SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number:
(Exact name of Registrant as specified in its charter)
Natura &Co Holding Inc.
(Translation of Registrant’s name into English)
Federative Republic of Brazil
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
New York Stock Exchange*
New York Stock Exchange
* Not for trading purposes, but only in connection with the listing of ADSs pursuant to the requirements of the Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
The number of outstanding shares as of December 31, 2021 was
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Yes ☒ No ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☐ U.S. GAAP
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
NATURA &CO HOLDING S.A.
TABLE OF CONTENTS
|Glossary of Certain Terms Used in This Annual Report
|Presentation of Financial and Other Information
|Item 1. Identity of Directors, Senior Management and Advisers
|A. Directors and Senior Management||1|
|Item 2. Offer Statistics and Expected Timetable
|A. Offer Statistics||1|
|B. Method and Expected Timetable||1|
|Item 3. Key Information
|A. Selected Financial Data||1|
|B. Capitalization and Indebtedness||4|
|C. Reasons for the Offer and Use of Proceeds||4|
|D. Risk Factors||5|
|Item 4. Information on the Company
|A. History and Development of the Company||50|
|B. Business Overview||57|
|C. Organizational Structure||106|
|D. Property, Plant and Equipment||106|
|Item 4A. Unresolved Staff Comments
|Item 5. Operating and Financial Review and Prospects
|A. Operating Results||108|
|B. Liquidity and Capital Resources||127|
|C. Research and development, Patents and Licenses, Etc||138|
|D. Trend Information||138|
|E. Critical Accounting Policies and Estimates||139|
|Item 6. Directors, Senior Management and Employees
|A. Directors and Senior Management||139|
|C. Board Practices||150|
|E. Share Ownership||159|
|Item 7. Major Shareholders and Related Party Transactions
|A. Major Shareholders||160|
|B. Related Party Transactions||163|
|C. Interests of Experts and Counsel||164|
|Item 8. Financial Information
|A. Consolidated Statements and Other Financial Information||165|
|B. Significant Changes||168|
|Item 9. The Offer and Listing
|A. Offering and Listing Details||168|
|B. Plan of Distribution||168|
|D. Selling Shareholders||171|
|F. Expenses of the Issue||171|
|Item 10. Additional Information
|A. Share Capital||172|
|B. Memorandum and Articles of Association||172|
|C. Material Contracts||186|
|D. Exchange Controls||186|
|F. Dividends and Paying Agents||196|
|G. Statement by Experts||196|
|H. Documents on Display||197|
|I. Subsidiary Information||197|
|Item 11. Quantitative and Qualitative Disclosures About Market Risk
|Item 12. Description of Securities Other Than Equity Securities
|A. Debt Securities||201|
|B. Warrants and Rights||201|
|C. Other Securities||201|
|D. American Depositary Shares||201|
|Item 13. Defaults, Dividend Arrearages and Delinquencies
|B. Arrears and Delinquencies||203|
|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
|A. Material Modifications to Instruments||203|
|B. Material Modifications to Rights||203|
|C. Withdrawal or Substitution of Assets||203|
|D. Change in Trustees or Paying Agents||203|
|E. Use of Proceeds||203|
|Item 15. Controls and Procedures
|A. Disclosure Controls and Procedures||204|
|B. Management’s Annual Report on Internal Control over Financial Reporting||204|
|C. Attestation Report of the Registered Public Accounting Firm||204|
|D. Changes in Internal Control over Financial Reporting||204|
|Item 16. Reserved
|Item 16A. Audit Committee Financial Expert
|Item 16B. Code of Ethics
|Item 16C. Principal Accountant Fees And Services
|Item 16D. Exemptions from the Listing Standards for Audit Committees
|Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|Item 16F. Change in Registrant’s Certifying Accountant
|Item 16G. Corporate Governance
|Item 16H. Mine Safety Disclosure
|Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
|Item 17. Financial Statements
|Item 18. Financial Statements
|Item 19. Exhibits
|Index to Consolidated Financial Statements
This annual report on Form 20-F contains forward-looking statements. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial conditions, or other matters, based on current beliefs of our management as well as assumptions made by, and information currently available to, our management. Forward-looking statements can be identified by the fact that they do not relate only to historical or current facts and may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions, although the absence of any such words or expressions does not mean that a particular statement is not a forward-looking statement. These statements are subject to various risks and uncertainties, many of which are outside the parties’ control. Therefore, you should not place undue reliance on these statements. Factors that could cause actual plans and results to differ materially from those in these statements include, but are not limited to, risks and uncertainties detailed in the section of this annual report entitled “Item 3. Key Information—D. Risk Factors” and the following factors:
The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the parties’ businesses, including those described in this annual report, and information contained in this annual report.
Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this offering memorandum might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.
We are under no obligation, and we expressly disclaim any obligation, to update, alter or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise. Persons reading this document are cautioned not to place undue reliance on these forward-looking statements, which only speak as of the date hereof.
All references in this annual report to the “Company,” “we,” “us” and “our” refer to Natura &Co, as defined below, unless the context otherwise requires. All references herein to the “real,” “reais” or “R$” are to the Brazilian real, the official currency of Brazil. All references to “U.S. dollars,” “dollars” or “U.S.$” are to United States dollars, the official currency of the United States. All references to “pounds,” “pound sterling” or “£” are to the British pound sterling, the official currency of the United Kingdom. All references to “ARS$” are to the Argentinian peso, the official currency of Argentina.
In addition, as used in this annual report, the following defined terms have the following respective meanings:
“ABIHPEC” means Associação Brasileira da Indústria de Higiene Pessoal, Perfumaria e Cosméticos, or the Brazilian Personal Hygiene, Perfumery and Cosmetics Association.
“ADSs” means American Depositary Shares, each representing two Natura &Co Holding Shares.
“Aesop” means Emeis Holding Pty Ltd and its consolidated subsidiaries.
“Aesop International” means all operations under our Aesop brand, except those located in Brazil and Latin America.
“Avon” means Avon Products, Inc., a New York corporation, and its consolidated subsidiaries.
“Avon International” means our segment comprising all operations under our Avon brand, except those located in Brazil and Latin America.
“Avon Luxembourg” means Avon Luxembourg Holdings S.à r.l. and its subsidiaries.
“Avon Shares” means both Avon Common Shares and Avon Preferred Shares.
“Avon Common Shares” means the shares of common stock, par value U.S.$0.25 per share, of Avon.
“Avon Preferred Shares” means the shares of Series C Preferred Stock, par value U.S.$1.00 per share, of Avon.
“B3” means the B3 S.A. – Brasil, Bolsa, Balcão, or the Brazilian Stock Exchange.
“BNDES” means the Banco Nacional de Desenvolvimento Econômico e Social, or the Brazilian National Economic and Social Development Bank.
“Brazil” means the Federative Republic of Brazil and the phrase “Brazilian government” refers to the federal government of Brazil.
“Brazilian Capital Markets Law” means Brazilian Law No. 6,385/76, as amended.
“Brazilian Central Bank” means Banco Central do Brasil, or the Central Bank of Brazil.
“Brazilian Corporation Law” means Brazilian Law No. 6,404/76, as amended.
“CDI” means the Certificado de Depósito Interbancário, or the Interbank Deposit Certificate, means the “over extra group” daily average rate for interbank deposits, expressed as an annual percentage, based on 252 business days, calculated daily and published by B3, or any other index as may be further used in substitution thereof.
“CMN” means the Conselho Monetário Nacional, or the Brazilian Monetary Council.
“consultants” are independent sales representatives who, although they are not employed by Natura &Co, sell Natura &Co products to customers of Natura &Co.
“CVM” means the Comissão de Valores Mobiliários, or the Brazilian Securities Commission.
“DOJ” means the United States Department of Justice.
“EU” means the European Union.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“FGV” means the Fundação Getulio Vargas.
