,740) |
(6,764) |
- |
- |
39,836 |
(32,668) |
| Facilities |
|
(183,420) |
(3,970) |
282 |
- |
4,844 |
(182,264) |
| Machinery and accessories |
|
(728,408) |
(43,950) |
9,334 |
(1,177) |
227,855 |
(536,346) |
| Leasehold improvements |
|
(602,622) |
(34,313) |
9,564 |
(118) |
91,561 |
(535,928) |
| Buildings |
|
(298,327) |
(25,674) |
67 |
(10,902) |
144,398 |
(190,438) |
| Furniture and fixtures |
|
(369,610) |
(22,816) |
9,509 |
993 |
58,776 |
(323,148) |
| IT equipment |
|
(392,095) |
(24,029) |
25,824 |
124 |
88,738 |
(301,438) |
| Other assets |
|
(30,836) |
(556) |
42 |
- |
2,047 |
(29,303) |
| Total depreciation |
|
(2,854,679) |
(166,738) |
57,891 |
(11,097) |
668,429 |
(2,306,194) |
| Net total |
|
5,377,408 |
(40,176) |
(4,197) |
52,275 |
(568,519) |
4,816,791 |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
Consolidated |
| |
Useful life range (in years) |
December 31, 2020 |
Additions |
Write-offs |
Write-offs
Impairment
|
Transfers |
Translation adjustment |
March 31, 2021 |
| Cost: |
|
|
|
|
|
|
|
|
| Vehicles |
2 to 5 |
79,227 |
523 |
(10,649) |
- |
6,908 |
2,835 |
78,844 |
| Tooling |
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 fixtures |
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 |
| |
|
|
|
|
|
|
|
|
| Depreciation value: |
|
|
|
|
|
|
|
|
| Vehicles |
|
(33,042) |
(5,869) |
10,028 |
- |
(5,898) |
667 |
(34,114) |
| Tooling |
|
(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 fixtures |
|
(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 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 ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
Consolidated |
| |
Useful life range (in years) |
December 31, 2021 |
Additions |
Write-offs |
Transfers |
Translation adjustment |
March 31, 2022 |
| Cost: |
|
|
|
|
|
|
|
| Software |
2,5 to 10 |
2,492,616 |
14,411 |
(11,549) |
44,327 |
(367,989) |
2,171,816 |
| Trademarks and patents (defined useful life) |
20 to 25 |
889,834 |
- |
- |
- |
(142,149) |
747,685 |
| Trademarks and patents indefinite useful life) |
- |
5,888,623 |
- |
- |
- |
(1,136,240) |
4,752,383 |
| Goodwill Avon |
- |
13,381,191 |
- |
- |
- |
(1,139,591) |
12,241,600 |
| Goodwill Emeis Brazil Pty Ltd. |
- |
143,180 |
- |
- |
- |
(17,427) |
125,753 |
| Goodwill The Body Shop |
- |
2,063,672 |
- |
- |
- |
(436,355) |
1,627,317 |
| Goodwill acquisition of The Body Shop stores |
- |
1,456 |
- |
- |
- |
- |
1,456 |
| Relationship with retail clients |
10 |
2,880 |
- |
- |
- |
(343) |
2,537 |
| Key money (indefinite useful life) |
- |
24,985 |
- |
- |
- |
(3,071) |
21,914 |
| Key money (defined useful life) |
3 to 18 |
14,363 |
- |
(3,349) |
- |
(2,203) |
8,811 |
| Relationship with franchisees and sub franchisees and sales representatives |
7 to 15 |
2,990,558 |
- |
- |
- |
(389,565) |
2,600,993 |
| Technology developed (by acquired subsidiary) |
5 |
1,580,808 |
- |
- |
- |
(266,320) |
1,314,488 |
| Other intangible assets and intangible under development |
2 to 10 |
277,776 |
38,059 |
(1) |
(43,180) |
(39,485) |
233,169 |
| Total cost |
|
29,751,942 |
52,470 |
(14,899) |
1,147 |
(3,940,738) |
25,849,922 |
| |
|
|
|
|
|
|
|
| Accumulated amortization: |
|
|
|
|
|
|
|
| Software |
|
(1,369,767) |
(93,681) |
11,439 |
316 |
320,836 |
(1,130,857) |
| Trademarks and patents |
|
(143,186) |
(9,901) |
- |
- |
26,637 |
(126,450) |
| Key money |
|
(16,517) |
- |
3,233 |
- |
2,374 |
(10,910) |
| Relationship with retail clients |
|
(3,218) |
(45) |
- |
- |
626 |
(2,637) |
| Relationship with franchisees and sub franchisees |
|
(729,049) |
(57,838) |
- |
- |
89,315 |
(697,572) |
| Technology developed |
|
(632,326) |
(73,523) |
- |
- |
114,327 |
(591,522) |
| Other intangible assets |
|
(296) |
(389) |
- |
(47) |
(388) |
(1,120) |
| Total accrued amortization |
|
(2,894,359) |
(235,377) |
14,672 |
269 |
553,727 |
(2,561,068) |
| Net total |
|
26,857,583 |
(182,907) |
(227) |
1,416 |
(3,387,011) |
23,288,854 |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
Consolidated |
| |
Useful life range (in years) |
December 31, 2020 |
Additions |
Write-offs |
Reversal (provision) of impairment |
Transfers |
Translation adjustment |
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 The Body Shop 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 |
7 to 15 |
2,959,519 |
- |
- |
- |
- |
180,831 |
3,140,350 |
| Technology developed (by acquired subsidiary) |
5 |
1,595,041 |
- |
- |
- |
- |
78,428 |
1,673,469 |
| Other intangible assets and intangible under development |
2 to 10 |
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 |
|
(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 accrued 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 ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| 18. | RIGHT-OF-USE AND LEASE LIABILITIES |
| |
Consolidated |
| |
Useful life in Years (a) |
December 31, 2021 |
Additions |
Write-offs |
Translation adjustment |
March 31, 2022 |
| Cost: |
|
|
|
|
|
|
| Vehicles |
3 |
168,062 |
7,229 |
(11,317) |
(17,415) |
146,559 |
| Machinery and equipment |
3 to 10 |
33,629 |
4,280 |
(224) |
(6,581) |
31,104 |
| Buildings |
3 to 10 |
1,543,018 |
138,016 |
(47,453) |
(136,502) |
1,497,079 |
| IT equipment |
10 |
31,803 |
105 |
(86) |
(3,219) |
28,603 |
| Retail stores |
3 to 10 |
3,417,595 |
122,149 |
(91,661) |
(494,748) |
2,953,335 |
| Tools and accessories |
3 |
1,053 |
- |
(415) |
(135) |
503 |
| Total cost |
|
5,195,160 |
271,779 |
(151,156) |
(658,600) |
4,657,183 |
| |
|
|
|
|
|
|
| Depreciation value: |
|
|
|
|
|
|
| Vehicles |
|
(91,509) |
(9,036) |
10,481 |
8,590 |
(81,474) |
| Machinery and equipment |
|
(17,133) |
(2,627) |
224 |
3,573 |
(15,963) |
| Buildings |
|
(507,045) |
(68,797) |
40,929 |
61,515 |
(473,398) |
| IT equipment |
|
(24,410) |
(1,850) |
85 |
2,166 |
(24,009) |
| Retail stores |
|
(1,458,512) |
(164,748) |
91,647 |
246,757 |
(1,284,856) |
| Tools and accessories |
|
(582) |
(94) |
415 |
64 |
(197) |
| Total accrued depreciation |
|
(2,099,191) |
(247,152) |
143,781 |
322,665 |
(1,879,897) |
| Net total |
|
3,095,969 |
24,627 |
(7,375) |
(335,935) |
2,777,286 |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
Consolidated |
| |
Useful life in Years (a) |
December 31, 2020 |
Additions |
Write-offs |
Transfers (b) |
Translation adjustment |
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 |
| Buildings |
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 |
| |
|
|
|
|
|
|
|
| Depreciation value: |
|
|
|
|
|
|
|
| Vehicles |
|
(63,422) |
(14,360) |
6,231 |
- |
