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Share Name | Share Symbol | Market | Type |
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Natura and Co Holding SA | NYSE:NTCO | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.57 | 0 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2023
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Commission File Number: 001-39169
Natura &Co Holding S.A.
(Exact name of registrant as specified in its charter)
Avenida Alexandre Colares, No. 1188, Sala A17-Bloco A
Parque Anhanguera
São Paulo, São Paulo 05106-000, Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40‑F:
Form 20-F ☒ 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):
Yes ☐ No ☒
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):
Yes ☐ No ☒
NATURA &CO HOLDING S.A.
TABLE OF CONTENTS
ITEM
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NATURA &CO HOLDING S.A. |
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By: |
/s/ Guilherme Strano Castellan |
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Name: |
Guilherme Strano Castellan |
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Title: |
Principal Financial Officer |
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By: |
/s/ Itamar Gaino Filho |
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Name: |
Itamar Gaino Filho |
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Title: |
Chief Legal and Compliance Officer |
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Date: November 14, 2023
Individual and Consolidated Interim Accounting Information (ITR) For the nine-month period ended September 30, 2023 |
www.pwc.com.br
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Natura &Co Holding S.A. Parent company and consolidated interim financial statements at 30 September 2023 and report on review |
(A free translation of the original in Portuguese)
Report on review of parent company and
consolidated interim financial statements
To the Board of Directors and Stockholders
Natura &Co Holding S.A.
Introduction
We have reviewed the accompanying interim statement of financial position of Natura &Co Holding S.A. ("Company") as at 30 September 2023 and the related statements of profit or loss and comprehensive income for the quarter and nine-month period then ended, and the statements of changes in shareholders’ equity and cash flows for the nine-month period then ended, as well as the accompanying consolidated interim statement of financial position of Natura &Co Holding S.A. and its subsidiaries ("Consolidated") as at 30 September 2023 and the related consolidated statements of profit or loss and comprehensive income for the quarter and nine-month period then ended, and the consolidated statements of changes in shareholders’ equity and cash flows for the nine-month period then ended, and explanatory notes.
Management is responsible for the preparation and fair presentation of these parent company and consolidated interim financial statements in accordance with the accounting standard CPC 21, Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC), and International Accounting Standard (IAS) 34 - Interim Financial Reporting, of the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on these interim financial statements based on our review.
Scope of review
We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
PricewaterhouseCoopers Auditores Independentes, Avenida Brigadeiro Faria Lima, 3732, 16º andar, partes 1 e 6, Edifício Adalmiro Dellape Baptista B32, Itaim Bibi, São Paulo - SP, CEP 04538-132,T: (11) 3674-2000, F: (11) 3674-2000, www.pwc.com.br |
Natura &Co Holding S.A.
Conclusion on the interim information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company and consolidated interim financial statements referred to above do not present fairly, in all material respects, the financial position of Natura &Co Holding S.A. and of Natura &Co Holding S.A. and its subsidiaries as at 30 September 2023, and the parent company financial performance for the quarter and nine-month period then ended and its cash flows for the nine-month period then ended, as well as the consolidated financial performance for the quarter and nine-month period then ended and the consolidated cash flows for the nine-month period then ended, in accordance with CPC 21 and IAS 34.
Other matters
Statement of value added
The interim financial statements referred to above include the parent company and consolidated statements of value added for the nine-month period ended 30 September 2023. These statements are the responsibility of the Company's management and are presented as supplementary information. These statements have been subjected to review procedures performed together with the review of the interim financial statements for the purpose concluding whether they are reconciled with the interim financial statements and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in the accounting standard CPC 09 - "Statement of Value Added". Based on our review, nothing has come to our attention that causes us to believe that these statements of value added have not been properly prepared, in all material respects, in accordance with the criteria established in this accounting standard, and that they are consistent with the parent company and consolidated interim financial statements taken as a whole.
São Paulo, 13 November 2023
PricewaterhouseCoopers
Auditores Independentes Ltda.
CRC 2SP000160/O-5
Leandro Mauro Ardito
Contador CRC 1SP188307/O-0
NATURA &CO HOLDING S.A. | ||||||||||||||||||
STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022 |
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(In thousands of Brazilian reais - R$) |
Note | Parent | Consolidated | Note | Parent | Consolidated | |||||||||||
ASSETS | September 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | LIABILITIES AND SHAREHOLDERS' EQUITY | September 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | |||||||
CURRENT | CURRENT | |||||||||||||||
Cash and cash equivalents | 6 | 997 | 5,566 | 3,292,480 | 4,195,713 | Borrowings, financing and debentures | 19 | - | - | 141,128 | 331,151 | |||||
Short-term investments | 7 | 10,675 | 24,264 | 3,480,871 | 1,800,439 | Lease | 18 | 315 | 193 | 628,546 | 878,448 | |||||
Trade accounts receivable | 8 | 2,562 | - | 3,406,585 | 3,502,399 | Trade accounts payable and reverse factoring operations | 20 | 5,842 | 6,451 | 5,516,965 | 6,375,930 | |||||
Trade accounts receivable - Related parties | 32 | 63,274 | 66,329 | - | - | Trade accounts payable - Related parties | 32 | 280,092 | 64,576 | - | - | |||||
Inventories | 9 | - | - | 4,362,898 | 4,516,874 | Dividends and interest on shareholders' equity payable | 24 | 244 | 260 | 244 | 260 | |||||
Recoverable taxes | 10 | 32,109 | 38,902 | 1,212,613 | 911,410 | Payroll, profit sharing and social charges | 12,135 | 51,485 | 1,072,729 | 1,276,977 | ||||||
Income tax and social contribution | - | - | 190,264 | 196,143 | Tax liabilities | 21 | 12,113 | 2,191 | 518,499 | 828,125 | ||||||
Derivative financial instruments | 5 | - | - | 134,661 | 235,114 | Income tax and social contribution | - | - | 197,529 | 70,294 | ||||||
Other current assets | 14 | 3,721 | 13,562 | 926,028 | 763,384 | Derivative financial instruments | 5 | - | - | 127,077 | 1,613,968 | |||||
113,338 | 148,623 | 17,006,400 | 16,121,476 | Provision for tax, civil and labor risks | 22 | - | - | 421,311 | 463,655 | |||||||
Other current liabilities | 23 | 6,741 | 23,113 | 986,337 | 1,499,060 | |||||||||||
Assets held for sale | 13 and 36 | - | - | 456,705 | 51 | Total current liabilities | 317,482 | 158,269 | 9,610,365 | 13,337,868 | ||||||
Total current assets | 113,338 | 148,623 | 17,463,105 | 16,121,527 | ||||||||||||
NON-CURRENT | ||||||||||||||||
Recoverable taxes | 10 | - | - | 880,887 | 1,356,868 | |||||||||||
Deferred income tax and social contribution | 11 | 142,766 | 150,167 | 2,677,285 | 3,519,515 | NON-CURRENT | ||||||||||
Judicial deposits | 12 | - | - | 401,159 | 457,550 | Borrowings, financing and debentures | 19 | - | - | 6,069,775 | 13,261,135 | |||||
Derivative financial instruments | - | - | 81,235 | 773,251 | Lease | 18 | 616 | 352 | 1,497,943 | 2,392,289 | ||||||
Long-term investments | 7 | - | - | 34,543 | 35,235 | Payroll, profit sharing and social charges | 4,441 | 6,029 | 6,012 | 26,152 | ||||||
Other non-current assets | 14 | - | - | 902,828 | 1,252,437 | Tax liabilities | 21 | - | - | 125,528 | 117,358 | |||||
142,766 | 150,167 | 4,977,937 | 7,394,856 | Deferred income tax and social contribution | 11 | - | - | 3,244,415 | 934,414 | |||||||
Income tax and social contribution | 0 | - | - | 375,396 | 448,532 | |||||||||||
Derivative financial instruments | 5 | - | - | - | 191,274 | |||||||||||
Provision for tax, civil and labor risks | 22 | 1,092 | 1,051 | 851,738 | 873,618 | |||||||||||
Investments | 15 | 28,113,555 | 22,215,420 | - | - | Other non-current liabilities | 23 | 17,786 | 17,750 | 744,370 | 751,566 | |||||
Property, plant and equipment | 16 | - | - | 3,859,197 | 4,966,150 | Total non-current liabilities | 23,935 | 25,182 | 12,915,177 | 18,996,338 | ||||||
Intangible | 17 | - | 1,445 | 22,297,146 | 23,260,970 | |||||||||||
Right of use | 18 | 896 | 530 | 1,973,401 | 2,941,887 | TOTAL LIABILITIES | 23,935 | 25,182 | 12,915,177 | 18,996,338 | ||||||
Total non-current assets | 28,257,217 | 22,367,562 | 33,107,681 | 38,563,863 | SHAREHOLDERS' EQUITY | 24 | ||||||||||
Capital stock | 12,484,515 | 12,484,424 | 12,484,515 | 12,484,424 | ||||||||||||
Treasury shares | (164,690) | (262,360) | (164,690) | (262,360) | ||||||||||||
Capital reserves | 10,427,721 | 10,540,885 | 10,427,721 | 10,540,885 | ||||||||||||
Legal profit reserve | ||||||||||||||||
Accumulated losses | 3,739,242 | (1,994,555) | 3,739,242 | (1,994,555) | ||||||||||||
Other comprehensive income | 1,542,350 | 1,564,340 | 1,542,350 | 1,564,340 | ||||||||||||
Shareholders' equity attributed to the Company's shareholders | 28,029,138 | 22,332,734 | 28,029,138 | 22,332,734 | ||||||||||||
Non-controlling interest in shareholders' equity of subsidiaries | - | - | 16,106 | 18,450 | ||||||||||||
Total shareholders' equity | 28,029,138 | 22,332,734 | 28,045,244 | 22,351,184 | ||||||||||||
TOTAL ASSETS | 28,370,555 | 22,516,185 | 50,570,786 | 54,685,390 | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 28,370,555 | 22,516,185 | 50,570,786 | 54,685,390 |
*The accompanying notes are an integral part of the Interim Accounting Information.
Note | Parent | Parent | Consolidated | Consolidated | |||||||||||||
July 1, 2023 to September 30, 2023 | July 1, 2022 to September 30, 2022 | January 1, 2023 to September 30, 2023 | January 1, 2022 to September 30, 2022 | July 1, 2023 to September 30, 2023 | July 1, 2022 to September 30, 2022 | January 1, 2023 to September 30, 2023 | January 1, 2022 to September 30, 2022 | ||||||||||
NET REVENUE | 26 | - | - | - | - | 7,517,260 | 8,401,159 | 22,610,958 | 24,120,309 | ||||||||
Cost of Sales | 27 | - | - | - | - | (2,610,993) | (3,177,329) | (7,793,624) | (9,216,929) | ||||||||
GROSS PROFIT | - | - | - | - | 4,906,267 | 5,223,830 | 14,817,334 | 14,903,380 | |||||||||
OPERATING (EXPENSES) INCOME | |||||||||||||||||
Selling, marketing and logistics expenses | 27 | - | - | - | - | (3,251,962) | (3,613,143) | (9,751,909) | (10,342,316) | ||||||||
Administrative, R&D, IT and project expenses | 27 | (15,363) | (35,124) | (53,695) | (252,861) | (1,275,426) | (1,381,475) | (4,057,422) | (4,281,688) | ||||||||
Impairment loss on trade receivables | 8 | - | - | - | - | (142,769) | (151,186) | (460,607) | (464,598) | ||||||||
Share of profits (losses) from subsidiaries | 15 | 7,010,576 | (459,984) | 5,696,939 | (1,657,460) | - | - | - | - | ||||||||
Other operating income (expenses), net | 30 | 4,272 | - | 5,754 | 12,326 | (284,759) | (101,693) | (700,726) | (202,792) | ||||||||
OPERATING PROFIT (LOSS) BEFORE FINANCIAL RESULT | 6,999,485 | (495,108) | 5,648,998 | (1,897,995) | (48,649) | (23,667) | (153,330) | (388,014) | |||||||||
Financial result | 29 | (6,400) | 6,034 | (3,696) | (894) | (1,064,904) | (549,688) | (1,943,321) | (1,340,780) | ||||||||
PROFIT (LOSS) BEFORE INCOME TAX AND | |||||||||||||||||
SOCIAL CONTRIBUTION | 6,993,085 | (489,074) | 5,645,302 | (1,898,889) | (1,113,553) | (573,355) | (2,096,651) | (1,728,794) | |||||||||
Income tax and social contribution | 0 | 31,456 | (70,703) | 4,373 | (70,703) | 961,953 | 110,669 | 780,559 | (87,357) | ||||||||
LOSS (PROFIT) FOR THE PERIODS FROM CONTINUING OPERATIONS | 7,024,541 | (559,777) | 5,649,675 | (1,969,592) | (151,600) | (462,686) | (1,316,092) | (1,816,151) | |||||||||
DISCONTINUED OPERATIONSsni | |||||||||||||||||
(LOSS) PROFIT FROM DISCONTINUED OPERATIONS | 36 | (112) | - | (9,524) | - | 7,175,592 | (96,786) | 6,956,022 | (152,465) | ||||||||
PROFIT (LOSS) FOR THE PERIODS | 7,024,429 | (559,777) | 5,640,151 | (1,969,592) | 7,023,992 | (559,472) | 5,639,930 | (1,968,616) | |||||||||
ATTRIBUTABLE TO | |||||||||||||||||
The Company´s shareholders | 7,024,429 | (559,777) | 5,640,151 | (1,969,592) | 7,024,429 | (559,777) | 5,640,151 | (1,969,592) | |||||||||
Non-controlling shareholders | - | - | - | - | (437) | 305 | (221) | 976 | |||||||||
PROFIT (LOSS) PER SHARE IN THE PERIODS -R$ | |||||||||||||||||
Basic | 31 | 5.1002 | (0.4073) | 4.0934 | (1.4356) | 5.1002 | (0.4072) | 4.0934 | (1.4356) | ||||||||
Diluted | 31 | 5.1002 | (0.4073) | 4.0934 | (1.4356) | 5.1002 | (0.4072) | 4.0934 | (1.4356) |
NATURA &CO HOLDING S.A. | ||||||||||||||||||
STATEMENT OF COMPREHENSIVE INCOME |
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FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND 2022 |
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(In thousands of Brazilian reais - R$) |
Note | Parent | Parent | Consolidated | Consolidated | ||||||||||||||
July 1, 2023 to September 30, 2023 | July 1, 2022 to September 30, 2022 | January 1, 2023 to September 30, 2023 | January 1, 2022 to September 30, 2022 | July 1, 2023 to September 30, 2023 | July 1, 2022 to September 30, 2022 | January 1, 2023 to September 30, 2023 | January 1, 2022 to September 30, 2022 | |||||||||||
PROFIT (LOSS) FOR THE PERIOD | 7,024,429 | (559,777) | 5,640,151 | (1,969,592) | 7,023,992 | (559,472) | 5,639,930 | (1,968,616) | ||||||||||
Other comprehensive income (loss) to be reclassified to income statement in subsequent periods: | ||||||||||||||||||
Conversion of financial statements of controlled companies abroad | 15 | (236,877) | (549,711) | (786,385) | (3,035,690) | (236,671) | (550,995) | (788,508) | (3,040,412) | |||||||||
