| Significant accounting policies | 2. Significant accounting policies
a. Basis of preparation The Group’s consolidated financial
statements for 2022 include the financial statements of Betterware de México, S.A.P.I. de C.V., and subsidiaries as described in
note 2d (the “consolidated financial statements”). The preparation of the consolidated
financial statements in accordance with International Financial Reporting Standards requires the use of critical accounting estimates.
In addition, it requires Management to exercise judgment in the process of applying the Group’s accounting policies. The areas that involve
a high level of judgment or complexity, as well as areas where the judgments and estimates are significant to the consolidated financial
statements are disclosed in note 4. Until 2020, Betterware’s financial
year was a 52- or 53-weeks period ending on the Sunday nearest to December 31, however, due to the fact that in 2021 Betterware placed
debt on the Mexican Stock Exchange, the financial period must be presented in compliance with the Mexican General Corporate Law, which
must coincide with the calendar year, therefore the financial information of 2022 and 2021 is presented as of December 31, 2022 (the “2022
period”) and as of December 31, 2021 (the “2021 period”) and for the years then ended. The financial year of 2020 consisted
of 53 weeks ended on January 3, 2021 (the “2020 period”), which were not adjusted to calendar year because the effect of the
change is not significant.
b. Basis of accounting & correction of immaterial errors The Group’s consolidated financial
statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) or and the interpretations
issued by IFRS Interpretations Committee (“IFRIC”) applicable to companies that report under IFRS. The financial statements
comply with IFRS issued by the International Accounting Standards Board (“IASB”). The Group made a correction of immaterial
errors related to its December 31, 2021 and January 3, 2021 consolidated financial statements as summarized below. The Group performed
a materiality evaluation in accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”)
No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements
in Current Year Financial Statements, and concluded that the misstatement was immaterial to its previously issued financial statements.
However, as the impact of correcting the cumulative misstatement during 2022 would have been material to net earnings, the Company revised
its previously issued financial statements as of and for the years ended December 31, 2021 and January 3, 2021: Consolidated Statement of Financial
Position as of December 31, 2021
Assets Adjusted Previously Presented Difference Reference
Current assets:
Trade accounts receivable, net $ 745,593 778,054 (32,461 ) a
Inventories 1,286,155 1,339,378 (53,223 ) a, b
Prepaid expenses 35,596 69,224 (33,628 ) c
Total current assets 3,352,747 3,472,059 (119,312 )
Total assets $ 5,185,229 5,304,541 (119,312 )
Liabilities and stockholders’ equity
Current liabilities:
Accrued expenses $ 159,354 142,169 17,185 b
Provisions 118,468 115,192 3,276 d
Income tax payable 97,634 88,679 8,955 f
Total current liabilities $ 2,449,919 2,420,503 29,416
Non-current liabilities:
Deferred income tax $ 38,975 80,907 (41,932 ) a, b, c, d
Total non-current liabilities 1,535,107 1,577,039 (41,932 )
Total liabilities $ 3,985,026 3,997,542 (12,516 )
Stockholder’s equity
Capital stock $ 321,312 294,999 26,313 e
Retained earnings (deficit) 856,994 990,103 (133,109 ) a, b, c, d, e, f
Equity attributable to owners of the Group 1,185,548 1,292,344 (106,796 )
Total stockholders’ equity 1,200,203 1,306,999 (106,796 )
Total liabilities and stockholders’ equity $ 5,185,229 5,304,541 (119,312 ) Consolidated Statement of Profit
or Loss and Other Comprehensive Income for the year ended December 31, 2021
Adjusted Previously Presented Difference Reference
Net revenue $ 10,067,683 10,039,668 28,015 a
Cost of sales 4,498,008 4,399,164 98,844 a, b
Gross profit 5,569,675 5,640,504 (70,829 )
Administrative expenses 1,247,742 1,247,436 306 d
Selling expenses 1,256,289 1,264,581 (8,292 ) c