(237) |
(71,788) |
| Machinery and equipment |
|
(21,045) |
(3,130) |
8,819 |
- |
(804) |
(16,160) |
| Buildings |
|
(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 accrued 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 |
| a) | The useful lives applied refer to the term of the contracts in which the Company is 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 ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| |
Consolidated |
| |
March 31, 2022 |
March 31, 2021 |
| Amounts recognized in the statement of income for the three-month period ended March 31, 2022 and 2021: |
|
|
| Financial expense on lease |
47,779 |
54,621 |
| Amortization of right of use |
247,152 |
256,118 |
| Appropriation in the result of variable lease installments not included in the measurement of lease liabilities |
16,503 |
15,172 |
| Sublease revenue |
(6,551) |
(8,073) |
| Short-term lease expenses and low-value assets |
20,730 |
27,480 |
| Benefits granted by lessor related to Covid-19 |
(5,138) |
(16,479) |
| Other lease-related expenses |
14,440 |
11,426 |
| Total |
334,915 |
340,265 |
| |
|
|
| Amounts recognized in the financing activities in the cash flow statement: |
|
|
| Lease payments (principal) |
272,784 |
301,420 |
| Amounts recognized in the operating activities in the cash flow statement: |
|
|
| Lease payments (interest) |
51,464 |
50,830 |
| Variable lease payments, not included in the measurement of lease liabilities |
18,055 |
3,524 |
| Short-term and low-value assets lease payments |
17,177 |
22,803 |
| Other lease-related payments |
22,360 |
10,672 |
| Total |
381,840 |
389,249 |
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Current |
847,307 |
1,005,523 |
| Non-current |
2,214,365 |
2,542,339 |
| Total |
3,061,672 |
3,547,862 |
Below are the changes in lease liability balances for the
three-month period ended March 31, 2022 and 2021:
| |
Consolidated |
| Balance as of December 31, 2020 |
3,858,455 |
| New contracts and modifications |
157,425 |
| Payments (principal) |
(301,420) |
| Payments (interest) |
(50,830) |
| Appropriation of financial charges |
54,621 |
| Write-offs (a) |
(332,893) |
| Translation adjustment |
535,255 |
| Balance as of March 31, 2021 |
3,920,613 |
| |
|
| Balance as of December 31, 2021 |
3,547,862 |
| New agreements and modifications |
258,088 |
| Payments (principal amount) |
(272,784) |
| Payments (interest) |
(51,464) |
| Appropriation of financial charges |
47,779 |
| Write-offs (a) |
(1,322) |
| Translation adjustment |
(466,487) |
| Balance as of March 31, 2022 |
3,061,672 |
| a) | Mainly related to termination
of agreements related to lease of stores.
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
The amount of lease liability payments, including interest
payments due to maturity, is as follows:
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Less than a year |
977,909 |
1,154,697 |
| One to five years |
1,973,320 |
2,086,269 |
| More than five years |
639,261 |
829,511 |
| Total expected cash flow |
3,590,490 |
4,070,477 |
| Interest to be incurred |
(528,818) |
(522,615) |
| Total balance |
3,061,672 |
3,547,862 |
| 19. | BORROWING, FINANCING AND DEBENTURES |
| |
Ref. |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Local currency: |
|
|
|
| Financing Agency for Studies and Projects FINEP |
|
36,918 |
44,193 |
| Debentures |
A |
1,889,945 |
1,922,732 |
| Working capital – The Body Shop Operation |
B |
439,812 |
526,743 |
| Working capital – Avon and Natura &Co Luxembourg operations |
|
993,868 |
164,491 |
| Notes – Avon (1) |
C |
3,540,842 |
4,255,958 |
| Total in local currency |
|
6,901,385 |
6,914,117 |
| |
|
|
|
| Foreign currency: |
|
|
|
| Representative debt securities (“Notes”) |
D |
4,727,568 |
5,523,287 |
| Resolution nº 4131/62 |
E |
238,023 |
279,428 |
| Total in foreign currency |
|
4,965,591 |
5,802,715 |
| Grand total |
|
11,866,976 |
12,716,832 |
| |
|
|
|
| Current |
|
3,863,522 |
945,069 |
| Non-current |
|
8,003,454 |
11,771,763 |
| |
|
|
|
| Debentures |
|
|
|
| Current |
|
316,779 |
350,145 |
| Non-current |
|
1,573,166 |
1,572,587 |
| (1) | Balances recorded at estimated fair value resulting from business combinations with subsidiary Avon. |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
Reference |
Currency |
Maturity |
Charges |
Effective interest rate |
Guarantees |
| A |
Real |
By August 2024 |
Interest of 112% of the CDI 1.00% + CDI and 1.15% + CDI, with maturity dates in September 2022 and August 2024. |
113.0%
CDI + 1.15% - CDI +1.30%
|
None |
| B |
Pounds |
April 2024 |
Sonia + interest of 2.9% p.a. |
Sonia + interest 2.9% of p.a. |
“Corporate” guarantee from the subsidiary Natura Cosméticos until December 2021 and “Aval” guarantee from Natura &Co from January 2022. |
| C |
Dollar |
March 2023 and March 2043 |
Interest of 6.45% p.a. and 8.45% p.a. |
Interest of 6.45% of p.a. and 8.45% of p.a. |
None |
| D |
Dollar |
May 2028 |
Interest of 4.125% p.a. |
5.79% |
“Aval” Guarantee from Natura &Co |
| E |
Dollar |
May 2022 |
Sonia + interest of 1.1% p.a. |
Sonia + interest 1.1% of p.a. |
“Aval” Guarantee from subsidiary Indústria e Comércio de Cosméticos Natura Ltda. |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
Changes in the balances of borrowing, financing and debentures
for the three-month period ended March 31, 2022 and 2021 are as follows:
| |
Parent |
Consolidated |
| Balance as of December 31, 2020 |
515,966 |
13,822,913 |
| New borrowing and financing |
- |
133,980 |
| Repayment |
- |
(623,273) |
| Appropriation of financial charges and funding costs |
8,140 |
178,845 |
| Financial charges payment |
- |
(324,814) |
| Exchange rate variation |
- |
401,366 |
| Translation adjustment |
- |
421,874 |
| Balance as of March 31, 2021 |
524,106 |
14,010,891 |
| |
|
|
| Balance as of December 31, 2021 |
- |
12,716,832 |
| New borrowing and financing (a) |
- |
1,181,421 |
| Repayment |
- |
(238,574) |
| Appropriation of financial charges and funding costs |
- |
144,408 |
| Financial charges payment |
- |
(211,706) |
| Exchange rate variation |
- |
(871,906) |
| Translation adjustment |
- |
(853,499) |
| Balance as of March 31, 2022 |
- |
11,866,976 |
| a) | On October 28, 2021, the subsidiary Natura &Co Luxembourg, entered into a revolving credit facility
in the principal amount of up to US$625.0 million. The revolving credit facility has a term of 36 months, subject to extensions. On March
11, 2022, the amount of US$ 200.0 million (approximately R$ 1,116 million) was used.