Exchange rate effect on the conversion from hyperinflationary economy | 15 | 59,415 | (13,929) | 280,233 | (28,529) | 59,415 | (13,929) | 280,233 | (28,529) | |||||||||
Earnings (losses) from cash flow hedge operations | 15 | - | - | - | 89 | 887,651 | (269,284) | 739,089 | (923,676) | |||||||||
Tax effects on earnings (losses) from cash flow hedge operations | 11 | - | - | - | - | (304,366) | 91,442 | (254,927) | 315,188 | |||||||||
Equity in earnings (losses) from cash flow hedge operation | 15 | 887,651 | (269,284) | 739,089 | (923,765) | - | - | - | - | |||||||||
Equity in tax effects on earnings (losses) from cash flow hedge operations | 11 | (304,366) | 91,442 | (254,927) | 315,188 | - | - | - | - | |||||||||
Comprehensive loss for the periods, net of tax effects | 7,430,252 | (1,301,259) | 5,618,161 | (5,642,299) | 7,430,021 | (1,302,238) | 5,615,817 | (5,646,045) | ||||||||||
ATTRIBUTABLE TO | ||||||||||||||||||
The Company´s shareholders | 7,430,252 | (1,301,259) | 5,618,161 | (5,642,299) | 7,430,252 | (1,301,259) | 5,618,161 | (5,642,299) | ||||||||||
Noncontrolling shareholders | - | - | - | - | (231) | (979) | (2,344) | (3,746) | ||||||||||
7,430,252 | (1,301,259) | 5,618,161 | (5,642,299) | 7,430,021 | (1,302,238) | 5,615,817 | (5,646,045) | |||||||||||
*The accompanying notes are an integral part of the Interim Accounting Information. |
NATURA &CO HOLDING S.A. | ||||||||||||||||||
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY |
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FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND 2022 |
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(In thousands of Brazilian reais - R$) |
Equity appraisal adjustment | |||||||||||||||||||||||||
Capital Reserves | |||||||||||||||||||||||||
Note | Capital stock | Treasury shares | Share premium | Special reserve | Additional paid-in capital | Income from transactions with non-controlling shareholders | Legal profit reserve | Retained losses | Other comprehensive income | Shareholders' equity attributed to controlling shareholders | Non-Controlling | Total shareholders' equity | |||||||||||||
Retained earnings |
Shareholders | ||||||||||||||||||||||||
BALANCES AS OF JANUARY 1, 2022 | 12,481,683 | (151,342) | 10,021,409 | 362,059 | 187,402 | (92,066) | 871,223 | - | 4,865,202 | 28,545,570 | 21,155 | 28,566,725 | |||||||||||||
Loss for the periods | - | - | - | - | - | - | - | (1,969,592) | - | (1,969,592) | 976 | (1,968,616) | |||||||||||||
Exchange rate effect on the conversion from hyperinflationary economy | - | - | - | - | - | - | - | - | (28,529) | (28,529) | - | (28,529) | |||||||||||||
Other comprehensive income | - | - | - | - | - | - | - | - | (3,644,178) | (3,644,178) | (4,722) | (3,648,900) | |||||||||||||
Total comprehensive income for the periods | - | - | - | - | - | - | - | (1,969,592) | (3,672,707) | (5,642,299) | (3,746) | (5,646,045) | |||||||||||||
Share repurchase | - | (120,300) | - | - | - | - | - | - | - | (120,300) | - | (120,300) | |||||||||||||
Transactions in stock and restricted shares option plans: | |||||||||||||||||||||||||
Provision for stock and restricted shares option plans | 24 | - | - | - | - | 205,056 | - | - | - | - | 205,056 | - | 205,056 | ||||||||||||
Exercise of stock and restricted shares option plans | 24 | 5,872 | 9,282 | - | - | (22,135) | - | 3,911 | - | - | (3,070) | - | (3,070) | ||||||||||||
Reclassification of hyperinflationary economy adjustment effect | - | - | (126,473) | - | (58,494) | - | (8,294) | - | 193,261 | - | - | - | |||||||||||||
BALANCES AS OF SEPTEMBER 30, 2022 | 12,487,555 | (262,360) | 9,894,936 | 362,059 | 311,829 | (92,066) | 866,840 | (1,969,592) | 1,385,756 | 22,984,957 | 17,409 | 23,002,366 | |||||||||||||
BALANCES AS OF JANUARY 1, 2023 | 12,484,424 | (262,360) | 9,894,936 | 362,059 | 375,956 | (92,066) | - | (1,994,555) | 1,564,340 | 22,332,734 | 18,450 | 22,351,184 | |||||||||||||
Net income for the periods | - | - | - | - | - | - | - | 5,640,151 | - | 5,640,151 | (221) | 5,639,930 | |||||||||||||
Exchange rate effect on the conversion from hyperinflationary economy | - | - | - | - | - | - | - | - | 280,233 | 280,233 | - | 280,233 | |||||||||||||
Other comprehensive income | - | - | - | - | - | - | - | - | (302,223) | (302,223) | (2,123) | (304,346) | |||||||||||||
Total comprehensive income for the periods | - | - | - | - | - | - | - | 5,640,151 | (21,990) | 5,618,161 | (2,344) | 5,615,817 | |||||||||||||
Transactions in stock and restricted shares option plans: | |||||||||||||||||||||||||
Provision for stock and restricted shares option plans | 0 | - | - | - | - | 116,312 | - | - | - | - | 116,312 | - | 116,312 | ||||||||||||
Exercise of stock and restricted shares option plans | 24 | 91 | 97,670 | - | - | (229,476) | - | - | 93,646 | - | (38,069) | - | (38,069) | ||||||||||||
BALANCES AS OF SEPTEMBER 30, 2023 | 12,484,515 | (164,690) | 9,894,936 | 362,059 | 262,792 | (92,066) | - | 3,739,242 | 1,542,350 | 28,029,138 | 16,106 | 28,045,244 | |||||||||||||
*The accompanying notes are an integral part of the Interim Accounting Information. |
Note | Parent | Consolidated | |||||||
January 1, 2023 to September 30, 2023 | January 1, 2022 to September 30, 2022 | January 1, 2023 to September 30, 2023 | January 1, 2022 to September 30, 2022 | ||||||
CASH FLOW FROM OPERATING ACTIVITIES | |||||||||
Profit (loss) for the periods | 5,640,151 | (1,969,592) | 5,639,930 | (1,968,616) | |||||
Adjustments to reconciliate profit (loss) for the periods with net cash genereted by (used in) operating activities: | |||||||||
Depreciation and amortization | 16, 17 and 18 | 1,657 | 1,083 | 1,730,520 | 1,683,252 | ||||
Interest and exchange variation on short-term investments | 29 | (743) | (14,071) | (642,271) | (330,069) | ||||
Loss from swap and forward derivative contracts | 5 | - | 5,266 | 1,741,801 | 527,882 | ||||
Increse (reversion) of provision for tax, civil and labor risks | 22 | - | 989 | 53,566 | (29,457) | ||||
Monetary adjustment of judicial deposits | 12 | - | - | (20,510) | (26,846) | ||||
Monetary adjustment of provision for tax, civil and labor risks | 22 | 41 | 55 | 58,539 | 67,068 | ||||
Income tax and social contribution | (4,373) | 70,703 | (780,559) | 87,359 | |||||
Income from sale and write-off of property, plant and equipment and intagible | 13, 16 and 17 | - | - | (130,036) | (81,555) | ||||
Share of (profits) losses from subsidiaries | 15 | (5,696,939) | 1,657,460 | - | - | ||||
Interest and exchange rate variation on leases | 18 | 83 | 20 | 121,065 | 167,270 | ||||
Interest and exchange rate variation on borrowings, financing and debentures, net of acquisition costs | 19 | - | - | 437,022 | 324,207 | ||||
Adjustment and exchange rate variation on other assets and liabilities | 431 | 170 | 2,162 | 2,025 | |||||
Provision for impairment | 30 | - | - | 25,103 | 12,510 | ||||
Increase (reversion) of provision for stock option plans | 24,550 | 194,348 | 78,152 | 194,348 | |||||
Provision for losses with trade accounts receivables, net of reversals | 8 | - | - | 460,607 | 466,184 | ||||
Provision for inventory losses, net of reversals | 9 | - | - | 299,516 | 303,801 | ||||
Provision for carbon credits | - | - | (11,245) | (8,278) | |||||
Effect from hyperinflationary economy | - | - | 245,484 | 123,204 | |||||
Other adjustments to reconcile net income for the period | - | - | (206,228) | - | |||||
(35,142) | (53,569) | 9,102,618 | 1,514,289 | ||||||
DECREASE (INCREASE) IN ASSETS | |||||||||
Trade accounts receivable and related parties | 95 | (7,599) | (628,924) | (366,375) | |||||
Inventories | - | - | (752,740) | (109,695) | |||||
Recoverable taxes | - | - | 61,768 | (8,133) | |||||
Other assets | 17,268 | 21,254 | 491,401 | (18,446) | |||||
Subtotal | 17,363 | 13,655 | (828,495) | (502,649) | |||||
INCREASE (DECREASE) IN LIABILITIES | |||||||||
Domestic and foreign trade accounts payable and related parties | 214,874 | (53,844) | (515,727) | (624,650) | |||||
Payroll, profit sharing and social charges, net | (40,938) | (20,338) | (82,792) | (262,364) | |||||
Tax liabilities | (78) | (68) | (239,192) | (57,995) | |||||
Other liabilities | (16,370) | (56,439) | (274,180) | 86,132 | |||||
Subtotal | 157,488 | (130,689) | (1,111,891) | (858,877) | |||||
CASH GENERATED BY (USED IN) OPERATING ACTIVITIES | 139,709 | (170,603) | 7,162,232 | 152,763 | |||||
OTHER CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Payment of income tax and social contribution | - | (2,568) | (279,669) | (399,022) | |||||
Release of judicial deposits net of withdrawals | 12 and 22 | - | - | 23,642 | 134,174 | ||||
Payments related to tax, civil and labor lawsuits | 22 | - | - | (51,935) | (111,838) | ||||
Payments due to settlement of derivative transactions | - | (934) | (1,520,622) | (230,250) | |||||
Payment of interest on lease | 18 | (83) | (20) | (120,692) | (85,994) | ||||
Payment of interest on borrowings, financing and debentures | 19 | - | - | (997,443) | (573,042) | ||||
Operating Activities - discontinued operations | - | - | (7,289,148) | 84,857 | |||||
CASH GENERATED BY (USED IN) OPERATING ACTIVITIES | 139,626 | (174,125) | (3,073,635) | (1,028,352) | |||||
CASH FLOW FROM INVESTING ACTIVITIES | |||||||||
Additions of property, plant and equipment and intangible | - | (2,031) | (741,263) | (651,231) | |||||
Proceeds from sale of property, plant and equipment and intangible | - | - | 16,725 | 4,070 | |||||
Short-term acquisition | (45,550) | (174,700) | (12,220,644) | (8,005,899) | |||||
Redemption of short-term investments | 57,250 | 301,833 | 10,625,482 | 8,613,685 | |||||
Redemption of interest on short-term investments | 2,632 | 15,230 | 101,164 | 85,636 | |||||
Capital increase in subsidiaries | (308,377) | 153,656 | - | - | |||||
Receipt of dividends from subsidiaries | 32 | 150,000 | - | - | - | ||||
Investing activities - discontinued operations | - | - | 12,254,162 | (116,919) | |||||
CASH (USED IN) GENERATED BY INVESTING ACTIVITIES | (144,045) | 293,988 | 10,035,626 | (70,658) | |||||
CASH FLOW FROM FINANCING ACTIVITIES | |||||||||
Repayment of lease - principal | 18 | (225) | (48) | (553,864) | (681,748) | ||||
Repayment of borrowings, financing and debentures – principal | 19 | - | - | (8,185,865) | (4,591,262) | ||||
New borrowings, financing, and debentures | 19 | - | - | 1,506,701 | 6,051,116 | ||||
Acquisition of treasury shares, net of receipt of option strike price | - | (120,300) | - | (120,300) | |||||
Payment of dividends and interest on equity | (16) | - | (16) | - | |||||
Receipt (payment) of funds due to settlement of derivative transactions | - | (4,332) | (367,786) | 132,147 | |||||
Capital Increase | 91 | 5,872 | 91 | 5,872 | |||||
Financing activities - discontinued operations | - | - | (166,180) | (139,111) | |||||
NET CASH (USED IN) GENERATED BY FINANCING ACTIVITIES | (150) | (118,808) | (7,766,919) | 656,714 | |||||
Effect of exchange rate variation on cash and cash equivalents | - | - | (98,305) | (312,672) | |||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (4,569) | 1,055 | (903,233) | (754,968) | |||||
Opening balance of cash and cash equivalents | 5,566 | 4,289 | 4,195,713 | 4,007,257 | |||||
Closing balance of cash and cash equivalents | 997 | 5,344 | 3,292,480 | 3,252,289 | |||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (4,569) | 1,055 | (903,233) | (754,968) |
Note | Parent | Consolidated | |||||||
January 1, 2023 to September 30, 2023 | January 1, 2022 to September 30, 2022 | January 1, 2023 to September 30, 2023 | January 1, 2022 to September 30, 2022 | ||||||
INCOME | 5,754 | 12,326 | 27,936,413 | 30,356,488 | |||||
Sale of goods, products and services | - | - | 28,555,081 | 30,395,848 | |||||
Provision for doubtful accounts, net of reversals | 8 | - | - | 56,687 | 24,203 | ||||
Other operating expenses, net | 5,754 | 12,326 | (675,355) | (63,563) | |||||
GOODS ACQUIRED FROM THIRD PARTIES | (22,650) | (212,769) | (17,834,958) | (20,195,153) | |||||
Cost of products sold and services rendered | - | - | (9,269,417) | (10,574,586) | |||||
Materials, electricity, outsourced services and other | (22,650) | (212,769) | (8,565,541) | (9,620,567) | |||||
GROSS VALUE ADDED | (16,896) | (200,443) | 10,101,455 | 10,161,335 | |||||
RETENTIONS | (1,657) | (1,083) | (1,730,521) | (1,679,060) | |||||
Depreciation and amortization | 16, 17 and 18 | (1,657) | (1,083) | (1,730,521) | (1,679,060) | ||||
VALUE ADDED PRODUCED BY THE COMPANY | (18,553) | (201,526) | 8,370,934 | 8,482,275 | |||||
TRANSFERRED VALUE ADDED | 5,703,572 | (1,612,122) | 10,278,805 | 4,132,440 | |||||
Equity in subsidiaries | 15 | 5,696,939 | (1,657,460) | - | - | ||||
Financial income - including inflation adjustments and exchange rate variations | 29 | 6,633 | 45,338 | 10,278,805 | 4,132,440 | ||||
TOTAL VALUE ADDED TO DISTRIBUTE - DISCONTINUED OPERATIONS | 5,685,019 | (1,813,648) | 18,649,739 | 12,614,715 | |||||
TOTAL VALUE ADDED TO DISTRIBUTE - DISCONTINUED OPERATIONS | (9,524) | - | 11,869,776 | 919,877 | |||||
'TOTAL VALUE ADDED TO DISTRIBUTE | 5,675,495 | (1,813,648) | 30,519,515 | 13,534,592 | |||||
TOTAL DISTRIBUTION OF VALUE ADDED | 5,675,495 | (1,813,648) | 30,519,515 | 13,534,592 | |||||
DISTRIBUTION OF VALUE ADDED - DISCONTINUED OPERATIONS | (9,524) | - | 11,869,776 | 919,877 | |||||
DISTRIBUTION OF VALUE ADDED - DISCONTINUED OPERATIONS | 5,685,019 | (1,813,648) | 18,649,739 | 12,614,715 | |||||
Payroll and social charges | 28 | 29,388 | 39,009 | 4,633,974 | 4,670,489 | ||||
Payroll and social charges | 16,213 | 31,289 | 3,479,944 | 3,487,540 | |||||
Benefits | 12,406 | 6,526 | 694,560 | 701,911 | |||||
FGTS | 769 | 1,194 | 459,470 | 481,038 | |||||
Taxes, fees and contributions | (4,381) | 70,703 | 3,112,557 | 4,258,800 | |||||
Federal | (4,381) | 70,703 | 2,645,658 | (376,272) | |||||
State | - | - | 466,899 | 4,634,265 | |||||
Municipal | - | - | - | 807 | |||||
Third-part capital remuneration | 10,337 | 46,232 | 12,219,300 | 5,501,577 | |||||
Rentals | - | - | (5,621) | 28,373 | |||||
Others | 10,337 | 46,232 | 12,224,921 | 5,473,204 | |||||
Equity remuneration | 5,649,675 | (1,969,592) | (1,316,092) | (1,816,151) | |||||
Retained (losses) earnings | 5,649,675 | (1,969,592) | (1,315,871) | (1,817,128) | |||||
Minority holders' share in retained profit | - | - | (221) | 977 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
1. | GENERAL INFORMATION |
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 1188, 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” and “The Body Shop”. 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, Avon and The Body Shop Consultant(s).