Distribution expenses 463,779 463,779 -
2,967,810 2,975,796 (7,986 )
Operating income 2,601,865 2,664,708 (62,843 )
Income before income taxes 2,562,495 2,625,338 (62,843 )
Current income tax 791,856 782,901 8,955 f
Deferred income tax 22,700 41,553 (18,853 ) a,b,c,d
Net income for the year $ 1,747,939 1,800,884 (52,945 ) Consolidated Statement of Financial
Position as of January 3, 2021
Assets Adjusted Previously Presented Difference Reference
Current assets:
Trade accounts receivable, net $ 735,026 757,806 (22,780 ) a
Inventories, net 1,284,672 1,274,026 10,646 a
Prepaid expenses 52,581 94,501 (41,920 ) c
Total current assets 2,852,516 2,906,570 (54,054 )
Total assets $ 4,359,706 4,413,760 (54,054 )
Liabilities and stockholders’ equity
Current liabilities:
Provisions 153,978 151,008 2,970 d
Total current liabilities $ 2,870,367 2,867,397 2,970
Non-current liabilities:
Deferred income tax $ 39,852 56,959 (17,107 ) a, b, c, d
Total non-current liabilities 607,363 624,470 (17,107 )
Total liabilities $ 3,477,730 3,491,867 (14,137 )
Stockholder’s equity
Capital stock 308,035 281,722 26,313
Retained earnings (deficit) $ (334,769 ) (268,539 ) (66,230 ) a, b, c, d, e
Equity attributable to owners of the Group 881,976 921,893 (39,917 )
Total stockholders’ equity 881,976 921,893 (39,917 )
Total liabilities and stockholders’ equity $ 4,359,706 4,413,760 (54,054 ) Consolidated Statement of Profit or
Loss and Other Comprehensive Income for the year ended January 3, 2021.
Adjusted Previously Presented Difference Reference
Net revenue $ 7,237,628 7,260,408 (22,780 ) a
Cost of sales 3,280,348 3,290,994 (10,646 ) a
Gross profit 3,957,280 3,969,414 (12,134 )
Administrative expenses 667,647 664,677 2,970 d
Selling expenses 895,275 853,355 41,920 c
Distribution expenses 331,023 331,023 -
1,893,945 1,849,055 44,890
Operating income 2,063,335 2,120,359 (57,024 )
Income before income taxes 824,105 881,129 (57,024 )
Deferred income tax (51,173 ) (34,066 ) (17,107 )
Net income for the year $ 298,444 338,361 (39,917 ) The adjustments relate to the following
matters:
(a) Cut-off
for revenue where control was not transferred to the customer.
(b) Cost
of inventory overstated on the international freight standard cost assumption; offset by
overstated accruals liabilities on import expenses.
(c) Cost
of catalogues that had a non-GAAP treatment as prepaids and were expensed at the same time
the revenues were realized; instead of when catalogues were received as IFRS states.
(d) Immaterial
provisions for labor matters.
(e) Reclassification
between capital stock and retained earnings for combination instead of consolidation of capital
in 2020.
(f) Accrual
for the tax contingency explained in note 28 was not recorded previously.
c. Basis of measurement The Group’s consolidated financial
statements have been prepared on the historical cost basis except for certain financial instruments measured at fair value. Functional and presentation currency These consolidated financial statements
are presented in Mexican pesos (“Ps or $”), which is the Group presentation currency. The amounts included in the consolidated
financial statements of each of the Group’s subsidiaries must be measured using the currency of the primary economic environment
in which the entity operates (“functional currency”). All financial information presented in Mexican pesos has been rounded
to the nearest thousand (except where otherwise specified). When referring to U.S. dollars (“US$”), means thousands of United
States dollars. Consolidated statement of profit or
loss and other comprehensive income The Group opted to present a single
consolidated statement of profit or loss and comprehensive income, consolidating the presentation of profit and loss, including an operating
profit line item, and comprehensive income in the same statement. Due to the commercial activities of the Group, costs and expenses presented
in the consolidated statements of profit or loss and other comprehensive income were classified according to their function. Accordingly,
cost of sales and operating expenses were presented separately.
