Årsrapport 30700228 EY Godkendt Revisionspartnerselskab Nørre Havnegade 43 6400 Sønderborg 2020-01-01 2020-12-31 2019-01-01 2019-12-31 58466816 B.S. DANMARK A/S Østergade 33, 3. 1100 København K 1976-06-28 Copenhagen 70252226 33114553 www.thebodyshop.dk PRICEWATERHOUSECOOPERS Statsautoriseret Revisionspartnerselskab 33771231 Strandvejen 44 2900 Hellerup 2021-07-01 Alexis Tchikladzé Regnskabsklasse B Revisionspåtegning true true 2021-07-01 2021-07-01 CaseWare Working Papers Copenhagen Kay Mikael Berg Managing director Alexis Tchikladze Chair Kay Mikael Berg Eva Margareta Lemark Copenhagen Jesper Bo Winther Thomas Lauritsen State Authorised Public Accountant mne26864 State Authorised Public Accountant mne34342 19419096 21639270 17016300 20557652 178592 -661207 0 100343 2224204 1642482 104534 121608 2119670 1520874 465664 335008 1654006 1185866 1654006 1185866 0 130000 0 12628 0 142628 1288266 1225334 97050 119996 0 36550 1385316 1381880 2748258 2787231 2748258 2787231 4133574 4311739 2902546 3848261 2902546 3848261 2171936 2430064 24186183 17003363 640642 863222 579920 352739 0 352783 27578681 21002171 5368204 8978478 35849431 33828910 39983005 38140649 523000 523000 22259292 20605286 22782292 21128286 118868 206192 118868 206192 0 339417 0 339417 181829 402464 1908603 2506814 243084 0 9988560 8442861 4759769 5114615 17081845 16466754 17081845 16806171 39983005 38140649 523000 19419420 1185866 523000 20605286 1654006 523000 22259292 15474127 19123756 1144819 992268 314914 436352 82440 5276 17016300 20557652 51 59 142628 445611 0 -520000 484332 1601705 -448368 -2188523 178592 -661207 72513 81004 32021 40604 243084 0 222580 335008 465664 335008 5521950 6051123 5521950 6051123 5391950 6038495 130000 12628 5521950 6051123 0 0 11862100 566389 36550 39399 0 0 341813 15933 0 36550 0 -36550 11596236 550456 0 10636766 446393 0 453545 30787 0 440528 7841 341813 15933 0 10307970 453406 0 1288266 97050 0 2787231 38973 2748258 2748258 Today, the Board of Directors and the Executive Board have discussed and approved the annual report of B.S. DANMARK A/S for the financial year 1 January - 31 December 2020. The annual report is prepared in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the financial position of the Company at 31 December 2020 and of the results of the Company's operations for the financial year 1 January - 31 December 2020. Further, in our opinion, the Management's review gives a fair review of the matters discussed in the Management's review. We recommend that the annual report be approved at the annual general meeting. To the shareholder of B.S. DANMARK A/S In our opinion, the Financial Statements give a true and fair view of the financial position of the Company at 31 December 2020, and of the results of the Company’s operations for the financial year 1 January - 31 December 2020 in accordance with the Danish Financial Statements Act. We have audited the Financial Statements of B.S. Danmark A/S for the financial year 1 January - 31 December 2020, which comprise income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies (“financial statements”). We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Management is responsible for Management’s Review. Our opinion on the financial statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether Management’s Review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, in our view, Management’s Review is in accordance with the Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management’s Review. Management is responsible for the preparation of Financial Statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. The company's purpose is to trade in The Body Shop products in accordance with a The Body Shop Master Franchise Agreement, which the company has entered into with The Body Shop International PLC, Watersmead Littlehampton, West Sussex BN17 6LS, England. As long as this Agreement is in effect, this section may not be amended without The consent of The Body Shop International PLC. The Body Shop Danmark A/S sells and markets products for skin, hair and body care as well as cosmetics. Sales take place through 3 channels: company stores, franchise stores and e-commerce. The company's head office is situated in Copenhagen. 100 % of all purchases for resale are made through the mother company in Great Britain. B.S. Danmark A/S has been directly impacted by Covid-19 and subsequent closing of malls in Denmark, both in spring 2020 and in December 2020. For both periods, the Company qualified for staff temporary furlough Government support. For the spring 2020, the Company didn’t qualify for the ‘Fixed costs’ Government support as sales on E-commerce could partially compensate revenue losses. For December 2020 and first two months of 2021, the Company will most likely be in a position to apply for Fixed costs Government support as well. However, due to uncertainties regarding the amount of compensation for fixed costs no income has been recognised in the Financial Statement for 2020." The income statement for 2020 shows a profit of DKK 1,654,006 against a profit of DKK 1,185,866 last year, and the balance sheet at 31 December 2020 shows equity of DKK 22,782,292. Management