1.1 Sale of subsidiary Aesop
On August 30, 2023, the Company concluded the sale of the subsidiary Aesop to L’Oréal for a total amount of R$12,396,226, after obtaining all regulatory approvals. The total gain obtained on the derecognition of the subsidiary's assets and liabilities and recognized as discontinued operations net of income tax and social contribution was R$7,231,416, which includes the reclassification of accumulated balance sheet conversion gains recognized in other comprehensive income amounting to R$115,168.
Further details about this operation, as well as the results of discontinued operations for the nine-month periods ending September 30, 2023 and 2022 are presented in explanatory note no.36.
The individual and consolidated interim accounting information shows all relevant information specific to the interim accounting information, which is consistent with that used by Management in its management and was approved by the Board of Directors and authorized for publication at a meeting held on November 7th, 2023.
The individual and consolidated interim accounting information was prepared based on historical cost, except for derivative instruments and short-term investments recognized that were measured at fair value, and assets and liabilities held for sale measured at lower of their carrying amount and the fair value net of selling expenses. The individual and consolidated interim accounting information are expressed in thousands of Reais (“R$”), 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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
3. | SUMMARY OF MATERIAL ACCOUNTING POLICIES |
The material 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, 2022, issued on March 13, 2023, as well as those applied for the comparative nine-month period ended September 30, 2022, except for the rules and changes effective as of January 1, 2023.
Among these amendments effective as of January 1, 2023, we highlight the amendments to CPC 23, Accounting Policies, Change in Estimates and Error Correction (IAS 8, Accounting Policies, Change in Estimates and Error Correction) and CPC 26 (R1), Presentation of Financial Statements (IAS 1, Presentation of Financial Statements), in addition to amendments to IFRS Practice Statement 2, Making Materiality Judgments, educational document issued by the IASB and not published by the CPC in Brazil), where the concepts of accounting estimates and applying materiality judgments to accounting policy disclosures to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies. In the preparation of individual and consolidated interim accounting information, these concepts were considered, however, there were no material effects on the nature and detail of the information presented.
Additionally, in May 2023 IASB published amendments to IAS 12, Income taxes, determining the application of a mandatory exception in the recognition of deferred taxes on taxable profit arising from the application of the requirements of the “Pillar 2” legislation, an initiative by the Organization for Economic Cooperation and Development (OECD), through which it seeks to implement a new tax system that will consist of an "extra layer" to the domestic taxation of the countries involved, seeking to ensure the payment of a global minimum effective rate of 15% by taxpayers members of large multinational groups, regardless of their jurisdiction of residence.
As required by the amendment, the Company applied the exception for recognition and disclosure of information on deferred tax assets and liabilities related to Pillar Two income taxes.
The other amendments to the accounting standards, effective as of January 1, 2023, did not have any material impact on the Company's interim individual and consolidated accounting information.
This individual and consolidated interim accounting information should be read in conjunction with the Company’s individual and consolidated financial statements for the year ended December 31, 2022.
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 material for the interim accounting information, were presented in note 4 of the Company’s individual and consolidated financial statements for the year ended December 31, 2022.
The estimates and assumptions used in the preparation of the interim, individual and consolidated accounting information for the nine-month period ended September 30, 2023, have not changed significantly compared with the estimates and assumptions as of December 31, 2022.
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
The information regarding the general considerations and polices was presented in note 5.1 of the Company’s individual and consolidated financial statements for the year ended December 31, 2022, and there are no changes for the nine-month period ended September 30, 2023.
The Company continues to monitor developments in the conflict between Russia and Ukraine to assess any possible future impacts that may arise because of the ongoing crisis, including the reduction in recoverable value of financial and non-financial assets, which the Company's Management assesses based on the best available information. At the date of this interim accounting information, the effects of the conflict on the equity and financial position and performance of operations were not material.
5.1 Market risks and hedge accounting
In order to hedge the current balance sheet positions of the Company against market risks, the following financial derivatives (hedging the variability of payments of financing liabilities arising from exchange rate and interest rate risks) and operating derivatives (hedging the exchange rate risk of operating cash flows, such as import and export operations) are used and consist of the balances in the following table, as of September 30, 2023, and December 31, 2022:
Description (Balance sheet position) |
Consolidated (Fair value, level 2) |
|
September 30, 2023 |
December 31, 2022 |
|
Financial derivatives |
107,005 |
(785,733) |
Operating derivatives |
(18,186) |
(11,144) |
Total |
88,819 |
(796,877) |
Below are the changes in net derivatives balances for the nine-month period ended September 30, 2023, and for the year ended December 31, 2022:
|
Consolidated |
Balance as of December 31, 2021 |
516,637 |
Losses from swap and forward derivative contracts in the result of the year |
(992,813) |
Payment of funds due to settlement of derivative transactions - operational activity |
594,225 |
Receipt of funds due to settlements of derivatives transactions - financing activity |
(118,707) |
Losses in cash flow hedge operations (other comprehensive income) |
(790,479) |
Other movements |
(5,740) |
Balance as of December 31, 2022 |
(796,877) |
Losses from swap and forward derivative contracts in the result of the period |
(1,741,801) |
Payment of funds due to settlement of derivative transactions - operational activity |
1,520,622 |
Payment of funds due to settlements of derivatives transactions - financing activity |
367,786 |
Gains in cash flow hedge operations (other comprehensive income) |
739,089 |
Balance as of September 30, 2023 |
88,819 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
The Company designates certain financial and operating derivatives described above for hedge accounting in accordance with the Company's risk management policy. The fair value of derivatives designated for cash flow and fair value hedge accounting, as well as gains and losses for the nine-month period ended September 30, 2023, are presented below.
|
Consolidated |
||||
|
Subject to hedging |
Notional currency |
Fair value |
Accumulated gains (losses) |
Gains (losses) for the nine-month period |
Currency swap – US$/R$ |
Currency |
BRL |
40,707 |
(1,031) |
764,255 |
Forward and swap agreements (Natura Distribuidora México) |
Currency |
BRL |
4 |
33 |
33 |
Forward and swap agreements (Avon) |
Currency |
BRL |
(6,716) |
(7,603) |
(7,603) |
Forward agreements (Natura Industria) |
Currency |
BRL |
(10,994) |
(10,994) |
(12,667) |
Forward agreements (The Body Shop) |
Currency |
BRL |
(295) |
(4,929) |
(4,929) |
Total |
|
|
22,706 |
(24,524) |
739,089 |
The movement in hedge reserves recorded in other comprehensive income is shown below:
|
Consolidated |
Cash flow hedge balance on December 31, 2021 |
21,866 |
Change in fair value recognized in other comprehensive income |
(790,479) |
Tax effects on the fair value of the hedging instrument |
270,035 |
Cash flow hedge balance on December 31, 2022 |
(498,578) |
Change in fair value recognized in other comprehensive income |
739,089 |
Tax effects on the fair value of the hedging instrument |
(254,927) |
Cash flow hedge balance on September 30, 2023 |
(14,416) |
In the quarter ended September 30, 2023, the Company transferred its sustainability-linked debt (“Notes”, as described in explanatory note 19) from the subsidiary Natura Cosméticos S.A. to the subsidiary Natura &Co Luxembourg Holdings S.á.r.l. (“Natura &Co Luxembourg”), as part of the rebalancing and reorganization process of the Group's debt initiated when the sale of the previously subsidiary Aesop.
The debt denominated in US dollars was included in a hedge accounting structure, aiming to protect the variability of payments arising from exchange rate and interest rate risks. Considering the transfer made to the subsidiary Natura &Co Luxembourg, whose functional currency is the US dollar, the protected risk was no longer eligible within the hedge accounting structure and, consequently, the Company proceeded with the derecognition of this structure. As a result, the amount of R$4,958,286, previously recognized in the liabilities of the subsidiary Natura Cosméticos S.A., was derecognized and recognized in the subsidiary Natura &Co Luxembourg. Losses recognized in other comprehensive income of R$700,810, before tax effects, were reclassified to the statement of profit and loss for the nine-month period ended September 30, 2023, as a financial expense. Additionally, the derivatives liability position of R$1,380,405 was settled with the corresponding financial institutions in September 2023.
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
5.2 Fair value estimate
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 information adopted by the market in a direct (as prices) or indirect (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: a) 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 parties, including market information that allows for such calculation; |
(iii) | except for the real estate receivables certificates, which are measured at fair value due to the designation as fair value hedge accounting, 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. |
The fair value of the investment in the Fundo Dynamo Beauty Ventures Ltda. (“DBV Fund”), classified at level 3 of the fair value hierarchy is calculated based on information on the net value of the investment in the Fund (NAV) calculated by the Fund’s manager based on valuation assumptions consistent with the accounting practices adopted in Brazil and IFRS, adjusted to reflect the fair value assumptions applicable to the nature of the Company’s investment. The Company’s valuation considers inputs not observable in the model, to reflect the contractual restrictions on this investment for early redemption of the security in the market. The significant unobservable inputs used in the fair value estimate reflect a discount due to the lack of liquidity of the security, which represent the values that the Company determined that market agents would consider for these discounts when defining the investment price.
There was no transfer between measurement levels in the fair value hierarchy during the nine-month period ended September 30, 2023, 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.
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Parent |
Consolidated |
||
|
September 30, 2023 |
December 31, 2022 |
September 30, 2023 |
December 31, 2022 |
Cash and bank deposits |
997 |
5,566 |
1,509,758 |
2,904,808 |
Certificate of bank deposits |
- |
- |
773,024 |
46,864 |
Repurchase operations (a) |
- |
- |
1,009,698 |
1,244,041 |
|
997 |
5,566 |
3,292,480 |
4,195,713 |
(a) | Repurchase operations are short-term investments and with high liquidity. As of September 30, 2023, repurchase operations are remunerated at an average rate of 100.0% of CDI (100.0% of the CDI as of December 31, 2022). |
|
Parent |
Consolidated |
||
|
September 30, 2023 |
December 31, 2022 |
September 30, 2023 |
December 31, 2022 |
Exclusive Investment fund(a) |
10,675 |
24,264 |
- |
- |
Mutual investment funds (b) |
- |
- |
1,854,740 |
1,228,093 |
Treasury bills (c) |
- |
- |
316,886 |
539,450 |
Government securities (LFT) (d) |
- |
- |
1,283,599 |
31,415 |
Dynamo Beauty Ventures Ltd, Fund |
- |
- |
34,543 |
35,235 |
Restricted cash |
- |
- |
25,646 |
1,481 |
|
10,675 |
24,264 |
3,515,414 |
1,835,674 |
|
|
|
|
|
Current |
10,675 |
24,264 |
3,480,871 |
1,800,439 |
Non-current |
- |
- |
34,543 |
35,235 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
(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 September 30, 2023, related to the “Crer para Ver” line within the exclusive investment fund is R$ 85,242 (R$91,340 as of December 31, 2022). | |
(b) | Mutual investment funds refer to the investments of some subsidiaries of the Company’s located mainly in Argentina, Chile, Colombia, and Mexico. |
(c) | As of September 30, 2023, investments in treasury bills are remunerated at an average rate of 111.70% of the CDI (109.69% as of December 31, 2022). |
(d) | As of September 30, 2023, investments in Government securities (LFT) are remunerated at an average rate of 99.30% of the CDI (100.02% of the CDI as of December 31, 2022). |
The breakdown of securities constituting the Essential Investment Fund portfolio, in which the Company holds 100% interest, on September 30, 2023 and December 31, 2022 is as follows:
|
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
Certificate of bank deposits |
- |
2,012 |
Repurchase operations (cash and cash equivalents) |
656,726 |
937,645 |
Treasury bills |
316,886 |
539,451 |
Government securities (LFT) |
1,283,599 |
46,070 |
|
2,257,211 |
1,525,178 |
These amounts are consolidated with the other investments of the same nature in the Company’s consolidated financial information.