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
The maturities of non-current portion of borrowing, financing
and debentures liabilities are as follows:
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| 2023 |
194,184 |
2,812,260 |
| 2024 |
1,796,337 |
2,249,609 |
| 2025 onwards |
6,012,933 |
6,709,894 |
| Total |
8,003,454 |
11,771,763 |
The contractual covenants associated with the debt contracts
of the Company 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 December 31, 2021 and
2020, the Company was in compliance with such covenants.
| 20. | TRADE ACCOUNTS PAYABLE AND REVERSE FACTORING OPERATIONS |
| |
Parent |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
| Domestic trade accounts payable |
2,111 |
3,537 |
4,441,611 |
5,248,462 |
| Foreign trade accounts payable (a) |
930 |
2,151 |
811,929 |
1,104,189 |
| Subtotal |
3,041 |
5,688 |
5,253,540 |
6,352,651 |
| |
|
|
|
|
| Reverse factoring operations (b) |
- |
- |
236,542 |
417,928 |
| Total |
3,041 |
5,688 |
5,490,082 |
6,770,579 |
| a) | Refers to imports mainly denominated in US dollars, Euros and British pounds. |
| b) | The Company has contracts signed with Banco Itaú Unibanco S.A. to directly structure a reverse
factoring operation with the Company’s main suppliers. |
| |
Parent |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
March 31, 2022 |
December 31, 2021 |
| ICMS (ordinary) |
- |
- |
123,782 |
150,396 |
| ICMS-ST provision (a) |
- |
- |
58,771 |
58,188 |
| Taxes on invoicing abroad |
- |
- |
216,881 |
340,648 |
| Withholding tax (IRRF) |
- |
- |
124,066 |
148,081 |
| Other taxes payable - foreign subsidiaries |
- |
- |
112,638 |
138,461 |
| Income tax |
1,356 |
446 |
15,659 |
7,062 |
| PIS and COFINS payable |
156 |
144 |
156 |
144 |
| INSS and service tax (ISS) payable |
62 |
64 |
32,983 |
29,359 |
| Other |
- |
- |
10,902 |
8,888 |
| Total |
1,574 |
654 |
695,838 |
881,227 |
| |
|
|
|
|
| Current |
1,574 |
654 |
587,663 |
766,430 |
| Non-current |
- |
- |
108,175 |
114,797 |
| a) | The Company has 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, 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 ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| 22. | PROVISION FOR TAX, CIVIL AND LABOR RISKS |
The Company is involved in certain
legal issues arising in the normal course of its business, which include civil, tax, social security, labor, business and other proceedings.
The Company’s Management believes
that, based on the elements existing on the base date of these financial statements, 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 provision for tax, civil and labor risks and contingent liabilities are presented below:
| (1) | Reversals mainly refer to adhesion to State tax amnesty programs and change of labor proceedings estimates. |
| (2) | The business combination amounts as of March 31, 2022 are segregated between tax (R$499,576), civil (R$10,897)
and labor (R$21,455) proceedings. |
| |
Consolidated |
| |
Tax |
Civil |
Labor |
Contingent liabilities (business combination) |
Total |
| |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
| |
|
|
|
|
|
|
|
|
|
|
| Balance as of January 1 |
862,092 |
931,771 |
305,690 |
219,373 |
233,474 |
251,339 |
597,585 |
797,693 |
1,998,841 |
2,200,176 |
| Additions |
9,617 |
48,378 |
46,895 |
5,803 |
27,025 |
16,903 |
- |
- |
83,537 |
71,084 |
| Reversals (1) |
(696) |
(21,890) |
(4,864) |
(29,541) |
(8,814) |
(13,850) |
(56,153) |
(11,017) |
(70,527) |
(76,298) |
| Payments |
(1,658) |
(2) |
(37,204) |
(13,641) |
(11,782) |
(7,607) |
- |
- |
(50,644) |
(21,250) |
| Inflation adjustment |
3,506 |
2,926 |
1,157 |
272 |
1,371 |
1,798 |
5,053 |
5,802 |
11,087 |
10,798 |
| Translation adjustment |
(43,973) |
17,208 |
(34,510) |
17,545 |
(22,119) |
13,134 |
(14,557) |
4,285 |
(115,159) |
52,172 |
| Transfers (3) |
(18,095) |
(383) |
(1,764) |
- |
127 |
(988) |
- |
- |
(19,731) |
(1,371) |
| Balance as of March 31 |
810,793 |
978,008 |
275,400 |
199,811 |
219,282 |
260,729 |
531,928 |
796,763 |
1,837,404 |
2,235,311 |
| |
|
|
|
|
|
|
|
|
|
|
| Current |
|
|
|
|
|
|
|
|
204,823 |
176,704 |
| Non-current |
|
|
|
|
|
|
|
|
1,632,581 |
2,058,607 |
22.1.1
Civil, commercial and other
As
of March 31, 2022, the Company is a party to civil, commercial and other lawsuits and proceedings, mainly related to indemnification claims.
Provisions are periodically reviewed based on the evolution of proceedings and the evolution of case law to reflect the best estimate.