d. Basis of consolidation The
Group’s consolidated financial statements, incorporate the financial statements of the entities controlled by Betterware. Control
is achieved when the Group:
● Has
the power over the investee
● Is
exposed, or has rights, to variable returns from its involvement with the investee
● Has
the ability to use its power to affect its returns The Group reassesses whether or not
it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed
above. When the Group has less than a majority
of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it
the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances
an assessing whether or not the Group´s voting rights in an investee are sufficient to give power, including:
● The
size of the Group’s holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
● Potential
voting rights held by the Group, other vote holders or other parties;
● Rights
arising from other contractual arrangements; and
● Any
additional facts and circumstances that indicate that the Group has, or does not have, the
current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders’ meetings. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, the results
of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the Group gains control until the
date when the Group ceases to control the subsidiary. Where necessary, adjustments are made
to the financial statements of subsidiaries to bring the accounting policies used into line with the Group’s accounting policies. All intragroup assets and liabilities,
equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation. Non-controlling interests in subsidiaries
are identified separately from the Group’s equity therein. Those interests of non-controlling shareholders that are present ownership
interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at
the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice
of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially measured at fair value. Subsequent
to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling
interests’ share of subsequent changes in equity. Profit or loss and each component of
other comprehensive income are attributed to the owners of the Group and to the non-controlling interests. Total comprehensive income
of the subsidiaries is attributed to the owners of the Group and to the non-controlling interests even if this results in the non-controlling
interests having a deficit balance. Changes in the Group’s interests
in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group’s
interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized
directly in equity and attributed to the owners of the Group. When the Group loses control of a subsidiary,
the gain or loss on disposal recognized in profit or loss is calculated as the difference between (i) the aggregate of the fair value
of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including
goodwill), less liabilities of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive
income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of
the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as required/permitted by applicable IFRS
Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IFRS 9, Financial Instruments Betterware, has control over its subsidiaries
due to the shares and voting rights acquired, which generate rights over the variable returns from the subsidiaries, and has the ability
to influence those returns through his power over them. As of December 31, 2022, 2021 and 2020 the percentage of participation that it
maintains over its subsidiaries are the following:
Operating Functional %
Participation
The
Group’s companies: Country currency 2022 2021 2020
Home organization (“Betterware”):
Betterware de México, S.A.P.I. de C.V. Mexico Peso 100 % 100 % 100 %
BLSM Latino América Servicios, S.A. de C.V. Mexico Peso 99 % 99 % 99 %
Betterware de Guatemala, S.A. Guatemala Quetzal 70 % 70 % -
Programa Lazos, S.A. de C.V. Mexico Peso 70 % 70 % -
GurúComm, S.A.P.I. de C.V. (1) Mexico Peso - 60 % -
Innova Catálogos, S.A. de C.V. (2) Mexico Peso - 70 % -
Betterware Ningbo Trading Co, LTD. China Yuan 100 % 100 % -
Finayo, S.A.P.I. de C.V. SOFOM ENR Mexico Peso 100 % - -
Beauty and personal care (B&PC) (“JAFRA”):
Jafra México Holding Company, B.V. Holanda Euro 100 % - -
Distribuidora Comercial JAFRA, S.A. de C.V. Mexico Peso 100 % - -
Jafra Cosmetics International, S.A. de C.V. Mexico Peso 100 % - -
Jafra Cosmetics, S.A. de C.V. Mexico Peso 100 % - -
Serviday, S.A. de C.V. Mexico Peso 100 % - -
Jafrafin, S.A. de C.V. Mexico Peso 100 % - -
Distribuidora Venus, S.A. de C.V. Mexico Peso 100 % - -
Jafra Cosmetics International, Inc. United States Dollar 100 % - -
(1) GurúComm was part of the Group until March 28, 2022.
(2) Innova Catálogos was part of the Group until November
18, 2022. As
of December 31, 2022, 2021 and January 3, 2021, there are no significant restrictions for investment in shares of the subsidiary companies
previously mentioned.
e. Cash and cash equivalents and restricted cash Cash and cash equivalents consist mainly
of bank deposits and short-term investments in securities, highly liquid and easily convertible into cash with original maturities of
three months or less and that are subject to insignificant risks of changes in value. Cash is stated at nominal value and cash equivalents
are valued at fair value. Any cash or cash equivalent that cannot be disposed of in less than three months is classified as restricted
cash. In cases where the definition of cash
and cash equivalents is not met due to restrictions, the amounts are presented in a separate line in the consolidated statements of financial
position and is excluded from cash and cash equivalents in the consolidated statements of cash flows.
f. Financial instruments Financial assets and financial liabilities
are recognized in the Group’s consolidated statement of financial position when the Group becomes a party to the contractual provisions
of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognized immediately in profit or loss.