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
Trade accounts receivable |
3,779,388 |
3,933,550 |
(-) Allowance for expected credit losses |
(372,803) |
(431,151) |
|
3,406,585 |
3,502,399 |
Maximum exposure to credit risk on the date of the interim 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 September 30, 2023 and December 31, 2022:
|
Consolidated |
|||
|
September 30, 2023 |
December 31, 2022 |
||
|
Trade accounts receivable |
Allowance for expected credit losses |
Trade accounts receivable |
Allowance for expected credit losses |
Current |
2,918,871 |
(108,977) |
2,814,843 |
(94,148) |
Past due: |
|
|
|
|
Up to 31 days |
397,661 |
(44,959) |
621,711 |
(59,764) |
From 31 to 60 days |
117,577 |
(40,924) |
142,507 |
(53,609) |
From 61 to 90 days |
82,884 |
(38,978) |
106,124 |
(48,851) |
From 91 to 180 days |
262,395 |
(138,965) |
248,365 |
(174,779) |
|
3,779,388 |
(372,803) |
3,933,550 |
(431,151) |
The changes in the allowance for expected credit losses for the nine-month periods ended September 30, 2023 and 2022 are as follows:
|
Consolidated |
Balance as of December 31, 2021 |
(453,981) |
Additions, net of reversals |
(465,391) |
Write-offs (a) |
456,947 |
Translation adjustment |
33,441 |
Balance as of September 30, 2022 |
(428,984) |
|
|
Balance as of December 31, 2022 |
(431,151) |
Transfer to non-current assets held for sale |
1,661 |
Additions, net of reversals |
(460,607) |
Write-offs (a) |
504,235 |
Translation adjustment |
13,059 |
Balance as of September 30, 2023 |
(372,803) |
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. |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Consolidated |
||
|
September 30, 2023 |
December 31, 2022 |
|
Finished products |
3,499,052 |
3,634,068 |
|
Raw materials and packaging |
1,068,119 |
1,159,507 |
|
Auxiliary materials |
260,914 |
146,409 |
|
Products in progress |
61,545 |
68,849 |
|
(-) Allowance for inventory losses |
(526,732) |
(491,959) |
|
|
4,362,898 |
4,516,874 |
The changes in the allowance for inventory losses for the nine-month periods ended September 30, 2023 and 2022 are as follows:
|
Consolidated |
Balance as of December 31, 2021 |
(615,945) |
Additions, net of reversals (a) |
(303,801) |
Write-offs (b) |
244,780 |
Translation adjustment |
66,846 |
Balance as of September 30, 2022 |
(608,120) |
|
|
Balance as of December 31, 2022 |
(491,959) |
Transfer to non-current assets held for sale |
4,400 |
Additions, net of reversals (a) |
(299,516) |
Write-offs (b) |
230,146 |
Translation adjustment |
30,197 |
Balance as of September 30, 2023 |
(526,732) |
a) | This refers to the recognition of net allowance for losses due to discontinuation, expiration and quality, to cover expected losses on the realization of inventories, pursuant to the policy of the Company. |
b) | This consists of write-offs of products for which there is already an allowance for losses, where the Company has no expectation of sales/realization. |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
ICMS on purchase of goods (a) |
664,666 |
704,018 |
Taxes on purchase of goods – foreign subsidiaries |
227,545 |
245,955 |
ICMS on purchases of property, plant and equipment |
13,887 |
14,365 |
PIS and COFINS on purchase of property, plant and equipment and purchase of goods (b) |
831,661 |
950,307 |
Withholding PIS, COFINS and CSLL |
1,671 |
1,671 |
Tax on Manufactured Goods - IPI (c) |
169,096 |
152,686 |
Other |
184,974 |
199,276 |
|
2,093,500 |
2,268,278 |
|
|
|
Current |
1,212,613 |
911,410 |
Non-current |
880,887 |
1,356,868 |
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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
The effective rate calculated by the company in the nine-month period ended September 30, 2023 was 37.23%. This percentage is based on pre-tax loss of R$2,096,651 and income tax benefit of R$780,559. The main components that cause the effective rate to deviate from the nominal income tax rate of 34% are mainly permanent tax benefits such as investment subsidies and other incentives, as well as the impact of tax losses carryforward benefit in certain jurisdictions.
These benefits are offset by the mix of results before taxes by country, tax losses carryforward that could not be benefited, differences in nominal rates of subsidiaries abroad and other permanent tax effects in local jurisdictions that increase the respective tax obligations.
The effective rate calculated by the Company for the nine-month period ended September 30, 2022, was negative 5.05%. This percentage is based on pre-tax loss of R$1,728,794 and income tax revenue of R$87,357. The main components that cause the effective rate to distance itself from the nominal income tax rate of 34% are the different yields by country, tax losses from certain jurisdictions that cannot benefit from deferred income tax assets, related permanent effects to withholding income tax arising from transactions between group companies that cannot be benefited or offset by tax losses and credits in certain jurisdictions that can be benefited and permanent net favorable items, including investment subsidies and other incentives.
Changes in deferred income tax and social contribution asset and liability for the nine-month periods ended September 30, 2023 and 2022, are as follows:
|
Parent |
Consolidated |
|
|
Assets |
Assets |
Liabilities |
Balance as of December 31, 2021 |
- |
2,954,074 |
(994,041) |
Effect on income statement |
- |
636,336 |
(59,831) |
Transfer between deferred income tax and social contribution liabilities and assets |
- |
16,486 |
(16,486) |
Reserve for grant of options and restricted shares |
- |
6,076 |
- |
Other comprehensive income impact |
- |
315,188 |
- |
Translation adjustment |
- |
(223,272) |
175,114 |
Balance as of September 30, 2022 |
- |
3,704,888 |
(895,244) |
|
|
|
|
Balance as of December 31, 2022 |
150,167 |
3,519,515 |
(934,414) |
Effect on income statement |
4,373 |
(658,807) |
(2,290,640) |
Transfer between deferred income tax and social contribution liabilities and assets |
- |
16,378 |
(16,378) |
Reclassification of contingency to deferred liability |
- |
- |
(52,004) |
Creation of tax credits on a universal basis |
- |
20,213 |
- |
Write-off of discontinued operation |
- |
(155,309) |
24,933 |
Reserve for grant of options and restricted shares |
(11,774) |
(55,887) |
2,485 |
Other comprehensive income impact |
- |
5,218 |
- |
Translation adjustment |
- |
(14,036) |
21,603 |
Balance as of September 30, 2023 |
142,766 |
2,677,285 |
(3,244,415) |
The Company considered the effective tax rate projections including the effects of continued and discontinued operations when determining the tax effects applicable to the nine-month period ended September 30, 2023.
Management monitors the performance of all its entities and evaluates whether deferred income tax assets can be realized from four sources of use: potential tax loss offset, reversal of taxable temporary differences, tax planning opportunities (which can include corporate movements) and projection of future taxable profits. The Company does not have a record of deferred income tax assets that cannot be supported by one or more of these sources of realization.
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
12. | JUDICIAL DEPOSITS |
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 September 30, 2023 and December 31, 2022 are as follows:
|
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
Unaccrued tax proceedings(a) |
249,628 |
274,273 |
Accrued tax proceedings (b) |
127,579 |
150,929 |
Unaccrued civil proceedings |
5,496 |
5,783 |
Accrued civil proceedings |
1,439 |
1,470 |
Unaccrued labor proceedings |
8,080 |
11,014 |
Accrued labor proceedings |
8,937 |
14,081 |
Total judicial deposits |
401,159 |
457,550 |
a) | The tax proceedings related to these judicial deposits refer, substantially, to ICMS-ST. |
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 nine-month periods ended September 30, 2023 and 2022 are as follows:
|
Consolidated |
Balance as of December 31, 2021 |
585,284 |
New deposits |
18,867 |
Redemptions |
(82,405) |
Inflation adjustment and interests |
26,846 |
Payments / Utilization |
(70,637) |
Translation adjustment |
(2,498) |
Balance as of September 30, 2022 |
475,458 |
|
|
Balance as of December 31, 2022 |
457,550 |
New deposits |
11,501 |
Redemptions |
(35,143) |
Inflation adjustment and interests |
20,510 |
Payments / Utilization |
(52,486) |
Translation adjustment |
(773) |
Balance as of September 30, 2023 |
401,159 |
In addition to judicial deposits, the Company has contracted insurance policies and guarantee letters for certain lawsuits.
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
13. | NON-CURRENT ASSETS HELD FOR SALE |
The changes in the balance for the nine-month periods ended September 30, 2023 and 2022 are as follows:
|
Consolidated |
Balance as of December 31, 2021 |
52,921 |
Transfers of fixed assets, other assets and liabilities |
16,080 |
Impairment (c) |
(12,510) |
Translation adjustment |
(4,983) |
Balance as of September 30, 2022 |
51,508 |
|
|
Balance as of December 31, 2022 |
51 |
Transfers of assets of the previously subsidiary Aesop (a) |
2,492,471 |
Other transfers (b) |
555,682 |
Impairment (c) |
(56,179) |
Write-offs by disposal (d) |
(2,529,955) |
Translation adjustment |
(5,365) |
Balance as of September 30, 2023 |
456,705 |
a) | These transfers include the value of the assets of Aesop, previously subsidiary of the Company and whose sale was assessed as highly probable in the quarter ended March 31, 2023. The interest in Aesop was subsequently disposed during the quarter ended on September 30, 2023. |
b) | The other transfers include certain properties of the subsidiary Avon, located in the United States, Chile and Brazil. |
c) | Reflect the recognition of loss due to impairment of properties of the subsidiary Avon, located in the United States, Chile and Brazil, transferred to non-current assets held for sale and being tested for impairment purposes upon transfer and consequent measurement to the lower of fair value fewer selling costs and previous book value. |
d) | The write-offs due to disposal presented in the movement include the value of the assets of the previously subsidiary Aesop written off upon sale to L'Oreal, on August 30, 2023. Also among the write-offs are the sale of an asset of the subsidiary Avon in Chile, amounting to R$37,484. |
Further details about the sale operation of the subsidiary Aesop, as well as the results of discontinued operations for the nine-month periods ending September 30, 2023 and 2022 are presented in explanatory note no. 36.
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Parent |
Consolidated |
||
|
September 30, 2023 |
December 31, 2022 |
September 30, 2023 |
December 31, 2022 |
Marketing and advertising advances |
- |
- |
48,148 |
43,509 |
Supplier advances |
1,522 |
1,357 |
285,470 |
290,205 |
Employee advances |
73 |
- |
24,198 |
20,267 |
Rent advances and guarantee deposit (a) |
- |
- |
84,550 |
160,437 |
Advance insurance expenses |
- |
11,456 |
94,185 |
124,293 |
Overfunded pension plan (b) |
- |
- |
690,328 |
694,527 |
Customs broker advances - Import taxes |
- |
- |
33,488 |
38,398 |
Sublease receivables (c) |
- |
- |
203,019 |
262,108 |
Carbon credits |
- |
- |
16,179 |
14,297 |
Receivables from service providers (d) |
- |
- |
140,796 |
110,214 |
Other |
2,126 |
749 |
208,495 |
257,566 |
|
3,721 |
13,562 |
1,828,856 |
2,015,821 |
|
|
|
|
|
Current |
3,721 |
13,562 |
926,028 |
763,384 |
Non-current |
- |
- |
902,828 |
1,252,437 |
(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 subsidiary The Body Shop which will be returned by the landlord at the end of the lease agreements. |
(b) | Pension plan arising from the acquisition of subsidiary Avon. |
(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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
15. | INVESTMENTS |
|
Parent |
|
|
September 30, 2023 |
December 31, 2022 |
Investments in subsidiaries, net of losses |
28,113,555 |
22,215,420 |
Information and changes in the balances for the nine-month periods ended September 30, 2023 and 2022 are as follows:
|
September 30, 2023 |
|||
|
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) |
13,643,155 |
(7,513,429) |
5,960,831 |
12,090,557 |
Shareholders’ equity interest (unsecured liabilities) |
13,643,155 |
(7,513,429) |
5,960,831 |
12,090,557 |
Fair value adjustment of acquired assets and liabilities |
- |
3,589,614 |
- |
3,589,614 |
Tax benefit from income tax of subsidiaries (b) |
- |
357,327 |
- |
357,327 |
Goodwill |
- |
12,076,057 |
- |
12,076,057 |
Total |
13,643,155 |
8,509,569 |
5,960,831 |
28,113,555 |
Net income (loss) for the period of subsidiaries |
7,466,145 |
(2,100,152) |
330,946 |
5,696,939 |
|
|
|
|
|
Balances as of December 31, 2022 |
5,992,009 |
10,500,599 |
5,722,812 |
22,215,420 |
Share of profit (loss) of equity investees |
7,466,145 |
(2,100,152) |
330,946 |
5,696,939 |
Translation adjustment |
(509,798) |
(33,658) |
(242,928) |
(786,384) |
Capital increase |
- |
158,377 |
150,000 |
308,377 |
Effect of hyperinflationary economy adjustment |
322,716 |
(42,483) |
- |
280,233 |
Contribution by the controlling company for purchase option plans granted to executive officers of the subsidiaries and other reserves net of tax effects |
30,546 |
34,830 |
- |