| a) | Disputes related to talc |
The
subsidiary Avon International was named a defendant (along with other manufacturers of cosmetics and other products that, unlike those
marketed by Avon, were designed with asbestos) in personal injury lawsuits brought in US courts. As of March 31, 2022, there were 158
individual cases pending against Avon International and during the three-month period ended March 31, 2022, 13 new cases were started
and 6 were closed or settled. The value of the settlements was not material, individually or in the aggregate, for the operating results
of the Company or the subsidiary Avon International.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
22.1.2
Labor
The Company,
as of March 31, 2022, is a party in 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 subsidiary 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 contingent
liabilities for which the probability of disbursing funds that incorporate economic benefits is assessed as possible are presented below:
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Tax |
9,303,586 |
9,884,541 |
| Civil |
148,777 |
128,479 |
| Labor |
181,824 |
180,838 |
| Total contingent liabilities |
9,634,187 |
10,193,858 |
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| |
|
|
| Pension and post-employment health care plans(a) |
614,550 |
673,458 |
| Deferred revenue from performance obligations with customers (b) |
312,005 |
393,046 |
| Provisions for incentives to consultants |
222,131 |
286,791 |
| Provisions for operating expenses (marketing / technology, etc.) (c) |
500,517 |
601,841 |
| Provision for store renovation |
93,148 |
105,165 |
| Crer Para Ver (d) |
93,748 |
90,655 |
| Provisions for rentals (e) |
36,154 |
55,500 |
| Provision for restructuring (f) |
53,668 |
103,760 |
| Long-term incentives (g) |
4,728 |
6,302 |
| Insurance payables |
65,805 |
127,413 |
| Other Liabilities(h) |
174,388 |
214,635 |
| Total |
2,170,842 |
2,658,566 |
| |
|
|
| Current |
1,316,477 |
1,716,110 |
| Non-current |
854,365 |
942,456 |
| a) | As of March 31, 2022, there is R$389,874 (R$445,804 as of December 31, 2021) referring to pension plans,
and R$35,096 referring to post-employment plans (R$34,774 as of December 31, 2021) of subsidiary Avon, and R$127,622 (R$124,649 as of
December 31, 2021) referring to post-employment assistance plans of the subsidiary Natura Cosméticos and R$61,958 (R$68,230 as
of December 31, 2021) referring to post-employment assistance plans of the subsidiary Natura &Co International. |
| b) | Refers to the deferral of revenue from performance obligations related to loyalty programs based on points,
sale of gift cards not yet converted into products and programs and events to honor direct sales consultants, of which R$186,450 (R$235,308
as of December 31, 2021) is referring to subsidiary Avon, R$95,432 (R$121,341 as of December 31, 2021) referring to the consolidated subsidiary
Natura Cosméticos and R$30,123 (R$36,397 as of December 31, 2021) referring to subsidiary Natura &Co International. |
| c) | Refers to the Company's operating provisions arising mainly from expenses with the provision of technology,
marketing and advertising services. |
| d) | Contribution of the social program to the development of the quality of education. |
| e) | Refers to the (grace period) granted by the lessors to start paying the rent of certain retail stores,
for the lease agreements that were not included in the initial measurement of the lease liability / right of use of subsidiary The Body
Shop, in accordance with the exceptions allowed by CPC 06 (R2) / IFRS 16. |
| f) | Provision for costs directly related to the integration plan and changes in the organizational structure
substantially of the subsidiary Avon. |
| g) | Substantially refers to the variable compensation plans of the subsidiary Avon's executives. |
| h) | Refers to miscellaneous provisions such as indemnities and long-term contractual obligations. |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
24.1
Treasury shares
On March 31, 2022, the item “Treasury
shares” has the following composition:
| |
Number of shares |
R$ (in thousands) |
Average price per share - R$ |
| Balance as of December 31, 2021 |
4,899,540 |
151,342 |
30.89 |
| Used |
(313,785) |
(8,282) |
26.39 |
| Acquired |
5,391,900 |
120,300 |
22.31 |
| Balance as of March 31, 2022 |
9,977,655 |
263,360 |
26.39 |
The minimum and maximum cost of the
balance of treasury shares on March 31, 2022 are R$ 21.11 and R$ 24.07, respectively.
24.2
Dividends
As of December 30, 2021, dividends
were proposed for the year ended December 31, 2021 in the amount of R$ 180,772, equivalent to the remuneration of R$0.1315 per share based
on earnings in the period. According to the Company’s bylaws and the article 197 of law no. 6,604/76 the amount of R$133,616 referring
to the portion of minimum mandatory dividends exceeding the realized net income for the year was submitted for approval in the Annual
General Meeting held in April 2022 and was classified as unrealized profit reserve.
24.3
Reclassification of effects between equity accounts
As of January 1 and December 31, 2021,
the balances referring to predecessor adjustments presented in goodwill on the issuance/sale of shares in capital reserve in the statement
of changes in equity were reclassified to special reserve in capital reserve, also a component of the Company's equity, for a better consolidated
presentation of these impacts in this statement. This reclassification in the amount of R$303,059 does not have any effect on the equity
and financial position presented by the Company in these periods.
As of January 1, 2021, the balances
referring to the effects of the conversion of balance sheets of subsidiaries in hyperinflationary economies presented in retained earnings
in earnings reserve in the statement of changes in equity were reclassified to Other comprehensive income, also a component of the Company's
equity, for a better consolidated presentation of these impacts in this statement. This reclassification in the amount of R$202,677 does
not have any effect on the equity and financial position presented by the Company in that period.
During the period ended March 31, 2022,
the balance referring to the effects of the conversion of balance sheets of subsidiaries in hyperinflationary economies presented in capital
reserves (goodwill reserve on the issuance/sale of shares and additional paid-in capital) and in profit reserves (retained earnings) in
the statement of changes in equity was reclassified to other comprehensive income, also a component of the Company's equity, for a better
consolidated presentation of these impacts in this statement. This reclassification in the amount of R$193,261 does not have any effect
on the equity and financial position presented by the Company in this period.
| 25. | INFORMATION ON SEGMENTS |
There was no change in the composition
of the operating segments and information by geographic area in relation to that disclosed in the financial statements for the year ended
December 31, 2021.