g. Financial assets All recognized financial assets are
measured subsequently in their entirety at either amortized cost or fair value, depending on the classification of the financial assets. Classification of financial assets
Debt
instruments that meet the following conditions are measured subsequently at amortized cost:
● the
financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;
and
● the
contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest (“SPPI”) on the principal amount
outstanding. Debt
instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):
● the
financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling the financial assets; and
● the
contractual terms of the financial asset give rise on specified dates to cash flows that
are SPPI on the principal amount outstanding. As
of December 31, 2022, 2021 and January 3, 2021, the Group does not have this type of instruments. By
default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL). Despite
the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset:
● the
Group may irrevocably elect to present subsequent changes in fair value of an equity investment
in other comprehensive income if certain criteria are met; and
● the
Group may irrevocably designate a debt investment that meets the amortized cost or FVTOCI
criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch. As of December 31, 2022, 2021 and January
3, 2021, the Group does not have this type of instruments. Amortized cost and effective interest
method The effective interest method is a
method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The amortized cost of a financial asset
is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization
using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance.
The gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss allowance. Foreign exchange gains and losses The carrying amount of financial assets
that are denominated in a foreign currency is determined in that foreign currency and translated at the closing exchange rate of each
reporting period. Specifically, for financial assets measured at amortized cost that are not part of a designated hedging relationship,
exchange differences are recognized in profit or loss. Impairment of financial assets The Group always recognizes lifetime
expected credit losses (“ECL”) for trade receivables. The expected credit losses on these financial assets are estimated using
the simplified approach by using a provision matrix, estimated based on historical credit loss experience based on the past due status
of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. For financial assets that are not subject
to the simplified approach, the Group recognizes lifetime ECL when there has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group
measures the loss allowance for that financial instrument at an amount equal to 12-month ECL. Lifetime ECL represents the expected
credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month
ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible
within 12 months after the reporting date. Write-off policy The Group writes off a financial asset
when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery,
i.e., when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables,
when the amounts are over one year past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement
activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized
in profit or loss.
h. Financial liabilities All financial liabilities are measured
subsequently at amortized cost using the effective interest method or at FVTPL.
● Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes
in fair value recognized in profit or loss to the extent that they are not part of a designated hedging relationship. As of December 31,
2022, 2021 and January 3, 2021, the Group does not have this type of instruments. Financial liabilities and equity Classification as debt or equity
● Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability
and an equity instrument. As of December 31, 2022, 2021 and January 3, 2021, the Group does not have this type of instruments. Financial liabilities measured subsequently
at amortized cost Financial liabilities that are not
(i) contingent consideration of an acquirer in a business condensation combination and consolidation, (ii) held-for-trading, or (iii)
designated as at FVTPL, are measured subsequently at amortized cost using the effective interest method. The effective interest method is a
method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form
an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial
liability, or (where appropriate) a shorter period, to the amortized cost of a financial liability. Foreign exchange gains and losses For financial
liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign
exchange gains and losses are determined based on the amortized cost of the instruments. These foreign exchange gains and losses are recognized
in the ‘Foreign exchange (loss) gain, net’ line item in the consolidated statements of profit or loss and other comprehensive
income for financial liabilities that are not part of a designated hedging relationship. The fair value of financial liabilities
denominated in a foreign currency is determined in that foreign currency and translated at the closing exchange rate of the reporting
period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or
losses and is recognized in profit or loss for financial liabilities that are not part of a designated hedging relationship. Derecognition of financial liabilities The Group derecognizes financial liabilities
when, and only when, the Group’s obligations are discharged, canceled or have expired. The difference between the carrying amount
of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss. When the Group exchanges with the existing
lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment
of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification
of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new
liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms,
including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from
the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial,
the difference between (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after
modification should be recognized in profit or loss as the modification gain or loss within other gains and losses.
i. Derivative financial instruments The Group enters into a variety of
derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward
contracts and interest rate swaps.Further details of derivative financial instruments are disclosed in note 19. Derivatives are recognized initially
at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting
date. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value
is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. Derivatives
are not offset in the consolidated financial statements unless the Group has both legal right and intention to offset. A derivative is
presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it
is not expected to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities. Warrants The warrants meet the definition of
a derivative financial instrument as they represent a written put option that gives the holders of the warrants the right to exchange
them for the Group’s shares at a fixed price. Although the warrants will be exchanged for the Group’s shares based on the
terms of the warrant agreement, the warrants were classified as a derivative financial liability measured at FVTPL, and not as an equity
instrument, given that the functional currency of the Company (MXN) differs from the strike-price of the warrants, which is fixed in USD.