65,376 |
Hedge accounting impacts, net of tax effects |
492,106 |
(7,944) |
- |
484,162 |
Distribution of dividends |
(150,000) |
- |
- |
(150,000) |
Other impacts |
(569) |
- |
1 |
(568) |
Balance as of September 30, 2023 |
13,643,155 |
8,509,569 |
5,960,831 |
28,113,555 |
(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$ 1,689,388 (R$1,572,769 as of September 30, 2022) and Aesop (R$ 121,830 as of September 30, 2022), according to note 17. |
(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 if they are part of the same economic group and are in the same jurisdiction. This credit originated in the business combination of Avon and is expected to be realized from the operations in the United Kingdom. |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
September 30, 2022 |
|||
|
Natura Cosméticos S.,A.(a) |
Avon Products, Inc. |
Natura &Co International S.à.r.l. |
Total |
Percentage of interest |
100.00% |
100.00% |
100.00% |
|
Shareholders’ equity of the subsidiaries (unsecured liabilities) |
5,571,165 |
(5,482,440) |
5,754,654 |
5,843,379 |
Shareholders’ equity interest (unsecured liabilities) |
5,571,165 |
(5,482,440) |
5,754,654 |
5,843,379 |
Fair value adjustment of acquired assets and liabilities |
- |
4,088,089 |
- |
4,088,089 |
Tax benefit from income tax of subsidiaries (b) |
- |
266,124 |
- |
266,124 |
Goodwill |
- |
12,716,893 |
- |
12,716,893 |
Total |
5,571,165 |
11,588,666 |
5,754,654 |
22,914,485 |
Net income (loss) for the period of subsidiaries |
(39,895) |
(1,634,957) |
17,392 |
(1,657,460) |
|
|
|
|
|
Balances as of December 31, 2021 |
7,816,896 |
14,034,994 |
6,429,288 |
28,281,178 |
Share of profit (loss) of equity investees |
(39,895) |
(1,634,957) |
17,392 |
(1,657,460) |
Translation adjustment |
(1,736,126) |
(602,216) |
(697,348) |
(3,035,690) |
Effect of hyperinflationary economy |
77,541 |
(106,070) |
- |
(28,529) |
Contribution by the controlling company for purchase option plans granted to executive officers of the subsidiaries and other reserves net of tax effects |
65,258 |
25,186 |
- |
90,444 |
Hedge accounting impacts, net of tax effects |
(612,509) |
(1,390) |
5,322 |
(608,577) |
Write-off of the tax benefit arising from the calculation of income tax from subsidiaries |
- |
(126,881) |
- |
(126,881) |
Balance as of September 30, 2022 |
5,571,165 |
11,588,666 |
5,754,654 |
22,914,485 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Consolidated |
|||||||
|
Useful life range (in years) |
December 31, 2022 |
Additions |
Write-offs |
Transfers |
Transfer to asset held for sale |
Translation adjustment |
September 30, 2023 |
Cost: |
|
|
|
|
|
|
|
|
Vehicles |
2 to 5 |
74,362 |
5,202 |
(6,449) |
11,046 |
76 |
(11,286) |
72,951 |
Tooling |
3 |
204,177 |
- |
- |
6,871 |
- |
159 |
211,207 |
Tools and accessories |
3 to 20 |
175,452 |
7,206 |
(95) |
4,786 |
- |
(4,190) |
183,159 |
Facilities |
3 to 60 |
307,448 |
2,035 |
(1,096) |
8,041 |
(166) |
(916) |
315,346 |
Machinery and accessories |
3 to 15 |
2,272,136 |
6,101 |
(35,811) |
125,562 |
(25,065) |
(38,746) |
2,304,177 |
Leasehold improvements |
2 to 20 |
1,128,086 |
29,816 |
(65,582) |
9,149 |
(696,954) |
(21,645) |
382,870 |
Buildings |
14 to 60 |
1,916,939 |
13,254 |
(10,038) |
(4,275) |
(582,033) |
(42,875) |
1,290,972 |
Furniture and fixtures |
2 to 25 |
674,062 |
26,651 |
(67,212) |
5,856 |
(93,440) |
(23,626) |
522,291 |
Land |
- |
645,657 |
693 |
(633) |
- |
(267,425) |
(7,269) |
371,023 |
IT equipment |
3 to 15 |
627,770 |
4,849 |
(102,916) |
13,237 |
(52,223) |
(21,053) |
469,664 |
Other assets |
- |
26,230 |
- |
(12) |
- |
- |
(490) |
25,728 |
Projects in progress |
- |
580,627 |
285,409 |
(24,414) |
(200,735) |
(38,819) |
(23,766) |
578,302 |
Total cost |
|
8,632,946 |
381,216 |
(314,258) |
(20,462) |
(1,756,049) |
(195,703) |
6,727,690 |
|
|
|
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
|
|
|
Vehicles |
|
(38,070) |
(4,151) |
5,089 |
- |
(24) |
3,735 |
(33,421) |
Tooling |
|
(179,485) |
(9,520) |
- |
- |
- |
2,790 |
(186,215) |
Tools and accessories |
|
(135,440) |
(15,487) |
2 |
(12) |
- |
3,472 |
(147,465) |
Facilities |
|
(201,307) |
(16,821) |
1,088 |
(1,364) |
166 |
11,359 |
(206,879) |
Machinery and accessories |
|
(1,118,339) |
(169,238) |
31,299 |
(513) |
17,185 |
38,633 |
(1,200,973) |
Leasehold improvements |
|
(626,431) |
(56,289) |
63,062 |
(133) |
464,551 |
21,478 |
(133,762) |
Buildings |
|
(455,402) |
(97,034) |
9,750 |
20 |
301,177 |
12,626 |
(228,863) |
Furniture and fixtures |
|
(408,832) |
(64,907) |
66,087 |
- |
62,651 |
19,601 |
(325,400) |
IT equipment |
|
(475,668) |
(54,962) |
102,220 |
1,585 |
31,284 |
15,753 |
(379,788) |
Other assets |
|
(27,822) |
(411) |
- |
83 |
- |
2,423 |
(25,727) |
Total depreciation |
|
(3,666,796) |
(488,820) |
278,597 |
(334) |
876,990 |
131,870 |
(2,868,493) |
Net total |
|
4,966,150 |
(107,604) |
(35,661) |
(20,796) |
(879,059) |
(63,833) |
3,859,197 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(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 |
September 30, 2022 |
Cost: |
|
|
|
|
|
|
|
Vehicles |
2 to 5 |
38,902 |
1 |
(9,211) |
10,396 |
(550) |
39,538 |
Tooling |
3 |
191,840 |
- |
(2,124) |
1,066 |
(222) |
190,560 |
Tools and accessories |
3 to 20 |
110,998 |
11,282 |
(1,983) |
3,134 |
(33,640) |
89,791 |
Facilities |
3 to 60 |
303,452 |
60 |
(2,232) |
3,937 |
(8,540) |
296,677 |
Machinery and accessories |
3 to 15 |
1,959,943 |
21,685 |
(40,212) |
76,170 |
(157,334) |
1,860,252 |
Leasehold improvements |
2 to 20 |
1,128,504 |
28,830 |
(37,978) |
59,719 |
(129,079) |
1,049,996 |
Buildings |
14 to 60 |
1,982,245 |
6,708 |
(349) |
(30,964) |
(113,712) |
1,843,928 |
Furniture and fixtures |
2 to 25 |
660,126 |
44,767 |
(38,794) |
20,385 |
(68,511) |
617,973 |
Land |
- |
628,373 |
- |
- |
10,095 |
(14,063) |
624,405 |
IT equipment |
3 to 15 |
634,580 |
17,614 |
(74,862) |
(54,738) |
(80,538) |
442,056 |
Other assets |
- |
31,636 |
- |
(532) |
- |
4,958 |
36,062 |
Projects in progress |
- |
561,488 |
339,250 |
(2,107) |
(328,323) |
(64,876) |
505,432 |
Total cost |
|
8,232,087 |
470,197 |
(210,384) |
(229,123) |
(666,107) |
7,596,670 |
|
|
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
|
|
Vehicles |
|
(9,457) |
(8,591) |
8,397 |
(18) |
5,131 |
(4,538) |
Tooling |
|
(174,164) |
(5,622) |
2,124 |
- |
143 |
(177,519) |
Tools and accessories |
|
(65,740) |
(11,026) |
129,793 |
- |
(105,050) |
(52,023) |
Facilities |
|
(183,420) |
(13,410) |
1,866 |
276 |
4,606 |
(190,082) |
Machinery and accessories |
|
(728,408) |
(130,678) |
33,902 |
(2,217) |
96,759 |
(730,642) |
Leasehold improvements |
|
(602,622) |
(98,151) |
34,548 |
566 |
68,719 |
(596,940) |
Buildings |
|
(298,327) |
(58,179) |
195 |
13,160 |
55,462 |
(287,689) |
Furniture and fixtures |
|
(369,610) |
(64,345) |
32,663 |
2,245 |
33,331 |
(365,716) |
IT equipment |
|
(392,095) |
(69,409) |
76,041 |
67,761 |
59,969 |
(257,733) |
Other assets |
|
(30,836) |
(1,729) |
535 |
- |
1,287 |
(30,743) |
Total depreciation |
|
(2,854,679) |
(461,140) |
320,064 |
81,773 |
220,357 |
(2,693,625) |
Net total |
|
5,377,408 |
9,057 |
109,680 |
(147,350) |
(445,750) |
4,903,045 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Consolidated |
|||||||
|
Useful life range (in years) |
December 31, 2022 |
Additions |
Write-offs |
Transfers |
Transfer to asset held for sale |
Translation adjustment |
September 30, 2023 |
Cost: |
|
|
|
|
|
|
|
|
Software |
2.5 to 10 |
2,949,813 |
92,571 |
(467,843) |
181,912 |
(96,956) |
(55,859) |
2,603,638 |
Trademarks and patents (defined useful life) |
20 to 25 |
813,204 |
- |
- |
- |
(139,869) |
(27,026) |
646,309 |
Trademarks and patents (indefinite useful life) |
- |
4,818,030 |
- |
- |
- |
- |
32,834 |
4,850,864 |
Goodwill Avon |
- |
12,307,865 |
- |
- |
- |
- |
(231,808) |
12,076,057 |
Goodwill Emeis Brazil Pty Ltd. |
- |
124,315 |
- |
- |
- |
(124,315) |
- |
- |
Goodwill The Body Shop |
- |
1,645,527 |
7 |
- |
- |
- |
43,854 |
1,689,388 |
Goodwill acquisition of The Body Shop stores |
- |
1,456 |
- |
- |
- |
- |
- |
1,456 |
Goodwill acquisition of Singu stores |
- |
- |
52,049 |
- |
- |
- |
- |
52,049 |
Relationship with retail clients |
10 |
2,583 |
- |
- |
- |
(2,255) |
(8) |
320 |
Key money (indefinite useful life) |
- |
22,313 |
- |
- |
- |
- |
(723) |
21,590 |
Key money (defined useful life) |
3 to 18 |
7,828 |
383 |
(2,144) |
(378) |
- |
877 |
6,566 |
Relationship with franchisees and sub franchisees and sales representatives |
14 to 15 |
2,676,563 |
- |
(14,892) |
372 |
- |
(110,957) |
2,551,086 |
Technology developed (by acquired subsidiary) |
- |
1,457,039 |
- |
- |
- |
- |
(58,670) |
1,398,369 |
Other intangible assets and intangible under development |
- |
133,403 |
162,046 |
(5,563) |
(161,546) |
(9,797) |
(2,656) |
115,887 |
Total cost |
|
26,959,939 |
307,056 |
(490,442) |
20,360 |
(373,192) |
(410,142) |
26,013,579 |
|
|
|
|
|
|
|
|
|
Accumulated amortization: |
|
|
|
|
|
|
|
|
Software |
|
(1,720,169) |
(306,116) |
467,346 |
436 |
75,818 |
8,576 |
(1,474,109) |
Trademarks and patents |
|
(169,620) |
(23,992) |
- |
- |
45,298 |
22,890 |
(125,424) |
Key money |
|
(10,103) |
- |
2,114 |
- |
- |
1,423 |
(6,566) |
Relationship with retail clients |
|
(2,968) |
- |
- |
- |
2,255 |
393 |
(320) |
Relationship with franchisees and sub franchisees |
|
(918,994) |
(184,219) |
14,892 |
- |
- |
31,590 |
(1,056,731) |
Technology developed |
|
(874,225) |
(209,806) |
- |
- |
- |
35,253 |
(1,048,778) |
Other intangible assets |
|
(2,890) |
(2,661) |
2,175 |
- |
9,797 |
(10,926) |
(4,505) |
Total accrued amortization |
|
(3,698,969) |
(726,794) |
486,527 |
436 |
133,168 |
89,199 |
(3,716,433) |
Net total |
|
23,260,970 |
(419,738) |
(3,915) |
20,796 |
(240,024) |
(320,943) |
22,297,146 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(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 |
September 30, 2022 |
Cost: |
|
|
|
|
|
|
|
Software |
2.5 to 10 |
2,492,616 |
99,001 |
(28,661) |
419,249 |
(251,501) |
2,730,704 |
Trademarks and patents (defined useful life) |
20 to 25 |
889,834 |
- |
- |
- |
(140,495) |
749,339 |
Trademarks and patents (indefinite useful life) |
- |
5,888,623 |
- |
(43) |
- |
(1,202,292) |
4,686,288 |
Goodwill Avon |
- |
13,381,191 |
- |
- |
- |
(652,446) |
12,728,745 |
Goodwill Emeis Brazil Pty Ltd. |
- |
143,180 |
- |
- |
- |
(21,350) |
121,830 |
Goodwill The Body Shop |
- |
2,063,672 |
- |
- |
- |
(490,903) |
1,572,769 |
Goodwill acquisition of The Body Shop stores |
- |
1,456 |
- |
(290) |
- |
- |
1,166 |
Relationship with retail clients |
10 |
2,880 |
- |
- |
- |
(319) |
2,561 |
Key money (indefinite useful life) |
- |
24,985 |
- |
(123) |
- |
(2,949) |
21,913 |
Key money (defined useful life) |
3 to 18 |
14,363 |
- |
(4,655) |
- |
(2,442) |
7,266 |
Relationship with franchisees and sub franchisees and sales representatives |
14 to 15 |
2,990,558 |
- |
- |
- |
(315,726) |
2,674,832 |
Technology developed (by acquired subsidiary) |
- |
1,580,808 |
- |
- |
- |
(257,738) |
1,323,070 |
Other intangible assets and intangible under development |
- |
277,776 |
128,220 |
(1) |
(220,871) |
(16,899) |
168,225 |
Total cost |
|
29,751,942 |
227,221 |
(33,773) |
198,378 |
(3,355,060) |
26,788,708 |
|
|
|
|
|
|
|
|
Accumulated amortization: |
|
|
|
|
|
|
|
Software |
|
(1,369,767) |
(301,773) |
27,290 |
(64,504) |
170,022 |
(1,538,732) |
Trademarks and patents |
|
(143,186) |
(27,745) |
- |
- |
20,315 |
(150,616) |
Relationship with retail clients |
|
(3,218) |
(43) |
- |
- |
314 |
(2,947) |
Key money |
|
(16,517) |
- |
4,581 |
- |
2,466 |
(9,470) |
Relationship with franchisees and sub franchisees |
|
(729,049) |
(198,896) |
- |
- |
80,449 |
(847,496) |
Technology developed |
|
(632,326) |
(205,118) |
- |
- |
109,754 |
(727,690) |
Other intangible assets |
|
(296) |
(2,038) |
- |
(48) |
442 |
(1,940) |
Total accrued amortization |
|
(2,894,359) |
(735,613) |
31,871 |
(64,552) |
383,762 |
(3,278,891) |
Net total |
|
26,857,583 |
(508,392) |
(1,902) |
133,826 |
(2,971,298) |
23,509,817 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
During the nine-month period ended September 30, 2023, the slower economic recovery observed in the Company's retail operations resulting, among others, from a retraction in the sector's economic prospects affected significant assumptions used in the goodwill recoverability test for future profitability of the Group of Cash Generating Units (CGUs) associated with the operation of the subsidiary The Body Shop. In response to changes in these assumptions on which the recoverability of goodwill due to future profitability is more sensitive, the Company's management recalculated the recoverable value of the respective group of CGUs. The recoverable amount was determined based on value in use calculations, consistent with the methods used on December 31, 2022, disclosed in note 17 of the financial statements on that date.
As a result of this assessment, the need to recognize losses due to impairment of goodwill or other assets belonging to the group of CGUs as of September 30, 2023 was not identified. We will continue to monitor potential indications of impairment of goodwill, as well as factors that impact the significant assumptions used in the goodwill recoverability test based on future profitability, given that changes in such assumptions may have a significant effect in relation to the recoverability of goodwill.