“FTC” means the United States Federal Trade Commission.
“IASB” means the International Accounting Standards Board.
“IBGE” means Instituto Brasileiro de Geografia e Estatística, or the Brazilian Institute of Geography and Statistics.
“IFRS” means International Financial Reporting Standards as issued by the IASB.
“IT” means information technology.
“Merger Sub I” means Nectarine Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of Natura &Co Holding.
“Merger Sub II” means Nectarine Merger Sub II, Inc., a Delaware corporation and a direct wholly owned subsidiary of Merger Sub I.
“Merger Subs” means Merger Sub I and Merger Sub II, collectively.
“Natura” means Natura Cosméticos S.A., a corporation (sociedade anônima) incorporated under the laws of Brazil, and its consolidated subsidiaries (excluding Aesop, The Body Shop and their respective subsidiaries).
“Natura &Co” means (1) prior to the consummation of the Transaction, Natura Cosméticos S.A. and its consolidated subsidiaries, and (2) after the consummation of the Transaction, Natura &Co Holding S.A. and its consolidated subsidiaries, including Natura and Avon.
“Natura &Co LATAM” means our segment including all operations under our Natura, Avon, Aesop and The Body Shop brands located in Brazil and Latin America.
“Natura &Co Luxembourg” means Natura &Co Luxembourg Holdings S.à r.l., a private limited company (société à responsabilité limitée) organized under the laws of the Grand Duchy of Luxembourg.
“Natura &Co Holding” means Natura &Co Holding S.A., a corporation (sociedade anônima) incorporated under the laws of Brazil, excluding its subsidiaries.
“Natura &Co Holding By-Laws” means the by-laws of Natura &Co Holding.
“Natura &Co Holding Shares” means common shares of Natura &Co Holding.
“Natura Cosméticos” means Natura Cosméticos S.A., a corporation (sociedade anônima) incorporated under the laws of Brazil, excluding its subsidiaries.
“Natura Cosméticos Shares” means common shares of Natura Cosméticos.
“Natura Entities” means Natura &Co, Natura &Co Holding, Nectarine Merger Sub I, Inc. and Nectarine Merger Sub II, Inc., collectively.
“Natura Indústria” means Indústria e Comércio de Cosméticos Natura Ltda.
“Novo Mercado Rules” means the listing rules of the Novo Mercado segment of the B3.
“NYSE” means the New York Stock Exchange.
“Sales representatives” or “representatives” means independent contractors who are not employees of Avon or any of its subsidiaries, but directly or indirectly purchase products or services from Avon or any of its subsidiaries.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Shareholders’ Agreement” means the Shareholders’ Agreement of Natura &Co Holding which was entered into on September 4, 2019, as amended.
“SKU” means stock keeping unit, a unique identifier assigned to each of our products for inventory-keeping purposes.
“The Body Shop” means The Body Shop International Limited, a private limited company registered in England and Wales and its subsidiaries.
“The Body Shop International” or “TBS International” means our segment including all operations under our The Body Shop brand, except those located in Brazil and Latin America.
“Transaction” means the transaction effected by the Agreement and Plan of Mergers, dated May 22, 2019, as amended on October 3, 2019 and as may be further amended from time to time in accordance with its terms (the “Merger Agreement”) entered into by Avon, Natura Cosméticos, Natura &Co Holding and the Merger Subs pursuant to which (i) Natura &Co Holding, after the completion of certain restructuring steps, held all issued and outstanding shares of Natura Cosméticos, (ii) Merger Sub II merged with and into Avon, with Avon surviving the merger, and (iii) Merger Sub I merged with and into Natura &Co Holding, with Natura &Co Holding surviving the merger, and as a result of which each of Avon and Natura Cosméticos became a wholly owned direct subsidiary of Natura &Co Holding. The Transaction closed on January 3, 2020.
“United Kingdom” or “UK” means the United Kingdom of Great Britain and Northern Ireland.