considers the Company's financial performance in the year satisfactory. No events materially affecting the Company's financial position have occurred subsequent to the financial year-end. The annual report of B.S. DANMARK A/S for 2020 has been prepared in accordance with the provisions in the Danish Financial Statements Act applying to reporting class B entities and elective choice of certain provisions applying to reporting class C entities. Effective from the financial year 2020, the Company has implemented amending act no. 1716 of 27 December 2018 to the Danish Financial Statements Act. The implementation of the amending act has not affected the Company's accounting policies on recognition and measurement of assets and liabilities but has solely entailed a requirement for further disclosures. The accounting policies used in the preparation of the financial statements are consistent with those of last year. Revenues are recognised in the income statement as earned. Furthermore, value adjustments of financial assets and liabilities measured at fair value or amortised cost are recognised. Moreover, all expenses incurred to achieve the earnings for the year are recognised in the income statement, including depreciation, amortisation, impairment losses and provisions as well as reversals due to changed accounting estimates of amounts that have previously been recognised in the income statement. Assets are recognised in the balance sheet when it is probable that future economic benefits attributable to the asset will flow to the Company, and the value of the asset can be measured reliably. Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow out of the Company, and the value of the liability can be measured reliably. Assets and liabilities are initially measured at cost. Subsequently, assets and liabilities are measured as described for each item below. Reporting currency The financial statements are presented in Danish kroner (DKK). Transactions in foreign currencies are translated at the exchange rates at the dates of transaction. Exchange differences arising due to differences between the transaction date rates and the rates at the dates of payment are recognised in financial income and expenses in the income statement. Where foreign exchange transactions are considered hedging of future cash flows, the value adjustments are recognised directly in equity. Receivables, payables and other monetary items in foreign currencies that have not been settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Any differences between the exchange rates at the balance sheet date and the rates at the time when the receivable or the debt arose are recognised in financial income and expenses in the income statement. The Company has chosen IAS 18 as interpretation for revenue recognition. Income from the sale of goods for resale and finished goods, is recognised in revenue provided that delivery and transfer of risk to the buyer have taken place. Revenue is recognised exclusive of VAT and net of discounts relating to sales. With reference to section 32 of the Danish Financial Statements Act, gross profit/loss is calculated as a summary of revenue, other operating income, expenses for raw materials and consumables and other external expenses. Other operating income and other operating expenses comprise items of a secondary nature to the main activities of the Company. Cost of goods includes the materials and consumables used in generating the year's revenue. Staff expenses comprise wages and salaries as well as payroll expenses. Amortisation, depreciation and impairment losses comprise amortisation, depreciation and impairment of intangible assets and property, plant and equipment. The basis of amortisation/depreciation, which is calculated as cost less any residual value, is amortised/depreciated on a straight line basis over the expected useful life. The expected useful lives of the assets are as follows: Renting rights 3-5 years Goodwill 20 years Fixtures and fittings, other plant and equipment 5-10 years Leasehold improvements 4-7 years Depreciation is based on the residual value of the asset and is reduced by impairment losses, if any. The depreciation period and the residual value are determined at the acquisition date and are reassessed annually. Where the residual value exceeds the carrying amount of the asset, no further depreciation charges are recognised. In the case of changes in the depreciation period or the residual value, the effect on the depreciation charges is recognised prospectively as a change in accounting estimates. Financial income and expenses are recognised in the income statement at the amounts relating to the financial year. Financial income and expenses comprise of interest, realised and unrealised exchange adjustments, amortisation of mortgage loans as well as extra payments and repayment under the on account tax scheme. Tax for the year includes current tax on the year's expected taxable income and the year's deferred tax adjustments. The portion of the tax for the year that relates to the profit/loss for the year is recognised in the income statement, whereas the portion that relates to transactions taken to equity is