a) Right-of-use
|
Consolidated |
||||||
|
Useful life in Years (a) |
December 31, 2022 |
Additions |
Write-offs |
Transfer to asset held for sale (b) |
Translation adjustment |
September 30, 2023 |
Cost: |
|
|
|
|
|
|
|
Vehicles |
3 |
164,661 |
42,143 |
(84,887) |
- |
(12,318) |
109,599 |
Machinery and equipment |
3 to 10 |
31,216 |
10,501 |
(1,536) |
- |
(4,596) |
35,585 |
Buildings |
3 to 10 |
1,570,088 |
167,935 |
(101,589) |
- |
(29,884) |
1,606,550 |
IT equipment |
10 |
29,052 |
2,259 |
(7,940) |
- |
(2,431) |
20,940 |
Retail stores |
3 to 10 |
3,361,432 |
242,298 |
(229,125) |
(1,388,973) |
(81,351) |
1,904,281 |
Software |
3 to 4 |
13,527 |
5,566 |
- |
- |
47 |
19,140 |
Tools and accessories |
3 |
498 |
14 |
(216) |
- |
(9) |
287 |
Total cost |
|
5,170,474 |
470,716 |
(425,293) |
(1,388,973) |
(130,542) |
3,696,382 |
|
|
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
|
|
Vehicles |
|
(105,457) |
(31,682) |
82,536 |
- |
13,264 |
(41,339) |
Machinery and equipment |
|
(13,787) |
(7,661) |
1,377 |
- |
4,298 |
(15,773) |
Buildings |
|
(556,655) |
(182,323) |
69,241 |
- |
(3,722) |
(673,459) |
IT equipment |
|
(23,957) |
(3,839) |
7,940 |
- |
1,992 |
(17,864) |
Retail stores |
|
(1,525,308) |
(285,042) |
229,125 |
563,908 |
50,369 |
(966,948) |
Software |
|
(3,121) |
(4,235) |
- |
- |
(50) |
(7,406) |
Tools and accessories |
|
(302) |
(124) |
216 |
- |
18 |
(192) |
Total accrued depreciation |
|
(2,228,587) |
(514,906) |
390,435 |
563,908 |
66,169 |
(1,722,981) |
Net total |
|
2,941,887 |
(44,190) |
(34,858) |
(825,065) |
(64,373) |
1,973,401 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Consolidated |
|||||
|
Useful life in Years (a) |
December 31, 2021 |
Additions |
Write-offs |
Translation adjustment |
September 30, 2022 |
Cost: |
|
|
|
|
|
|
Vehicles |
3 |
168,062 |
22,238 |
(21,436) |
(11,886) |
156,978 |
Machinery and equipment |
3 to 10 |
33,629 |
5,555 |
(8,837) |
(5,706) |
24,641 |
Buildings |
3 to 10 |
1,543,018 |
289,038 |
(143,757) |
(117,794) |
1,570,505 |
IT equipment |
10 |
31,803 |
1,127 |
(3,970) |
(1,305) |
27,655 |
Retail stores |
3 to 10 |
3,417,595 |
596,811 |
(281,434) |
(451,952) |
3,281,020 |
Tools and accessories |
3 |
1,053 |
- |
(396) |
(182) |
475 |
Total cost |
|
5,195,160 |
914,769 |
(459,830) |
(588,825) |
5,061,274 |
|
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
|
Vehicles |
|
(91,509) |
(32,731) |
20,358 |
8,376 |
(95,506) |
Machinery and equipment |
|
(17,133) |
(6,740) |
8,837 |
2,946 |
(12,090) |
Buildings |
|
(507,045) |
(221,164) |
115,629 |
66,635 |
(545,945) |
IT equipment |
|
(24,410) |
(5,024) |
3,968 |
3,016 |
(22,450) |
Retail stores |
|
(1,458,512) |
(438,675) |
278,640 |
221,569 |
(1,396,978) |
Tools and accessories |
|
(582) |
(167) |
396 |
107 |
(246) |
Total accrued depreciation |
|
(2,099,191) |
(704,501) |
427,828 |
302,649 |
(2,073,215) |
Net total |
|
3,095,969 |
210,268 |
(32,002) |
(286,176) |
2,988,059 |
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. |
c) |
Retail stores write-offs are associated with the transformation plan of the subsidiary The Body Shop, as mentioned in Note 28. |
|
Consolidated |
|
|
September 30, 2023 |
September 30, 2022 |
Amounts recognized in the statement of income for the nine-month periods ended September 30, 2023 and 2022: |
|
|
Financial expense on lease |
121,065 |
119,194 |
Amortization of right of use |
514,906 |
657,250 |
Appropriation in the result of variable lease installments not included in the measurement of lease liabilities |
8,652 |
45,524 |
Sublease revenue |
(15,583) |
(31,304) |
Short-term lease expenses and low-value assets |
30,303 |
59,143 |
Benefits granted by lessor related to Covid-19 |
(635) |
(13,641) |
Adjustment to recoverable value of right-of-use assets - impairment |
- |
(15,427) |
Other lease-related expenses |
4,214 |
- |
Total |
662,922 |
820,739 |
|
|
|
Amounts recognized in the financing activities in the cash flow statement: |
|
|
Lease payments (principal) |
553,864 |
767,097 |
Amounts recognized in the operating activities in the cash flow statement: |
|
|
Lease payments (interest) |
120,692 |
85,994 |
Variable lease payments, not included in the measurement of lease liabilities |
13,384 |
33,730 |
Short-term and low-value assets lease payments |
26,008 |
48,756 |
Other lease-related payments |
28,425 |
56,029 |
Total |
742,373 |
991,606 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
b) Lease liability
|
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
Current |
628,546 |
878,448 |
Non-current |
1,497,943 |
2,392,289 |
Total |
2,126,489 |
3,270,737 |
Below are the changes in lease liability balances for the nine-month periods ended September 30, 2023 and 2022:
|
Consolidated |
Balance as of December 31, 2021 |
3,547,862 |
New contracts and modifications |
882,521 |
Payments (principal) |
(820,859) |
Payments (interest) |
(85,994) |
Appropriation of financial charges |
143,205 |
Write-offs (a) |
(1,054) |
Translation adjustment |
(370,953) |
Balance as of September 30, 2022 |
3,294,728 |
|
|
Balance as of December 31, 2022 |
3,270,737 |
Transfer to held for sale |
(891,098) |
New contracts and modifications |
460,470 |
Payments (principal) |
(553,864) |
Payments (interest) |
(120,692) |
Appropriation of financial charges |
121,065 |
Write-offs (a) |
(48,501) |
Translation adjustment |
(111,628) |
Balance as of September 30, 2023 |
2,126,489 |
|
|
a) Mainly related to termination of agreements related to lease of stores.
The amount of lease liability payments, including interest payments due to maturity, is as follows:
|
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
Less than a year |
777,930 |
1,070,253 |
One to five years |
1,337,921 |
2,019,723 |
More than five years |
498,376 |
856,402 |
Total expected cash flow |
2,614,227 |
3,946,378 |
Interest to be incurred |
(487,738) |
(675,641) |
Total balance |
2,126,489 |
3,270,737 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Ref, |
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
|
Local currency: |
|
|
|
Financing Agency for Studies and Projects FINEP |
|
3,546 |
16,979 |
Debentures |
A |
1,890,179 |
1,913,204 |
Commercial Notes |
B |
501,240 |
519,044 |
Working capital – Avon |
|
- |
113,664 |
Working Capital - Natura &Co Luxembourg |
|
- |
1,304,425 |
Notes – Avon (1) |
|
132,668 |
1,421,272 |
Notes – Luxembourg |
C and D |
3,658,311 |
3,130,732 |
Working Capital |
|
24,959 |
- |
Total in local currency |
|
6,210,903 |
8,419,320 |
|
|
|
|
Foreign currency: |
|
|
|
Representative debt securities (“Notes”) |
|
- |
5,172,966 |
Total in foreign currency |
|
- |
5,172,966 |
Grand total |
|
6,210,903 |
13,592,286 |
|
|
|
|
Current |
|
141,128 |
331,151 |
Non-current |
|
6,069,775 |
13,261,135 |
|
|
|
|
Debentures |
|
|
|
Current |
|
68,189 |
77,601 |
Non-current |
|
1,852,699 |
1,835,603 |
(1) Balances recognized at fair value in the business combination with subsidiary Avon and subsequently measured at amortized cost.
Reference |
Currency |
Maturity |
Charges |
Effective interest rate |
Guarantees |
A |
Brazillian Real |
July 2027 to September 2032 |
CDI + 1.65%; CDI + 0.8%; IPCA + 6.8% and IPCA + 6.9% with bi-annual payments |
CDI+1.65%, CDI+0.8%, CDI+1.34% e CDI+1.60% |
Guarantee of Natura &Co Holding S.A. |
B |
Brazilian Real |
September 2025 |
CDI interest + 1.55% with bi-annual payments |
CDI+1.55% |
Guarantee of Natura &Co Holding S.A. |
C |
US Dollar |
April 2029 |
6.00% year with bi-annual payments |
6.125% per year |
Guarantee of Natura &Co Holding S.A. and Natura Cosméticos S.A. |
D |
US Dollar |
May 2028 |
4.125% year with bi-annual payments |
4.125% per year |
Guarantee of Natura &Co Holding S.A. and Natura Cosméticos S.A. |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
Changes in the balances of borrowing, financing and debentures for the nine-month periods ended September 30, 2023 and 2022 are as follows:
|
Consolidated |
Balance as of December 31, 2021 |
12,716,832 |
New borrowing and financing |
6,051,116 |
Amortizations |
(4,591,262) |
Appropriation of financial charges and funding costs |
532,028 |
Financial charges payment |
(573,042) |
Exchange rate variation |
(207,821) |
Translation adjustment |
(219,841) |
Balance as of September 30, 2022 |
13,708,010 |
|
|
Balance as of December 31, 2022 |
13,592,286 |
New borrowing and financing (a) |
1,506,701 |
Amortizations (b) |
(8,185,865) |
Reversal of fair value recognized in business combinations |
(206,228) |
Appropriation of financial charges and funding costs |
773,906 |
Financial charges payment |
(997,443) |
Exchange rate variation |
(336,884) |
Translation adjustment |
64,430 |
Balance as of September 30, 2023 |
6,210,903 |
a) |
The movement that occurred in 2023 is mainly due to the revolving credit line obtained by the subsidiary Natura &Co Luxembourg during the second quarter of 2023. |
b) |
The movement in amortizations in 2023 is substantially due to the debt rebalancing process initiated in the third quarter, where the Company carried out and settled (i) an offer to the holders of securities representing Avon's debt to repurchase approximately 90 % of securities issued for R$1,156,743 (comprising R$934,742 of principal, R$193,086 of premium and R$28,915 of accrued interest); and (ii) offer to holders of debt securities of Natura &Co Luxembourg (maturing in 2028 and 2029) to repurchase approximately 55% of the securities issued for R$ 4,142,906 (comprising R$ 4,049,329 of principal, R$5,800 premium and R$87,778 accrued interest). |
Other amortizations in the period also include the payment of working capital debt amounts at Natura &Co Luxembourg of R$ 2,402,790 (of which R$ 1,283,025 refer to the settlement of the open position in the credit line revolving loan and R$1,119,764 of working capital debt (“Club Loan”). |
The maturities of the non-current portion of borrowing, financing and debentures liabilities are as follows:
|
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
2025 |
601,924 |
- |
2026 |
- |
1,763,902 |
2027 onwards |
5,467,851 |
11,497,233 |
Total |
6,069,775 |
13,261,135 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
19.1 Covenants
As of September 30, 2023 and December 31, 2022, the Company and its subsidiaries no longer has the obligation to calculate and disclose restrictive clauses (covenants), which establish the maintenance of minimum financial indicators resulting from the quotient of dividing the net debt of treasury by the EBITDA of the last 12 months, based on the maturity and early settlement of the 9th and 10th series of debentures in December 2022.
The Company also has covenants related to non-financial indicators according to each Contract. The Company is in compliance with such covenants as of September 30, 2023 and December 31, 2022.
|
Parent |
Consolidated |
||
|
September 30, 2023 |
December 31, 2022 |
September 30, 2023 |
December 31, 2022 |
Domestic trade accounts payable |
2,945 |
3,402 |
4,193,338 |
4,644,534 |
Foreign trade accounts payable (a) |
2,897 |
3,049 |
775,860 |
877,496 |
Subtotal |
5,842 |
6,451 |
4,969,198 |
5,522,030 |
Reverse factoring operations (b) |
- |
- |
547,767 |
853,900 |
Total |
5,842 |
6,451 |
5,516,965 |
6,375,930 |
a) |
Refers to imports mainly denominated in US dollars, Euros and British pounds. |
b) |
The Company has contracts signed with first class financial institutions, mainly Banco Itaú Unibanco S.A. to directly structure a reverse factoring operation with the Company’s main suppliers. For more details on these transactions, please refer to note 3.15 of the annual financial statements for the year ended December 31, 2022. |
|
Parent |
Consolidated |
||
|
September 30, 2023 |
December 31, 2022 |
September 30, 2023 |
December 31, 2022 |
ICMS (ordinary) |
- |
- |
130,437 |
180,708 |
ICMS-ST provision (a) |
- |
- |
63,996 |
60,945 |
Taxes on invoicing abroad |
- |
- |
176,478 |
346,407 |
Withholding tax (IRRF) |
- |
- |
108,713 |
138,293 |
Other taxes payable - foreign subsidiaries |
- |
- |
136,172 |
147,056 |
Income tax |
11,822 |
12,051 |
11,822 |
18,170 |
PIS and COFINS payable |
206 |
140 |
206 |
140 |
INSS and service tax (ISS) payable |
85 |
- |
8,168 |
31,895 |
Other |
- |
- |
8,035 |
21,869 |
Total |
12,113 |
12,191 |
644,027 |
945,483 |
|
|
|
|
|
Current |
12,113 |
12,191 |
518,499 |
828,125 |
Non-current |
- |
- |
125,528 |
117,358 |
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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
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:
|
Consolidated |
|||||||||
|
Tax |
Civil |
Labor |
Contingent liabilities (business combination)(3) |
Total |
|||||
|
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1 |
187,052 |
181,693 |
557,675 |
305,690 |
186,118 |
233,474 |
406,428 |
597,585 |
1,337,273 |
1,318,442 |
Additions |
19,663 |
55,663 |
284,041 |
206,470 |
85,197 |
73,916 |
- |
- |
388,901 |
336,049 |
Reversals |
(4,801) |
(26,445) |
(8,620) |
(12,060) |
(34,610) |
(24,963) |
(25,622) |
(193,497) |
(73,653) |
(256,965) |
Payments/ utilization of judicial deposits (1) |
(51,587) |
(9,005) |
(293,003) |
(126,809) |
(41,660) |
(48,242) |
- |
- |
(386,250) |
(184,056) |
Inflation adjustment |
7,644 |
33,067 |
27,143 |
16,410 |
4,849 |
4,569 |
18,903 |
13,022 |
58,539 |
67,068 |
Exchange rate variation (OCI) |
(2,605) |
(27,351) |
(21,648) |
3,574 |
(11,116) |
(26,053) |
(16,406) |
(8,763) |
(51,775) |
(58,593) |
Transfers (2) |
- |
24 |
- |
(965) |
14 |
- |
- |
- |
14 |
(941) |
Balance as of September 30 |
155,366 |
207,646 |
545,588 |
392,310 |
188,792 |
212,701 |
383,303 |
408,347 |
1,273,049 |
1,221,004 |
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
421,311 |
321,152 |
Non-current |
|
|
|
|
|
|
|
|
851,738 |
899,852 |
(1) |
Tax payments refer mainly to the completion of the administrative procedure with the State of Amazonas for the effective settlement of tax amnesties, using judicial deposits, filed by the Company in the year 2022. Civil payments refer mainly to costs incurred in the settlement of lawsuits related to talc (see Note 36). |
|
(2) | Reversals of contingent liabilities (business combination) with Avon refer mainly to the change in estimates for tax, civil and labor lawsuits. | |
(3) | The business combination amounts as of September 30, 2023, arising from the business combination with Avon are segregated between tax (R$374,421) and labor (R$8,882) lawsuits. | |
(4) | During the year ended December 31, 2022, certain balances included in provision for tax risks were reclassified to align the Group's subsidiaries, as disclosed in explanatory note no. 2. |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
a) Disputes related to talc (Civil)
The subsidiary Avon Products, Inc (“Avon”) has been named a defendant in numerous personal injury lawsuits filed in U.S. courts, alleging that certain talc products the company sold in the past were contaminated with asbestos. Many of these actions involve several co-defendants, including manufacturers of cosmetics and manufacturers of other products that, unlike the subsidiary Avon’s Products, were designed to contain asbestos. As of September 30, 2023, there were 317 individual cases pending against the subsidiary Avon (during the nine-month period ended September 30, 2023, 163 new cases were started and 74 were dismissed, settled or otherwise resolved).