Net revenue by segment is as follows
for the three-month period ended March 31, 2022:
| Ø | Natura &Co Latam – 57.6% |
| Ø | Avon International – 22.3% |
The following tables summarize the
financial information related to the three-month period ended March 31, 2022 and 2021 and the year ended December 31, 2021:
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
25.1
Operating segments
| |
March 31, 2022 |
| |
Reconciliation to net income (loss) for the period |
| |
Net
Revenue
|
Performance assessed by the company |
Depreciation and
amortization
|
Discontinued operations |
Financial
income
|
Financial
expense
|
Income
tax
|
Net income
(loss)
|
| Natura &Co Latam |
4,751,521 |
393,304 |
(219,596) |
- |
1,081,927 |
(1,363,219) |
(21,106) |
(128,690) |
| Avon International 1 |
1,841,975 |
40,847 |
(178,407) |
(39,587) |
146,558 |
(263,983) |
(37,036) |
(331,608) |
| The Body Shop 1 |
1,017,406 |
64,656 |
(177,419) |
- |
13,802 |
(32,990) |
(10,452) |
(142,403) |
| Aesop International 1 |
642,394 |
139,717 |
(73,845) |
- |
16,172 |
(42,109) |
(12,517) |
27,418 |
| Corporate expenses |
- |
(122,787) |
- |
- |
95,913 |
(38,638) |
(1,377) |
(66,890) |
| Consolidated |
8,253,296 |
515,737 |
(649,267) |
(39,587) |
1,354,372 |
(1,740,939) |
(82,488) |
(642,173) |
| |
March 31, 2021 |
| |
Reconciliation to net income (loss) for the period |
| |
Net
Revenue
|
Performance assessed by the company |
Depreciation and
amortization
|
Discontinued operations |
Financial
income
|
Financial
expense
|
Income
tax
|
Net income
(loss)
|
| Natura &Co Latam |
5,185,945 |
574,380 |
(213,329) |
- |
764,596 |
(867,170) |
(82,272) |
176,205 |
| Avon International 1 |
2,363,473 |
(22,322) |
(218,962) |
(28,749) |
247,756 |
(324,543) |
(19,145) |
(308,467) |
| The Body Shop 1 |
1,319,731 |
194,198 |
(190,658) |
- |
20,241 |
(44,659) |
2,007 |
(18,871) |
| Aesop International 1 |
585,924 |
156,487 |
(73,246) |
- |
49 |
(18,960) |
(18,741) |
45,589 |
| Corporate expenses |
- |
(73,669) |
(181) |
- |
6,302 |
(11,518) |
28,058 |
(51,008) |
| Consolidated |
9,455,073 |
829,074 |
(696,376) |
(28,749) |
1,038,944 |
(1,266,850) |
(90,093) |
(156,552) |
| |
March 31, 2022 |
December 31, 2021 |
| |
Non-current assets |
Total assets |
Current liabilities |
Non-current liabilities |
Non-current assets |
Total assets |
Current liabilities |
Non-current liabilities |
| Natura &Co Latam |
16,979,586 |
27,220,035 |
6,448,606 |
8,635,216 |
18,060,879 |
29,580,551 |
7,462,550 |
8,794,843 |
| Avon International 1 |
11,834,945 |
14,481,649 |
4,235,622 |
2,014,100 |
14,286,498 |
17,512,750 |
2,783,907 |
5,100,109 |
| The Body Shop 1 |
6,531,943 |
8,376,021 |
1,736,656 |
1,933,662 |
8,166,363 |
10,813,064 |
1,690,622 |
2,485,200 |
| Aesop International 1 |
1,285,774 |
2,146,234 |
481,348 |
513,293 |
1,520,514 |
2,542,125 |
610,451 |
648,695 |
| Corporate expenses |
842,684 |
- |
1,383,318 |
1,001,773 |
964,359 |
- |
1,146,347 |
1,159,041 |
| Consolidated |
37,474,932 |
52,223,939 |
14,285,550 |
14,098,044 |
42,998,613 |
60,448,490 |
13,693,877 |
18,187,888 |
1 The operations
of these segments located in Latin American countries (Latam) are presented in the Natura &Co Latam segment.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
25.2
Net revenue and non-current assets by geographic region
| |
Net revenue |
Non-current assets |
| March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
December 31, 2021 |
| Asia |
880,179 |
972,133 |
1,028,849 |
1,216,942 |
| North America |
1,337,592 |
1,509,298 |
5,711,432 |
6,459,026 |
| Mexico |
852,514 |
975,921 |
3,248,572 |
3,640,644 |
| Other |
485,077 |
533,377 |
2,462,860 |
2,818,382 |
| South America |
3,653,455 |
3,944,391 |
13,582,147 |
14,250,548 |
| Brazil |
2,235,662 |
2,307,665 |
11,622,765 |
11,953,325 |
| Argentina |
634,509 |
621,252 |
795,173 |
1,036,205 |
| Other |
783,284 |
1,015,474 |
1,164,209 |
1,261,018 |
| Europe, Middle East and Africa (EMEA) |
2,194,003 |
2,850,110 |
15,623,839 |
19,276,178 |
| United Kingdom |
723,664 |
1,017,744 |
9,725,304 |
12,162,597 |
| Other |
1,470,340 |
1,832,366 |
5,898,534 |
7,113,581 |
| Oceania |
188,068 |
179,141 |
1,528,665 |
1,795,919 |
| Consolidated |
8,253,296 |
9,455,073 |
37,474,932 |
42,998,613 |
No individual or aggregate customer
(economic group) represents more than 10% of the Company’s net revenue.
| |
Consolidated |
| Gross revenue: |
March 31, 2022 |
March 31, 2021 |
| Direct Selling |
7,989,252 |
9,580,631 |
| Retail |
1,166,641 |
796,079 |
| Online |
739,063 |
815,170 |
| Other sales |
747,066 |
867,386 |
| Subtotal |
10,642,022 |
12,059,266 |
| |
|
|
| Returns and cancellations |
(130,933) |
(137,910) |
| Commercial discounts and rebates |
(274,648) |
(243,742) |
| Taxes on sales |
(1,983,145) |
(2,222,541) |
| Subtotal |
(2,388,726) |
(2,604,193) |
| Total net revenue |
8,253,296 |
9,455,073 |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| 27. | OPERATING EXPENSES AND COST OF SALES |
| |
Parent |
Consolidated |
| Classified by function |
March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
| Cost of sales |
- |
- |
2,945,608 |
3,322,467 |
| Selling, marketing and logistics expenses |
- |
- |
3,685,454 |
4,007,445 |
| Administrative, R&D, IT, and project expenses |
60,947 |
24,616 |
1,533,300 |
1,627,686 |
| Total |
60,947 |
24,616 |
8,164,362 |
8,957,598 |
| |
|
|
|
|
| Classified by nature |
|
|
|
|
| Cost of sales |
- |
- |
2,945,608 |
3,322,467 |
| Raw material/packaging material/resale |
- |
- |
2,493,433 |
3,008,015 |
| Employee benefits expense (note 28) |
- |
- |
141,733 |
135,340 |
| Depreciation and amortization |
- |
- |
59,190 |
54,410 |
| Other |
- |
- |
251,252 |
124,702 |
| |
|
|
|
|
| Selling, marketing and logistics expenses |
- |
- |
3,685,454 |
4,007,445 |
| Logistics costs |
- |
- |
556,774 |
653,055 |
| Personnel expenses (note 28) |
- |
- |
1,090,024 |
1,122,513 |
| Marketing, sales force and other selling expenses |
- |
- |
1,709,589 |
1,895,685 |
| Depreciation and amortization |
- |
- |
329,067 |
336,192 |
| |
|
|
|
|
| Administrative, R&D, IT and project expenses |
60,947 |
24,616 |
1,533,300 |
1,627,686 |
| Innovation expenses |
- |
- |
76,615 |
65,037 |
| Personnel expenses (note 29) |
25,576 |
21,833 |
639,403 |
724,965 |
| Other administrative expenses |
35,195 |
2,783 |
556,272 |
531,910 |
| Depreciation and amortization |
176 |
- |
261,010 |
305,774 |
| |
|
|
|
|
| Total |
60,947 |
24,616 |
8,164,362 |
8,957,598 |
| |
Parent |
Consolidated |
| |
March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
| Payroll, profit sharing and bonuses |
14,094 |
14,409 |
1,373,447 |
1,470,600 |
| Pension Plan |
- |
- |
64,400 |
65,568 |
| Share-based payments and charges on restricted shares |
8,311 |
5,176 |
23,484 |
52,262 |
| Health care, food and other benefits |
449 |
760 |
178,645 |
165,076 |
| Charges, taxes and social contributions |
255 |
102 |
178,471 |
180,560 |
| INSS |
2,467 |
1,386 |
52,713 |
48,752 |
| Total |
25,576 |
21,833 |
1,871,160
|
1,982,818 |
28.1
Share-based payments
Information regarding share-based payments
was presented in the Company's financial statements for the year ended December 31, 2021, in note 29.