recognised in equity. The Company and its Danish group entities are jointly taxed. The total Danish income tax charge is allocated between profit/loss-making Danish entities in proportion to their taxable income (full absorption). Jointly taxed entities entitled to a tax refund are reimbursed by the management company based on the rates applicable to interest allowances, and jointly taxed entities which have paid too little tax pay a surcharge according to the rates applicable to interest surcharges to the management company. Goodwill is amortised over the expected economic life of the asset, measured by reference to Management’s experience in the individual business segments. Goodwill is amortised on a straight-line basis over the amortisation period, which is 20 years. The amortisation period is based on the managements expectation. Other intangible assets include development projects and other acquired intangible rights, including software licences, distribution rights and development projects. Other intangible assets are measured at cost less accumulated amortisation and impairment losses. Property, plant and equipment Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes the acquisition price and costs directly related to the acquisition until the time at which the asset is ready for use. Gains or losses are calculated as the difference between the selling price less selling costs and the carrying amount at the date of disposal. Gains and losses from the disposal of property, plant and equipment are recognised in the income statement as other operating income or other operating expenses. The Company has chosen IAS 17 as interpretation for classification and recognition of leases. Leases that do not transfer substantially all the risks and rewards incident to the ownership to the Company are classified as operating leases. Payments relating to operating leases and any other rent agreements are recognised in the income statement over the term of the lease. The Company's aggregate liabilities relating to operating leases and other rent agreements are disclosed under "Contingent liabilities". Fixed asset investments consist of rent deposits measured at cost. The carrying amount of intangible assets, property, plant and equipment and investments in subsidiaries and associates is assessed for impairment on an annual basis. Impairment tests are conducted on assets or groups of assets when there is evidence of impairment. The carrying amount of impaired assets is reduced to the higher of the net selling price and the value in use (recoverable amount). The recoverable amount is the higher of the net selling price of an asset and its value in use. The value in use is calculated as the present value of the expected net cash flows from the use of the asset or the group of assets and the expected net cash flows from the disposal of the asset or the group of assets after the end of the useful life. Previously recognised impairment losses are reversed when the reason for recognition no longer exists. Impairment losses on goodwill are not reversed. Inventories are measured at cost in accordance with the FIFO method. Where the net realisable value is lower than cost, inventories are written down to this lower value. The net realisable value of inventories is calculated as the sales amount less costs of completion and expenses required to effect the sale and is determined taking into account marketability, obsolescence and development in the expected selling price. Goods for resale are measured at cost, which comprises the cost of acquisition plus delivery costs as well as other expenses directly attributable to the acquisition. Receivables are measured at amortised cost. The Company has chosen IAS 39 as interpretation for impairment of financial receivables. An impairment loss is recognised if there is objective evidence that a receivable or a group of receivables is impaired. If there is objective evidence that an individual receivable has been impaired, an impairment loss is recognised on an individual basis. Receivables in respect of which there is no objective evidence of individual impairment are tested for objective evidence of impairment on a portfolio basis. The portfolios are primarily based on the debtors' domicile and credit ratings in line with the Company's risk management policy. The objective evidence applied to portfolios is determined based on historical loss experience. Impairment losses are calculated as the difference between the carrying amount of the receivables and the present value of the expected cash flows, including the realisable value of any collateral received. The effective interest rate for the individual receivable or portfolio is used as discount rate. Prepayments recognised under "Assets" comprise prepaid expenses regarding subsequent financial reporting years. Provisions are recognised when - in consequence of an event occurred before or on the balance sheet date the Company has a legal or constructive obligation and it is probable that economic benefits must be given up to settle the obligation. Other provisions include warranty obligations in respect of repair work within the warranty period. Provisions