“United States” or “U.S.” means the United States of America.
“U.S. GAAP” or “GAAP” means generally accepted accounting principles in the U.S.
Consolidated Financial Statements
Natura &Co Holding, formerly Natura Holding S.A., was incorporated on January 21, 2019 as part of a corporate restructuring process initiated by Natura Cosméticos on May 22, 2019, as described below under “—The Transaction.”
On November 13, 2019, the controlling shareholders of Natura Cosméticos contributed to Natura &Co Holding shares corresponding to approximately 57.3% of Natura Cosméticos’ capital. On November 13, 2019, all of the Natura Cosméticos shares held by the noncontrolling shareholders and not previously held by Natura &Co Holding were contributed to Natura &Co Holding in exchange for shares of Natura &Co Holding, and Natura Cosméticos became a wholly owned subsidiary of Natura &Co Holding (collectively referred to as the “Corporate Restructuring”). This contribution became effective on December 17, 2019.
Prior to the Corporate Restructuring, Natura &Co Holding had limited or no assets, operations, activities or liabilities and no material contingent liabilities or commitments.
The Corporate Restructuring was accounted for using the predecessor method of accounting, through which, the historical operations of Natura &Co are deemed to be those of Natura &Co Holding. Accordingly, the consolidated financial statements included in this annual report reflect:
The consolidated financial information presented in this annual report has been derived from the audited consolidated financial statements as of December 31, 2021 and 2020 and for each of the years in the three-year period ended December 31, 2021 and the related notes thereto of Natura &Co Holding, using the predecessor method of accounting, as explained above, included in this annual report.
The consolidated financial statements of Natura &Co Holding and Natura &Co are prepared in accordance with IFRS as issued by the IASB and are presented in Brazilian reais.
We maintain our books and records in Brazilian reais, which is the functional currency and presentation currency of the consolidated financial statements of Natura &Co Holding and Natura &Co. Unless otherwise noted, our financial information presented herein as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019 is stated in Brazilian reais, our reporting currency.
Avon, Natura Cosméticos, Natura &Co Holding and the Merger Subs entered into an Agreement and Plan of Mergers, dated May 22, 2019, as amended on October 3, 2019 and November 5, 2019, or the Merger Agreement, pursuant to which (i) Natura &Co Holding, after the completion of certain restructuring steps, held all issued and outstanding shares of Natura Cosméticos, (ii) Merger Sub II merged with and into Avon, with Avon surviving the merger, and (iii) Merger Sub I merged with and into Natura &Co Holding, with Natura &Co Holding surviving the merger, and as a result of which each of Avon and Natura Cosméticos became a wholly owned direct subsidiary of Natura &Co Holding.
The Transaction closed on January 3, 2020. Accordingly, our results of operations and financial condition for the historical periods discussed in this section prior to the Transaction do not reflect or include the results of operations or any assets or liabilities of Avon and purchase accounting adjustments, including the recognition of separately identifiable intangible assets, other fair value adjustments and goodwill. We began consolidating Avon and its subsidiaries as from January 3, 2020, and, accordingly, our results of operations and financial condition as of and for periods beginning on or after such date may not necessarily be comparable to our results of operations and financial condition for historical periods prior to the Transaction, including those discussed below.
On December 31, 2021, the exchange rate for reais into U.S. dollars was R$5.581 to U.S.$1.00, R$5.197 to U.S.$1.00 as of December 31, 2020, R$4.031 to U.S.$1.00 as of December 31, 2019, R$3.875 to U.S.$1.00 as of December 31, 2018, and R$3.308 to U.S.$1.00 as of December 31, 2017, in each case, as reported by the Brazilian Central Bank. The real/U.S. dollar exchange rate fluctuates widely, and the selling rate as of December 31, 2021 may not be indicative of future exchange rates. See “Item 3. Key Information—A. Selected Financial Data—Exchange Rates” for information regarding exchange rates for the Brazilian currency since January 1, 2017.
Solely for the convenience of the reader, we have transl