The expense related to stock options,
restricted shares and performance shares, including social charges, recognized in the three-month period ended March 31, 2022, was R$8,311
and R$23,484 for parent company and consolidated (R$5,176 and R$52,262 as of March 31, 2021), respectively.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
2022 Grants
In
April 2022, share-based awards related to the “Co-Investment Plan” and the “Long-Term Incentive Plan” were granted.
Grants for 2021
and earlier
Changes in the number of outstanding
stock options, as well as of restricted and performance shares, are presented below:
| |
Purchase Options and Strategy Acceleration Plan |
| |
Options (thousands) |
| Balance as of December 31, 2020 |
17,245 |
| Canceled / Exercised |
(718) |
| Balance as of March 31, 2021 |
16,527 |
| |
Purchase Options and Strategy Acceleration Plan |
| |
Options (thousands) |
| Balance as of December 31, 2021 |
20,137 |
| Canceled / Exercised |
(325) |
| Balance as of March 31, 2022 |
19,812 |
| |
Restricted shares (thousands) |
Performance shares
(thousands)
|
| Balance as of December 31, 2020 |
6,960 |
637 |
| Canceled |
(5) |
- |
| Exercised |
(1,272) |
- |
| Balance as of March 31, 2021 |
5,683 |
637 |
| |
Restricted shares (thousands) |
Performance shares
(thousands)
|
| Balance as of December 31, 2021 |
5,494 |
8,045 |
| Canceled / Exercised |
(2,464) |
(347) |
| Balance as of March 31, 2022 |
3,030 |
7,698 |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
The number of shares above and throughout
this disclosure note:
• do not include the Avon Products
Inc. plans that were in place prior to the acquisition by Natura &Co, as covered in note 29.2 of the Company’s financial statements
for the year ended December 31, 2021;
• are shown already considering
the stock split approved at the Extraordinary Shareholders Meeting held on September 17, 2019;
• are presented using B3 equivalents
for awards that are to be exercised / settled in ADRs, to ensure consistency; and
• the number of performance shares
is disclosed assuming achievement of performance conditions at target, whereas the expense recognized reflects the latest reassessment
of the number of awards expected to vest.
The awards outstanding at the end of
the three-month period ended March 31, 2022 have the following maturity dates, fair values and strike prices:
As of March 31,
2022 – Stock options
| Grant date |
Conditions for acquisition of right as of the grant date |
Strike price |
Fair value |
Existing options
(thousands)
|
Maximum remaining contractual life (years) |
Exercisable options
(thousands)
|
| March 16, 2015 |
2 to 4 years of service |
13.47 |
4.85 to 5.29 |
104 |
1.0 |
104 |
| July 28, 2015 (Strategy acceleration) |
4 to 5 years of service |
12.77 |
6.20 to 6.23 |
495 |
1.3 |
495 |
| March 15, 2016 |
2 to 4 years of service |
12.71 |
7.16 to 7.43 |
93 |
2.0 |
93 |
| July 11, 2016 (Strategy acceleration) |
4 to 5 years of service |
11.28 |
6.84 to 6.89 |
1,540 |
2.3 |
1,540 |
| March 10, 2017 |
2 to 4 years of service |
12.46 |
6.65 to 6.68 |
378 |
2.9 |
378 |
| March 10, 2017 (Strategy acceleration) |
4 to 5 years of service |
12.46 |
6.87 to 6.89 |
1,890 |
2.9 |
1,890 |
| March 12, 2018 |
2 to 4 years of service |
16.83 |
7.96 to 8.21 |
1,537 |
4.0 |
1,537 |
| March 12, 2018 (Strategy acceleration) |
3 to 5 years of service |
12.04 to 16.83 |
8.21 to 9.67 |
3,800 |
4.0 |
1,900 |
| April 12, 2019 |
2 to 4 years of service |
23.41 |
11.71 to 11.82 |
1,425 |
5.0 |
907 |
| April 12, 2019 (Strategy acceleration) |
4 to 5 years of service |
23.41 |
11.51 to 11.71 |
1,900 |
5.0 |
- |
| March 31, 2021 |
4 to 5 years of service |
48.98 |
29.08 to 29.81 |
1,100 |
9.0 |
- |
| December 17, 2021 |
3 to 4 years of service |
27.28 |
17.58 to 18.16 |
5,550 |
9.7 |
- |
| |
|
|
|
19,812 |
|
8,844 |
As of March 31,
2022 – Restricted shares
| Grant date |
Conditions for acquisition of right as of the grant date |
Existing shares (thousands) |
Fair value (R$) |
Maximum remaining contractual life (years) |
| April 12, 2019 – Plan I |
2 to 4 years of service |
278 |
21.62 to 22.53 |
1.0 |
| March 27, 2020 – Co-Investment Plan |
1 to 3 years of service |
652 |
29.00 |
1.1 |
| March 31, 2021 |
1 to 3 years of service |
2,100 |
48.13 |
2.1 |
| |
|
3,030 |
|
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
As of March 31,
2022 – Performance shares
| Grant date |
Conditions for acquisition of right as of the grant date |
Existing shares (thousands) |
Fair value
(R$)
|
Maximum remaining contractual life (years) |
Shares not released
(thousand)
|
| May 21, 2019 |
Achievement of performance conditions, 3 years of service plus an additional holding period of 1 year for certain awards. |
539 |
28.10 to 45.70 |
0.2 to 1.2 |
539 |
| September 30, 2020 |
Achievement of performance conditions, 2.5 years of service plus an additional holding period of 1 year for certain awards. |
4,067 |
48.56 to 73.46 |
1.1 to 2.1 |
4,067 |
| March 31, 2021 |
Achievement of performance conditions, 3 years of service plus an additional holding period of 1 year for certain awards. |
3,092 |
46.57 to 50.98 |
2.1 to 3.1 |
3,092 |
| |
|
7,698 |
|
|
7,698 |
As of March 31, 2022, the market price
was R$26.05 (R$48.14 as of March 31, 2021) per share.