Changes in the fair value of the financial liability are presented in the consolidated statements of profit or loss under the heading
“Loss in valuation of warrants”. For purposes of the Group’s adjusted
EBITDA, the changes in the fair value of the liability are excluded as they represent non-cash charges. The exchange of warrants for the Group’s
shares give rise to the settlement of the obligation associated with the liability with a corresponding increase in equity. The redemption
of warrants will result in a net impact in equity resulting from the increase in their fair value is recorded in profit or loss (reducing
retained earnings), offset by the equivalent increase in equity as a result of the issuance of shares.
j. Inventories and cost of sales Inventories are measured at the lower
of cost and net realizable value. The costs comprise direct materials, direct labor, and an appropriate proportion of variable and fixed
overhead costs, the latter being allocated on the basis of normal operating capacity. The cost of inventories is based on standard cost
method. The net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred
in administration (marketing), selling and distribution.
k. Prepaid expenses Prepaid expenses are mainly comprised
of advanced payments for printed catalogs, advanced payments for events, as well as, advanced payments for the purchase of inventories
that are received after the date of the consolidated statement of financial position and during the normal course of business, and they
are presented in current assets in accordance with the classification of the destination item.
l. Other assets Other assets mainly include inventory
of rewards related to the rewards program offered to our distributors, associates, leaders and consultants, recoverable taxes and rent
security deposits. They are presented in current or non-current assets in accordance with the classification of the destination item. The inventory for the rewards program
(see Note 2.v) is acquired based on exchange estimates from distributors, associates, leaders and consultants; and is reduced at the time
the points are redeemed and the reward is sent. Rewards inventory is recognized at acquisition cost. Rewards program for distributors,
associates, leaders and independent consultants: The Group has a reward program, which
is offered through its business segments, to distributors and associates in Betterware, and to consultants, including leaders, in JAFRA.
Its objective is to promote the fulfillment of specific objectives in the development of commercial activities of the business but considered
separate and distinct services from sales. In the case of Distributor and Associate Rewards, Betterware rewards its Distributors for enrolling
new Associates and appointing new Distributors, while Associates receive such rewards for referring new Associates and staying active.
In the case of rewards to Consultants, including JAFRA leaders, they are awarded for sponsorship when they manage to hire a new direct
sponsor or based on the commercial activities carried out by the group or lineage to which they are related. In this way, the members
of this independent sales force help expand the organization and sales channels, and at the same time commit to developing their network
of contacts and vendors. These rewards can be in: a) Points redeemable for products
that the Group purchases from other suppliers. Points expire according to the commercial terms established by the Group, and can be
modified at management’s discretion; and b) cards with a cash balance preload redeemable with certain providers, specifically
in the JAFRA segment, both for consultants and leaders depending on the business activities carried out by the group or lineage to
which they are related. The Group evaluates the performance of distributors, associates, and consultants, including leaders, at each
reporting date based on an estimate of compliance with the established program objectives, and records the corresponding expense, presenting
it as sales expenses and a provision. in return. The provision is reduced when the points are exchanged for the available products (rewards).
The value of the rewards program and the corresponding expense are determined based on the fair value of the services received considering
the analyzes carried out by the administration for similar services in the market.
m. Property, plant and equipment, net Items of property, plant and equipment
are measured at cost less accumulated depreciation and any accumulated impairment losses. If significant parts of an item have
different useful lives, then they are accounted for as separate items (major components). Depreciation is recognized using the
straight-line method. The estimated useful lives and depreciation method are reviewed at the end of each reporting period, with the effect
of any changes in estimate accounted for on a prospective basis. The following useful lives, considering
separately each of the asset’s components, are used in the calculation of depreciation:
Buildings 5 – 50 years
Molds and machinery 3 – 15 years
Vehicles 4 years
Computers and equipment 3 – 10 years
Leasehold improvements 3 – 5 years Property, plant and equipment is derec |