In December 2022, a case, titled Chapman, et al, v, Avon Products, Inc. et al., No, 22STCV05968, resulted in an adverse jury verdict after a trial, with the jury awarding the plaintiffs a total of US$36,0 million in compensatory damages and US$10,3 million in punitive damages against the subsidiary Avon. The Company believes it has strong grounds to seek the annulment of the judgment in this case and in January 2023 began the process of appealing the verdict seeking annulment in the trial court. On March 1, 2023, following post-trial arguments, the trial court issued a conditional order reducing the compensatory damages award against the subsidiary Avon to US$29,3 million. Plaintiffs have challenged the reduction of the award as to subsidiary Avon and have asserted that the reduction should only apply to subsidiary Avon’s co-defendant. The trial court has resolved this issue in the Plaintiffs’ favor and, once judgment is entered, the case will proceed on appeal.
22.2. Contingencies assessed as possible risk of loss
The Company has administrative and judicial contingencies which the expectation of loss, assessed by the Company's Management and supported by legal advisors, is classified as possible and, therefore, no provision has been recorded. As of September 30, 2023, the amounts of contingencies classified with probability of possible loss are as follows:
Consolidated |
||
|
September 30, 2023 |
December 31, 2022 |
Tax |
9,121,646 |
8,480,614 |
Civil |
261,546 |
161,859 |
Labor |
182,022 |
164,462 |
Total contingent liabilities |
9,565,214 |
8,806,935 |
|
Parent |
Consolidated |
||
|
September 30, 2023 |
December 31, 2022 |
September 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Pension and post-employment health care plans (a) |
- |
- |
490,734 |
463,948 |
Deferred revenue from performance obligations with customers (b) |
- |
- |
208,070 |
313,204 |
Provision for incentives to consultants |
- |
- |
155,627 |
217,349 |
Provision for operating expenses (marketing / technology, etc,) (c) |
- |
- |
394,287 |
604,064 |
Provision for store renovation |
- |
- |
98,659 |
116,137 |
Crer Para Ver (d) |
- |
- |
52,838 |
87,420 |
Provision for restructuring (e) |
21,598 |
39,846 |
133,700 |
188,317 |
Insurance payables |
1,912 |
- |
63,968 |
69,364 |
Other Liabilities (f) |
1,017 |
1,017 |
132,824 |
190,823 |
Total |
24,527 |
40,863 |
1,730,707 |
2,250,626 |
|
|
|
|
|
Current |
6,741 |
23,113 |
986,337 |
1,499,060 |
Non-current |
17,786 |
17,750 |
744,370 |
751,566 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
a) | As of September 30, 2023, there is R$ 259,618 (R$ 282,295 as of December 31, 2022) referring to pension plans, and R$30,604 referring to post-employment plans (R$28,456 as of December 31, 2022) of subsidiary Avon, and R$ 140,420 (R$129,697 as of December 31, 2022) referring to post-employment assistance plans of the subsidiary Natura Cosméticos and R$ 60,092 (R$ 51,956 as of December 31, 2022) 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$ 115,552 (R$ 190,790 as of December 31, 2022) is referring to subsidiary Avon, R$ 81,789 (R$ 93,761 as of December 31, 2022) referring to the consolidated subsidiary Natura Cosméticos and R$ 10,729 (R$ 28,653 as of December 31, 2022) referring to subsidiary Natura &Co International. |
c) | Refers to the Company's operating provision 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) | Provision for costs directly related to the integration plan and changes in the organizational structure substantially of the subsidiary Avon and review of the Group's corporate structure. |
f) | Refers to miscellaneous provision such as indemnities and non-current contractual obligations. |
24.1 Treasury shares
On September 30, 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 |
(377,585) |
(9,282) |
24.58 |
Acquired |
5,391,900 |
120,300 |
22.31 |
Balance as of September 30, 2022 |
9,913,855 |
262,360 |
26.46 |
|
|
|
|
Balance as of December 31, 2022 |
9,913,855 |
262,360 |
26.46 |
Used |
(3,692,633) |
(97,670) |
26.45 |
Balance as of September 30, 2023 |
6,221,222 |
164,690 |
26.47 |
As a result of the Aesop sale, the balances of this previous subsidiary were not disclosed in the consolidated balance sheet. The results originating from this segment were classified as discontinued operations in the income statement for the nine-month periods ended September 30, 2023, and 2022.
The other operating segments did not change their composition and information by geographic area in relation to that disclosed in the financial statements for the year ended December 31, 2022.
Net revenue by segment is as follows for the nine-month period ended September 30, 2023:
Natura &Co Latam – 68.8%
Avon International – 20.2%
The Body Shop – 11.0%
The following tables summarize the financial information related to the nine-month periods ended September 30, 2023, and 2022 and the year ended December 31, 2022:
25.1 Operating segments
|
September 30, 2023 |
||||||
|
Reconciliation to net income (loss) for the period |
||||||
|
Net Revenue |
Performance assessed by the company |
Depreciation and amortization |
Discontinued operations |
Financial results |
Income tax |
Net income (loss) |
Natura &Co Latam |
15,558,622 |
1,686,135 |
(711,167) |
- |
(1,911,998) |
856,325 |
(80,705) |
Avon International 1 |
4,572,712 |
36,750 |
(511,706) |
(276,138) |
(513,732) |
(126,937) |
(1,391,763) |
The Body Shop 1 |
2,479,624 |
85,214 |
(507,647) |
- |
(61,455) |
113,877 |
(370,011) |
Aesop |
- |
- |
- |
(4,655) |
- |
- |
(4,655) |
Corporate expenses |
- |
(230,909) |
- |
7,236,815 |
543,864 |
(62,706) |
7,487,064 |
Consolidated |
22,610,958 |
1,577,190 |
(1,730,520) |
6,956,022 |
(1,943,321) |
780,559 |
5,639,930 |
|
September 30, 2022 |
||||||
|
Reconciliation to (loss) net income for the period |
||||||
|
Net Revenue |
Performance assessed by the company |
Depreciation and amortization |
Discontinued operations |
Financial results |
Income tax |
Net income (loss) |
Natura &Co Latam |
16,084,095 |
1,482,601 |
(659,802) |
- |
(1,037,052) |
(33,571) |
(247,824) |
Avon International 1 |
5,133,340 |
153,600 |
(507,849) |
(181,192) |
(447,660) |
(42,911) |
(1,026,012) |
The Body Shop 1 |
2,902,874 |
120,700 |
(511,349) |
- |
(52,738) |
95,712 |
(347,675) |
Aesop 1 |
- |
- |
|
28,727 |
- |
- |
28,727 |
Corporate balances |
- |
(466,197) |
282 |
- |
196,670 |
(106,587) |
(375,832) |
Consolidated |
24,120,309 |
1,290,704 |
(1,678,718) |
(152,465) |
(1,340,780) |
(87,357) |
(1,968,616) |
|
September 30, 2023 |
December 31, 2022 |
||||||
|
Non-current assets |
Total assets |
Current liabilities |
Non-current liabilities |
Non-current assets |
Total assets |
Current liabilities |
Non-current liabilities |
Natura &Co Latam |
15,333,459 |
28,466,537 |
5,079,758 |
6,745,995 |
18,838,366 |
28,675,608 |
8,363,130 |
10,164,706 |
Avon International 1 |
10,310,165 |
12,553,234 |
2,289,428 |
849,513 |
11,197,014 |
14,259,571 |
1,894,856 |
1,838,328 |
The Body Shop 1 |
6,568,023 |
7,643,102 |
1,354,411 |
1,559,664 |
6,565,913 |
7,928,270 |
1,292,903 |
1,669,625 |
Aesop |
- |
- |
- |
- |
1,621,126 |
2,735,417 |
731,018 |
776,512 |
Corporate balances |
896,034 |
1,907,913 |
886,768 |
3,760,005 |
341,444 |
1,086,524 |
1,055,961 |
4,547,167 |
Consolidated |
33,107,681 |
50,570,786 |
9,610,365 |
12,915,177 |
38,563,863 |
54,685,390 |
13,337,868 |
18,996,338 |
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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
25.2 Net revenue and non-current assets by geographic region
|
Net revenue |
Non-current assets |
||
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
December 31, 2022 |
|
Asia |
1,252,635 |
1,452,713 |
807,339 |
1,284,783 |
North America |
3,328,496 |
3,795,601 |
6,106,012 |
6,261,545 |
Mexico |
2,454,520 |
2,633,802 |
3,907,975 |
3,631,768 |
Other |
873,976 |
1,161,799 |
2,198,037 |
2,629,777 |
South America |
12,598,409 |
12,735,823 |
11,447,601 |
14,508,816 |
Brazil |
8,633,017 |
7,941,767 |
9,879,348 |
12,656,298 |
Argentina |
1,948,915 |
2,383,295 |
496,472 |
694,172 |
Other |
2,016,477 |
2,410,761 |
1,071,781 |
1,158,346 |
Europe, Middle East and Africa (EMEA) |
5,169,485 |
5,750,491 |
14,117,347 |
15,271,251 |
United Kingdom |
1,356,302 |
1,831,687 |
10,295,957 |
10,894,799 |
Other |
3,813,183 |
3,918,804 |
3,821,391 |
4,376,452 |
Oceania |
261,933 |
385,681 |
629,381 |
1,237,468 |
Consolidated |
22,610,958 |
24,120,309 |
33,107,681 |
38,563,863 |
No individual or aggregate customer (economic group) represents more than 10% of the Company’s net revenue.
|
Consolidated |
|
Gross revenue: |
September 30, 2023 |
September 30, 2022 |
Direct Selling |
23,996,577 |
25,421,369 |
Retail |
2,483,858 |
2,462,811 |
Online |
1,428,620 |
1,676,401 |
Other sales |
1,656,624 |
1,981,948 |
Subtotal |
29,565,679 |
31,542,529 |
|
|
|
Returns and cancellations |
(332,263) |
(428,411) |
Commercial discounts and rebates |
(678,335) |
(718,269) |
Taxes on sales |
(5,944,123) |
(6,275,540) |
Subtotal |
(6,954,721) |
(7,422,220) |
Total net revenue |
22,610,958 |
24,120,309 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Parent |
Consolidated |
||
Classified by function |
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
Cost of sales |
- |
- |
7,793,624 |
9,216,929 |
Selling, marketing and logistics expenses |
- |
- |
9,751,909 |
10,342,316 |
Administrative, R&D, IT, and project expenses |
53,695 |
252,861 |
4,057,422 |
4,281,688 |
Total |
53,695 |
252,861 |
21,602,955 |
23,840,933 |
|
|
|
|
|
Classified by nature |
|
|
|
|
Cost of sales |
- |
- |
7,793,624 |
9,216,929 |
Raw material/packaging material/resale |
- |
- |
6,910,866 |
8,334,433 |
Employee benefits expense (note 28) |
- |
- |
412,429 |
415,418 |
Depreciation and amortization |
- |
- |
137,954 |
133,380 |
Other |
- |
- |
332,375 |
333,698 |
|
|
|
|
|
Selling, marketing and logistics expenses |
- |
- |
9,751,909 |
10,342,316 |
Logistics costs |
- |
- |
1,318,400 |
1,596,375 |
Personnel expenses (note 28) |
- |
- |
2,762,320 |
2,799,679 |
Marketing, sales force and other selling expenses |
- |
- |
4,931,809 |
5,166,204 |
Depreciation and amortization |
- |
- |
739,380 |
780,058 |
|
|
|
|
|
Administrative, R&D, IT and project expenses |
53,695 |
252,861 |
4,057,422 |
4,281,688 |
Innovation expenses |
- |
- |
144,456 |
144,824 |
Personnel expenses (note 28) |
37,047 |
48,019 |
1,632,706 |
1,610,231 |
Restructuring expenses |
1,939 |
125,933 |
1,939 |
128,993 |
Other administrative expenses |
13,052 |
77,826 |
1,460,132 |
1,631,108 |
Depreciation and amortization |
1,657 |
1,083 |
818,189 |
766,532 |
|
|
|
|
|
Total |
53,695 |
252,861 |
21,602,955 |
23,840,933 |
|
Parent |
Consolidated |
||
|
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
Payroll, profit sharing and bonuses |
16,213 |
31,289 |
3,479,943 |
3,486,693 |
Pension Plan |
- |
- |
125,233 |
122,740 |
Share-based payments and charges on restricted shares, net of tax |
11,040 |
3,924 |
121,188 |
71,170 |
Health care, food and other benefits |
1,366 |
2,602 |
448,139 |
508,001 |
Charges, taxes and social contributions |
769 |
1,194 |
459,469 |
481,038 |
Social security |
7,659 |
9,010 |
173,483 |
155,686 |
Total |
37,047 |
48,019 |
4,807,455 |
4,825,328 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
28.1 Share-based payments
Information regarding share-based payments was presented in the Company's financial statements for the year ended December 31, 2022, in note 28.
The expense related to stock options, restricted shares and performance shares, including social security charges, recognized in the nine-month period ended September 30, 2023, was R$ 11,040 and R$ 121,188 for parent company and consolidated level (R$3,924 and R$71,170 as of September 30, 2022), respectively.
On May 5, 2023, the following awards were granted under the “Co-Investment Plan” and the “Long-Term Incentive Plan”:
a) 3,819,700 restricted shares with grant date fair value of R$11.20 that generally vest in tranches over 1 to 3 years, subject to the participants remaining in employment over the vesting period.
b) 8,736,315 performance shares with grant date fair values of R$11.20 to R$11.55 that vest at the end of a 3-year period, subject to the participants remaining in employment and certain performance conditions being met.
c) 30,000 options that vest in tranches over 3 to 4 years, subject to the participants remaining in employment over the vesting period.
These awards will be settled in Natura &Co Holding S.A.’s shares.
On August 30, 2023, the Company completed Aesop sale. In connection with this, 1,057,814 share-based awards granted to Aesop employees between 2021 and 2023 (of which 182,482 restricted shares and 875,332 performance shares) were vested and released. On the sale conclusion date, 600,000 options held by the Aesop employees were vested but remain outstanding and available for exercise as of September 30, 2023.