| 29. | FINANCE INCOME (EXPENSES) |
| |
Parent |
Consolidated |
| |
March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
| FINANCE INCOME: |
|
|
|
|
| Interest on short-term investments |
6,192 |
4,042 |
86,210 |
45,481 |
| Gains on monetary and exchange rate variations (a) |
2,490 |
2,118 |
1,092,906 |
290,367 |
| Gains on swap and forward transactions (c) |
- |
- |
109,199 |
662,309 |
| Gains on swap and forward derivatives mark to market |
- |
- |
7,977 |
1,181 |
| Hyperinflationary economy adjustment (Argentina) |
- |
- |
29,526 |
20,726 |
| Other finance income |
1,253 |
- |
28,554 |
18,880 |
| Subtotal |
9,935 |
6,160 |
1,354,372 |
1,038,944 |
| |
|
|
|
|
| FINANCE EXPENSES: |
|
|
|
|
| Interest on financing |
- |
(8,140) |
(140,043) |
(169,176) |
| Interest
on leases |
- |
- |
(47,779) |
(54,621) |
| Losses
from monetary and exchange rate variations (b) |
(1,031) |
- |
(306,012) |
(661,162) |
| Losses
on swap and forward transactions (d) |
(5,266) |
- |
(1,090,919) |
(259,907) |
| Losses on
swap and forward derivatives mark to market |
- |
- |
(1,206) |
(1,763) |
| Adjustment
of provision for tax, civil and labor risks and tax liabilities |
- |
- |
(11,087)
|
(10,028) |
| Appropriation
of funding costs (debentures and notes) |
- |
- |
(4,365) |
(2,630) |
| Interest
on pension plan |
- |
- |
(979) |
(3,079) |
| Hyperinflationary
economy adjustment (Argentina) |
- |
- |
(85,372) |
(36,585) |
| Other finance
expenses |
(17,686) |
(2,594) |
(53,177) |
(67,899) |
| Subtotal |
(23,983) |
(10,734) |
(1,740,939) |
(1,266,850) |
| Net finance income (expenses), net |
(14,048) |
(4,574) |
(386,567) |
(227,906) |
| |
|
|
|
|
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
(*) Of the balances originally presented
as of March 31, 2021, certain financial income and expenses have been reclassified for better presentation. This reclassification does
not affect the originally presented financial income and expense.
The breakdown set forth below is intended
to better explain the results of the foreign exchange 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:
| |
Parent |
Consolidated |
| |
March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
| (a) Gains on monetary and exchange rate variations |
2,490 |
2,118 |
1,092,906 |
290,367 |
| Gains on exchange rate variation on borrowings, financing and debentures |
- |
- |
876,878 |
30,673
|
| Exchange
rate variation on imports |
- |
- |
4,832 |
15,947
|
| Exchange
rate variation on export receivables |
2,490 |
2,118 |
13,683 |
43,929
|
| Exchange
rate variation on accounts payable from foreign subsidiaries |
- |
- |
69,666 |
90,679
|
| Exchange
variations of bank accounts in foreign currency |
- |
- |
127,847 |
109,139
|
| |
|
|
|
|
| (b) Losses from monetary and exchange rate variations |
(1,031) |
- |
(306,012) |
(661,162) |
| Losses from exchange rate variation on borrowings (i) |
- |
- |
(4,972) |
(439,621) |
| Exchange
rate variation on imports |
- |
- |
(9,868) |
(10,920) |
| Exchange
rate variation on export receivables |
(1,031) |
- |
(53,216) |
(23,639) |
| Exchange
rate variation on accounts payable from foreign subsidiaries |
- |
- |
(95,327) |
(85,646) |
| Exchange
rate variation on financing |
- |
- |
(142,629) |
(101,336) |
| |
|
|
|
|
| (c) Gains on swap and forward transactions |
- |
- |
109,199 |
662,309 |
| Revenue
from swap exchange coupons (ii) |
- |
- |
93,186 |
171,676
|
| Gains
on exchange variations on swap instruments (ii) |
- |
- |
16,013
|
490,633
|
| |
|
|
|
|
| (d) Losses on swap and forward transactions |
(5,266) |
- |
(1,090,919) |
(259,907) |
| Losses from exchange rate variation on swap instruments (ii) |
- |
- |
(891,915) |
(94,824) |
| Financial
costs of swap instruments (ii) |
(5,266) |
- |
(199,004) |
(165,083) |
(*) The original amounts presented in
these lines as of March 31, 2021, were reclassified to give a better disclosure. This reclassification does not impact the subtotal amounts
of the respective groups, or any line presented in the finance income (expenses) tables originally presented and included in the previous
table.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
| 30. | OTHER OPERATING EXPENSES, NET |
| |
Consolidated |
| |
March 31, 2022 |
March 31, 2021 |
| Other operating income, net |
|
|
| Result on write-off of property, plant and equipment |
- |
10,135 |
| Tax credits |
17,373 |
10,461 |
| Tax benefit from amnesty program (a) |
30,337 |
- |
| Revenue with sale of customer portfolio |
5,308 |
- |
| Other operating income |
4,846 |
6,974 |
| Total other operating income |
57,864 |
27,570 |
| |
|
|
| Other operating expenses, net |
|
|
| Result on write-off of property, plant and equipment |
(1,751) |
- |
| Crer para Ver (b) |
(11,712) |
(8,795) |
| Expenses with sale of customer portfolio |
- |
(3,964) |
| Transformation and integration plan (c) |
(80,119) |
(134,142) |
| Tax contingencies |
(1,695) |
(1,880) |
| Other operating expenses |
(21,300) |
(4,221) |
| Total other operating expenses |
(116,577) |
(153,002) |
| Other operating income (expenses), net |
(58,713) |
(125,432) |
| a) | Refers to tax benefits in Brazil from the inclusion in some states tax amnesty programs by the subsidiary
Avon Cosmeticos Ltda. |
| b) | Allocation of operating profit from sales of the “Crer para Ver” line of non-cosmetic products
to Instituto Natura, specifically directed to social projects for developing the quality of education. |
| c) | Expenses related to the implementation of the transformation plan of subsidiary The Body Shop and the
integration of subsidiary Avon Products Inc., which is supported by five pillars, namely: (1) making the brand younger; (2) optimizing
the retail and direct sale operations; (3) improving the omni-channel; (4) improving operational efficiency; and (5) redesigning the organization. |
The basic earnings per share are calculated
by dividing the profit (loss) attributable to the Company’s shareholders by the weighted average number of outstanding common shares,
excluding common shares purchased by the Company and held as treasury shares.
| |
Consolidated |
| |
March 31, 2022 |
March 31, 2021 |
| Loss attributable to the Company’s controlling shareholders |
(643,092) |
(155,169) |
| Weighted average of the number of issued common shares |
1,379,706,174 |
1,375,484,203 |
| Weighted average number of shares in treasury |
(9,632,014) |
(808,328) |
| Weighted average of the number of outstanding common shares |
1,370,074,160 |
1,374,675,875 |
| Basic loss per share – R$ |
(0.4694) |
(0.1129) |
Diluted earnings per share is calculated
by adjusting the weighted average number of common shares outstanding, assuming the conversion of all potential common shares that would
cause dilution. Considering that the Company recorded a loss for the three-month periods ended March 31, 2022 and 2021, any adjustment
would have an anti-dilution effect and, therefore, the diluted loss per share is equal to the basic loss per share.
| 32. | TRANSACTIONS WITH RELATED PARTIES |
In the course of the Company’s
operations, rights and obligations are generated between related parties, arising from administrative expenses and provision of services.
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
32.1.