The number of awards in this note is showed using equivalent B3 shares to ensure consistency, although some awards are settled in American Depositary Receipts (ADRs).
|
Parent |
Consolidated |
||
|
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
Financial expenses (debt interest) |
- |
- |
(723,946) |
(519,106) |
Interest on short-term investments and other |
743 |
14,071 |
642,271 |
330,069 |
Gains (losses) on financial activities, net |
- |
- |
336,884 |
207,821 |
Losses with derivatives on exchange rate variations on financial activities, net |
- |
- |
(331,204) |
(212,874) |
Losses on derivatives on interest payments and other financial activities, net |
- |
(5,266) |
(1,547,988) |
(311,427) |
Inflation adjustment of provision for tax, civil and labor risks and tax liabilities |
- |
3,353 |
(58,539) |
(67,068) |
Leases expenses |
(83) |
(20) |
(121,065) |
(119,194) |
Other financial expenses |
(3,177) |
(18,480) |
(26,881) |
(216,228) |
Hyperinflationary economy adjustment |
- |
- |
(107,666) |
(137,482) |
Other gains (losses) from exchange rate variation on operating activities |
(1,179) |
5,448 |
(5,187) |
(295,291) |
Financial results |
(3,696) |
(894) |
(1,943,321) |
(1,340,780) |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
|
Consolidated |
|
|
September 30, 2023 |
September 30, 2022 |
Other operating income, net |
|
|
Result on write-off of property, plant and equipment |
1,399 |
- |
Tax credits (a) |
25,379 |
60,731 |
Tax benefit from amnesty program (b) |
- |
102,469 |
Reversal for tax, labor and civil contingencies provision |
20,973 |
- |
Reversal for impairment provision |
31,076 |
- |
Revenue with sale of the customer portfolio |
8,077 |
6,587 |
Royalty income (c) |
- |
119,438 |
Other operating income |
16,840 |
29,461 |
Total other operating income |
103,744 |
318,686 |
|
|
|
Other operating expenses, net |
|
|
Result on write-off of property, plant and equipment |
- |
(8,092) |
Crer para Ver (d) |
(13,663) |
(37,260) |
Impairment provision |
(56,179) |
(12,510) |
Expenses with sale of customer portfolio |
(12,644) |
- |
Transformation and integration plan (e) |
(541,440) |
(366,124) |
Restructuring expenses (f) |
(73,988) |
(49,819) |
Other operating expenses |
(106,556) |
(47,672) |
Total other operating expenses |
(804,470) |
(521,478) |
Other operating expenses, net |
(700,726) |
(202,792) |
a) |
Refers mainly to PIS and COFINS credits. |
b) |
Refers to tax benefits in Brazil arising from the adhesion to state tax amnesty programs by the subsidiaries Natura Cosméticos S.A. and Avon Cosméticos Ltda. |
c) |
Refers to revenue from royalties received by subsidiary Avon from its representative in Japan, after a legal dispute as mentioned in explanatory note 22 of the Company's interim financial information for the period ended September 30, 2022, issued on August 11, 2022. |
d) |
Refers to appropriation of operating income obtained on the sales of the non-cosmetic product line called "Crer Para Ver" to the Natura Institute, specifically earmarked for social projects aimed at developing the quality of education. |
e) |
Expenses related to execution of Natura &Co Latam integration plan (“ELO project”) and integration of the subsidiary Avon International. |
f) |
Expenses mainly related to the execution of transformation plan of the subsidiary The Body Shop. |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
The basic earnings per share are calculated by dividing the profit (loss) attributable to the Company’s shareholders by the weighted average number of outstanding common shares, excluding common shares purchased by the Company and held as treasury shares.
|
Consolidated |
|
|
September 30, 2023 |
September 30, 2022 |
Gain (loss) attributable to the Company’s controlling shareholders |
5,640,151 |
(1,969,592) |
Weighted average of the number of issued common shares |
1,385,675,623 |
1,381,559,530 |
Weighted average treasury shares |
(7,808,628) |
(9,632,014) |
Weighted average of the number of outstanding common shares |
1,377,866,995 |
1,371,927,516 |
Earnings (loss) per share – R$ |
4.0934 |
(1.4356) |
The diluted earnings per share are calculated by adjusting the weighted average number of common shares outstanding, assuming the conversion of all potential common shares that would cause dilution.
|
Consolidated |
|
September 30, 2023 |
Gain attributable to the Company’s controlling shareholders |
5,640,151 |
Weighted average of the number of outstanding common shares |
1,377,866,995 |
Stock Options and restricted shares adjustment |
5,536,171 |
Weighted average number of common shares considered to diluted earnings per share |
1,383,403,166 |
Diluted earnings per share - R$ |
4.0770 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
In the course of the Company’s operations, rights and obligations are generated between related parties, arising from administrative expenses and provision of services.
32.1. Receivables and payables with related parties
The Company had transactions with related parties recognized as presented below:
|
Parent |
|
|
September 30, 2023 |
December 31, 2022 |
Current assets: |
|
|
Avon Products, Inc. (a) e (b) |
47,431 |
47,593 |
Natura Cosméticos S.A. – Argentina (a) |
3,843 |
4,022 |
Natura Cosméticos S.A. – Perú (a) |
481 |
501 |
Natura Cosméticos S.A – Colombia (a) |
339 |
353 |
The Body Shop International (a) and (b) |
9,537 |
9,656 |
Aesop Holdings Ltd. (UK) (a) and (b) |
- |
2,652 |
Indústria e Comércio de Cosméticos Natura Ltda. |
94 |
- |
Natura &Co Luxembourg Holdings S.à.r.l. (d) |
1,549 |
1,552 |
Total |
63,274 |
66,329 |
|
|
|
Current liabilities: |
|
|
Natura Cosméticos S.A. (a) and (b) |
52,854 |
1,472 |
Indústria e Comércio de Cosméticos Natura Ltda. (a) |
830 |
404 |
Natura Comercial (a) |
14 |
- |
Avon Products, Inc. (b) |
50,120 |
50,120 |
The Body Shop International (b) |
11,463 |
11,463 |
Natura &Co Luxembourg Holdings S.à.r.l. (d) |
164,811 |
- |
Aesop Holdings Ltd. (UK) |
- |
1,117 |
Total current liabilities |
280,092 |
64,576 |
a) |
Refers to the allocation of expenses related to the purchase options and restricted shares plans. |
b) |
Refers to the transfer of shared expenses. |
c) |
On December 31, 2022 refers to interest on own equity. |
d) |
Refers to reimbursement of expenses for issuing bonds. |
In the nine-month periods ended September 30, 2023 and 2022, there were no significant transactions of the parent company with related parties that passed through the income statement. The main transactions that occurred in the period refer to the transfer of expenses related to the stock option plans and shares restricted.
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
32.2. Uncontrolled and unconsolidated transactions with related parties
Instituto Natura holds shares in the Essential Investment Fund, As of September 30, 2023, the balance is R$ R$ 8,435 (R$ 6,805 as of December 31, 2022).
On June 5, 2012, an agreement was signed between Indústria e Comércio de Cosméticos Natura Ltda. and Bres Itupeva Empreendimentos Imobiliários Ltda., (“Bres Itupeva”), for the construction and rental of a goods processing, storage and distribution center (HUB), in Itupeva, São Paulo. In 2019, Bres Itupeva assigned its credits to BRC Securitizadora S/A to whom the Company makes monthly payments. Messrs. Antônio Luiz da Cunha Seabra, Guilherme Peirão Leal and Pedro Luiz Barreiros Passos, members of Natura &Co Holding S.A. controlling group, indirectly control Bres Itupeva. The amount involved in the transaction is recorded under the heading “Right to Use – Buildings”, the balance in the nine-month period ended on September 30, 2023 was R$55,495 (R$63,665 under the heading “Buildings” of Fixed Assets, on December 31, 2022) and in the nine-month period ended September 30, 2023, the amount paid as rent was R$12,431 (R$11,791 in the nine-month period ended September 30, 2022).
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 specific purpose Company (Bresco IX) held indirectly by Messrs. Antônio Luiz da Cunha Seabra, Guilherme Peirão Leal and Pedro Luiz Barreiros Passos as lessor and surface-right owner (Co-Chairmen from the Board of Directors of the Company and shareholders members of Natura &Co Holding S.A., the parent Company. The transaction was signed with the purpose of expanding the Company's distribution network and increasing its logistical efficiency through the installation of a new distribution center in the State of Alagoas. The amount involved in the transaction is recorded under the heading “Right of Use - Buildings” in the amount of R$30,853, in the nine-month period ended September 30, 2023, the total amount paid as rent was R$6,293 (there was no disbursement during the nine-month period ending September 30, 2022).
On May 12, 2021, the transaction was concluded between the Company, as lessee, and Bresco Logística Fundo de Investimento Imobiliário, as lessor, indirectly owned by Messrs. Antônio Luiz da Cunha Seabra, Guilherme Peirão Leal and Pedro Luiz Barreiros Passos. (Co-Chairmen from the Board of Directors of Natura &Co Holding S.A. and shareholders members of Natura &Co Holding S.A). The transaction was signed with the purpose of maintaining the Company's distribution center activities in Canoas, Rio Grande do Sul. The amount involved in the transaction is recorded under the heading “Right of Use - Buildings” at R$3,845, in the nine-month period ending September 30, 2023, the total amount paid as rent was R$2,126 (R$1,048 in the nine-month period ending September 30, 2022).
In the nine-month period ended September 30, 2023, the Company and its subsidiaries transferred to the Natura Institute as a donation associated with the net result of sales of the Natura Crer Para Ver product line the amount of R$45,000 (R$35,000 in the nine-month period ending September 30, 2022).
The Company has a policy for transactions with related parties, in addition to an internal control structure to support the identification, monitoring and approvals of transactions between related parties.
32.3. Key management personnel compensation
The total compensation of the key management personnel is as follows:
|
September 30, 2023 |
September 30, 2022 |
||||
|
Compensation |
Compensation |
||||
|
Fixed |
Variable |
Total |
Fixed |
Variable |
Total |
Board of Directors |
6,354 |
9,999 |
16,353 |
10,605 |
147,413 |
158,018 |
Executive Board |
21,242 |
171,423 |
192,665 |
26,045 |
40,608 |
66,653 |
|
27,596 |
181,422 |
209,018 |
36,650 |
188,021 |
224,671 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
The totals in the table above include the employer social security charges.
The amounts include increases and / or reversals of the cumulative expense recognized in the previous years due to reassessments of the number of share-based awards expected to vest and re-estimation of the social security charges expected to be payable by the Company on vesting.
Amounts for the nine-month period ended September 30, 2022 include termination benefits for certain key management employees related to the review process of Natura &Co's corporate structure.
The variable compensation incurred during the nine-month period ended on September 30, 2023 includes variable compensation associated to the Aesop sale.
In the ordinary course of its business, the Company enters into long-term agreements for provision of manufacturing, transportation, information technology services and electric power supply (with physical delivery, for its manufacturing activities). The agreements have termination clauses for noncompliance with essential obligations. In general, the minimum agreed upon is acquired and therefore there are no liabilities recorded in addition to the amount recognized on the accrual basis.
Total minimum supply payments, measured at nominal value, according to the contract, are as follows:
|
Consolidated |
|
|
September 30, 2023 |
December 31, 2022 |
Less than one year |
644,216 |
614,075 |
One to five years |
600,219 |
659,626 |
Above 5 years |
45,441 |
49,331 |
Total |
1,289,876 |
1,323,032 |
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 September 30, 2023 and December 31, 2022, insurance coverage is as follows:
Item |
Type of coverage |
Amount insured |
|
September 30, 2023 |
December 31, 2022 |
||
Industrial complex and administrative sites |
Any damages to buildings, facilities, inventories, and machinery and equipment |
4,607,425 |
4,924,868 |
Vehicles |
Fire, theft and collision for the vehicles insured by the Company |
215,428 |
221,523 |
Loss of profits |
No loss of profits due to material damages to facilities buildings and production machinery and equipment |
2,056,000 |
2,056,000 |
Freight |
Damages to products in transit |
90,237 |
97,308 |
Civil liability |
Protection against error or complaints in the exercise of professional activity that affect third parties |
1,429,819 |
1,991,888 |
Environmental liability |
Protection against environmental accidents that may result in environmental lawsuits |
30,000 |
30,000 |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
The following table presents the investment and financing transactions that do not involve the use of cash and cash equivalents and are therefore presented separately as additional information to the cash flow statements:
|
Parent |
Consolidated |
||
|
September 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
Non-cash items |
|
|
|
|
Hedge accounting impact, net of tax effects |
- |
89 |
484,162 |
(608,488) |
Net effect of acquisition of property, plant and equipment and intangible assets not yet paid |
- |
- |
52,991 |
59,550 |
On August 30, 2023, the Company concluded the sale of the subsidiary Aesop to L’Oreal for a total consideration of R$12,396,226, after obtaining all relevant regulatory approvals. The total gain earned on the write-off of the subsidiary's assets and liabilities and recognized as discontinued operations net of income tax and social contribution was R$7,231,416, which includes the reclassification of balance sheet conversion gains accumulated and recognized in other comprehensive results of R$115,168.
In addition to the gain obtained with the derecognition of assets and liabilities, certain incremental costs involving legal advisors and bank fees in the transaction were incurred and classified as part of discontinued operations.
The breakdown of results presented in discontinued operations in the income statement for the period is presented below:
|
September 30, 23 |
September 30, 2022 |
Consideration received for the sale to the previously controlled Aesop |
12,396,226 |
- |
Net assets of the previously controlled Aesop, derecognized |
(1,140,751) |
- |
Conversion gains rolled into other comprehensive income |
115,172 |
- |
Incremental transaction costs on sale |
(273,208) |
- |
Income tax and social contribution |
(3,866,019) |
- |
Net gain on the sale of the previously controlled Aesop |
7,231,420 |
- |
|
|
|
|
|
|
Loss before taxes from discontinued operations |
(274,837) |
(135,046) |
Income tax and social contribution |
(561) |
(17,419) |
Loss from discontinued operations |
(275,398) |
(152,465) |
|
|
|
Total discontinued operations |
6,956,022 |
(152,465) |
NATURA &CO HOLDING S.A. | |
NOTES TO THE INDIVIDUAL AND CONSOLIDATED INTERIM ACCOUNTING INFORMATION FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 | |
(Amounts in thousands of Reais - R$, except as mentioned otherwise) |
The results in discontinued operations, which includes the operational results of the previous controlled subsidiary Aesop for the nine-month periods ended on September 30, 2023 and 2022 are presented below:
Description |
September 30, 2023 |
September 30, 2022 |
Net Revenue |
1,587,314 |
1,839,130 |
Cost of sales |
(221,479) |
(218,340) |
Gross profit |
1,365,835 |
1,620,790 |
|
|
|
Operating (expenses) Income |
|
|
Selling, marketing, and logistics expenses |
(847,916) |
(974,890) |
Administrative, R&D, IT and projects expenses |
(453,120) |
(536,318) |
Impairment loss on trade receivable |
(250) |
(838) |
Other operating income (expenses), net(a) |
(287,041) |
(207,269) |
|
|
|
Operating loss before financial result |
(222,492) |
(98,525) |
|
|
|
Financial income |
22,200 |
28,916 |
Financial expenses |
(74,544) |
(65,437) |
|
|
|
Loss before income tax and social contribution |
(274,836) |
(135,046) |
Income tax and social contribution |
(562) |
(17,419) |
|
|
|
Loss for the period |
(275,398) |
(152,465) |
a) |
In addition to Aesop's results, the amount includes R$270,894 of expenses in the nine-month period ended September 30, 2023 (R$181,192 in the nine-month period ended September 30, 2022) related to costs incurred in the resolution of legal proceedings associated with the operation that the subsidiary Avon maintained in North America, which was sold prior to the acquisition of the subsidiary Avon by the Company. The Company presents these effects as part of its discontinued operations since it considers the discontinued operations of the subsidiary Avon as an extension of the Company and because it assesses that this presentation reliably represents the essence of the associated transaction. |
The net cash flows incurred by the discontinued operations are:
|
September 30, 2023 |
September 30, 2022 |
|
|
|
Operational activities |
(7,289,148) |
84,857 |
Investment activities |
12,254,162 |
(116,919) |
Financing activities |
(166,180) |
(139,111) |
Net cash generated (consumed) |
4,798,834 |
(171,173) |
Potential sale of subsidiary The Body Shop
As announced through regulatory filings and on the date of this interim financial information, the terms and conditions regarding a potential sale of The Body Shop are under negotiation and there is no guarantee that a transaction will be completed.
49 |
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