Receivables and payables with related parties
The Company had transactions with related
parties recognized as presented below:
| |
Parent |
| |
March 31, 2022 |
December 31, 2021 |
| Current Assets: |
|
|
| Natura Cosméticos S.A. (a) (b) |
7,690 |
153,656 |
| Avon Products, Inc(b) |
24,060 |
20,223 |
| Natura Cosméticos S.A. – Argentina (a) |
3,651 |
4,302 |
| Natura Cosméticos S.A. – Chile (a) |
- |
609 |
| Natura Cosméticos S.A. – Perú (a) |
455 |
567 |
| Natura Cosméticos S.A – Colombia(a) |
320 |
377 |
| The Body Shop International (b) |
12,700 |
7,416 |
| Aesop UK (a) |
2,467 |
2,836 |
| Natura Biosphera |
29 |
- |
| The Body Shop Brasil Franquias |
28 |
- |
| Ind e Com Cosméticos Natura Ltda |
805 |
- |
| Natura Dist de Mexico(a) |
- |
536 |
| Total current assets |
52,205 |
190,522 |
| Current Liabilities: |
|
|
| Natura Cosméticos S.A. (a) |
2,393 |
1,882 |
| Indústria e Comércio de Cosméticos Natura Ltda. (a) |
561 |
188 |
| Natura Comercial |
17 |
- |
| Avon Products, Inc(a) |
- |
37,784 |
| The Body Shop International |
- |
19,959 |
| Aesop UK |
- |
358 |
| Total current liabilities |
2,971 |
60,171 |
| a) | Refers to the allocation of expenses related to the purchase options and restricted shares plans. |
| b) | In December 31, 2021 refers to interest on own equity. |
32.2.
Uncontrolled and unconsolidated transactions with related parties
Instituto Natura holds shares in the
Essential Investment Fund. As of March 31, 2022, the balance is R$ 6,930 (R$ 8,850 as of March 31, 2021).
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 a processing center for distribution and warehousing of products (HUB),
in Itupeva, State of São Paulo. In 2019, 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 Company’s
controlling group, indirectly control Bres Itupeva. This agreement was amended on February 10, 2021, with Natura Cosméticos becoming
the lessee. The amount involved in the transaction is recorded under item “Right of Use” of “Buildings”, the netbook
value was R$ 71,895 in the three-month period ended March 31, 2022 (R$60,998 under item Buildings of Property, Plant and Equipment, as
of December 31, 2021) and in the three-month period ended March 31, 2022, the amount paid as lease was R$4,014 (R$3,560 for the three
month period ended March 31, 2021).
On January 8, 2021, a related-party
transaction was carried out between the Company, as lessee and owner, the subsidiary Indústria e Comércio de Cosméticos
Natura Ltda. and Natura &Co Holding S.A., as guarantors, and a special purpose company (Bresco IX) indirectly held by Messrs. Antônio
Luiz da Cunha Seabra, Guilherme Peirão Leal and Pedro Luiz Barreiros Passos, as lessor and surface-right owner (Co-Chairmen of
the Board of Directors of the Company and shareholder members of the controlling group parent Company). This transaction was entered into
with the purpose of expanding the Company’s distribution network and increasing its logistical efficiency through the installation
of a new distribution hub in the State of Alagoas. This is a build-to-suit lease in which the property has not yet been delivered and,
therefore, there was no disbursement during the three-month period ended March 31, 2022.
On May 12, 2021, a transaction was
entered into between Natura Cosméticos S.A., as lessee, and Bresco Logística Fundo de Investimento Imobiliário, as
lessor, indirectly held by Messrs. Antônio Luiz da Cunha Seabra, Guilherme Peirão Leal and Pedro Luiz Barreiros Passos. (Co-Chairmen
of the Board of Directors of the Company). This transaction had the purpose of keeping the Company’s distribution hub activities
in the city of Canoas, State of Rio Grande do Sul. The amount involved in the transaction is recorded under item “Right of Use”
of “Buildings” in the amount of R$5,501 and the total amount paid as rent was R$496.
In the three-month period ended March
31, 2022, the Company transferred to Instituto Natura as a donation associated with the net income from sales of the Natura Crer Para
Ver product line the amount of R$8,000 (R$10,000 for the three-month period ended March 31, 2021).
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
The Company has a structure of internal
controls to support the identification, monitoring and approval of transactions between Related Parties.
32.3.
Key management personnel compensation
The total compensation of the key management personnel is
as follows:
| |
March 31, 2022 |
March 31, 2021 |
| |
Compensation |
Compensation |
| |
Fixed |
Variable |
Total |
Fixed |
Variable |
Total |
| Board of Directors |
3,701 |
5,382 |
9,083 |
3,715 |
2,790 |
6,505 |
| Executive Board |
9,283 |
13,140 |
22,423 |
10,169 |
14,554 |
24,723 |
| |
12,984 |
18,522 |
31,506 |
13,884 |
17,344 |
31,228 |
The amounts include increases and /
or reversals of the cumulative expense recognized in the previous years due to reassessments of the number of awards expected to vest
and re-estimation of the social security charges expected to be payable by the Company on vesting.
33.1
Contracts related to supply
Total minimum supply payments, measured
at nominal value, according to the contract, are as follows:
| |
Consolidated |
| |
March 31, 2022 |
December 31, 2021 |
| Less than one year |
884,477 |
929,288 |
| One to five years |
277,276 |
460,081 |
| Above 5 years |
104,369 |
10,738 |
| Total |
1,266,122 |
1,400,107 |
The Company adopted an insurance policy
that mainly considers risk concentration and its materiality, considering the nature of their activities and the guidance of their insurance
advisors. As of March 31, 2022 and December 31, 2021, insurance coverage is as follows:
| Item |
Type of coverage |
Amount insured |
| March 31, 2022 |
December 31, 2021 |
| Industrial complex and administrative sites |
Any damages to buildings, facilities, inventories, and machinery and equipment |
5,206,353 |
6,008,031 |
| Vehicles |
Fire, theft and collision for the vehicles insured by the Company |
217,641 |
261,953 |
| Loss of profits |
No loss of profits due to material damages to facilities buildings and production machinery and equipment |
1,962,509 |
1,962,509 |
| Transport |
Damages to products in transit |
88,588 |
103,857 |
| Civil liability |
Protection against error or complaints in the exercise of professional activity that affect third parties |
2,075,791 |
2,445,664 |
| Environmental liability |
Protection against environmental accidents that may result in environmental lawsuits |
30,000 |
30,000 |
| 35. | ADDITIONAL INFORMATION RELATING TO THE STATEMENTS OF CASH FLOWS |
The following table presents additional
information on transactions related to the cash flow statement:
| |
Parent |
Consolidated |
| |
March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
| Non-cash items |
|
|
|
|
| Hedge accounting, net of tax effects |
59 |
- |
(294,819) |
39,655 |
| Net effect of acquisition of property, plant and equipment and intangible assets not yet paid |
- |
- |
130,516 |
187,848 |
NATURA &CO HOLDING S.A.
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022
(Amounts in thousands of Reais - R$, except as mentioned otherwise)
On April 13, 2022, the subsidiary Natura &Co Luxembourg
concluded the issuance of debt securities maturing on April 19, 2029 in the aggregate principal amount of US$600 million, subject to interest
of 6.125% per annum, which are guaranteed by Natura &Co and by the subsidiary Natura Cosméticos. The proceeds are intended
for the refinancing of certain short and medium-term debts of the Company, including the redemption of the senior notes due in March 2023
issued by the subsidiary Avon.