are measured and recognised based on experience with guarantee work. Current tax payables and receivables are recognised in the balance sheet as the estimated income tax charge for the year, adjusted for prior-year taxes and tax paid on account. Deferred tax is measured according to the liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on temporary differences relating to goodwill which is not deductible for tax purposes and on office premises and other items where temporary differences, apart from business combinations, arise at the date of acquisition without affecting either profit/loss for the year or taxable income. Where alternative tax rules can be applied to determine the tax base, deferred tax is measured based on Management's intended use of the asset or settlement of the liability, respectively. Deferred tax is measured according to the tax rules and at the tax rates applicable at the balance sheet date when the deferred tax is expected to crystallise as current tax. Deferred tax assets are recognised at the expected value of their utilisation; either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity. Changes in deferred tax due to changes in the tax rate are recognised in the income statement. Financial liabilities are recognised at the date of borrowing at the net proceeds received less transaction costs paid. On subsequent recognition, financial liabilities are measured at amortised cost, corresponding to the capitalised value, using the effective interest rate. Accordingly, the difference between the proceeds and the nominal value is recognised in the income statement over the term of the loan. Other liabilities are measured at net realisable value. Deferred income Deferred income recognised as a liability comprises payments received concerning income in subsequent financial reporting years. The deferred tax asset consists of temporary differences, that is expected to be utilized within the coming years. At 31 December 2020 other payables amounts to DKK 9,988k, and includes holiday accrual for the "freeze period" of DKK 814k. Management has choosen to pay the holiday accrual in 2021, and therefore classified it is as short term liability. In 2019, the holiday accrual for the "freeze period" amounted DKK 339k and was classified as long term liability. Other contingent liabilities The Company is jointly taxed with its sister, Aesop Denmark ApS, which acts as management company, and is jointly and severally liable with other jointly taxed group entities for payment of income taxes for the income year 2017 onwards as well as withholding taxes on interest, royalties and dividends falling due for payment on or after 8 September 2017. The Body Shop International Group operates in a wide variety of jurisdictions, in some of which the tax law is subject to varying interpretations and potentially inconsistent enforcement. As a result, there can be practical uncertainties in applying tax legislation to The Body Shop International Group’s activities. Whilst the Body Shop International Group considers that it operates in accordance with applicable tax law, there are potential tax exposures in respect of its operations. Other rent and lease liabilities: DKK 2020 2019 Rent and lease liabilities 10,159,371 11,468,846 Rent and lease liabilities include a rent obligation totaling DKK 9,966,368 (2019: DKK 11,468,846) in interminable rent agreements with remaining contract terms of 1-5 years. Where DKK 7,441,926 (2019: DKK 6,410,897) falls due within one year, DKK 2,524,442 (2019: DKK 5,057,949) falls due with one to five years, and DKK 0 (2019: DKK 0) falls due after 5 Years. Additionally, the company has entered other lease obligations totaling DKK 193,003 (2019: DKK 267,249) with remaining contract terms of 1-5 years. Where DKK 155,208 (2019: DKK 202,749) falls due within one year, DKK 37,795 (2019: DKK 64,500) falls due within one to five years, and DKK 0 (2019: DKK 0) falls due after 5 years. The Company has not provided any security or other collateral in assets at 31 December 2020. Parties exercising control Related party Domicile Basis for control The Body Shop Worldwide Limited United Kingdom Parent Company Natura & Co Holding S.A. Brazil Ultimate Parent Company Information about consolidated financial statements Parent Domicile Requisitioning of the parent company's consolidated financial statements The Body Shop Worldwide Limited West Sussex, United Kingdom Watersmead, Littlehampton BN17 6LS, West Sussex, United Kingdom 58466816 2020-01-01 2020-12-31 58466816 2019-01-01 2019-12-31 58466816 2019-12-31 58466816 2020-12-31 58466816 2020-01-01 2020-12-31 1 58466816 2020-01-01 2020-12-31 2 58466816 2020-01-01 2020-12-31 3 58466816 2020-01-01 2020-12-31 1 58466816 2020-01-01 2020-12-31 2 58466816 2020-01-01 2020-12-31 1 58466816 2020-01-01 e:GoodwillMember 58466816 2020-01-01 e:AcquiredIntangibleAssetsMember 58466816 2020-01-01 2020-12-31 e:AcquiredIntangibleAssetsMember 58466816 2020-12-31 e:AcquiredIntangibleAssetsMember 58466816 2020-01-01 2020-12-31 e:GoodwillMember 58466816 2020-12-31 e:GoodwillMember 58466816 2020-01-01 2020-12-31 e:RetainedEarningsMember 58466816 2019-01-01 2019-12-31 e:RetainedEarningsMember 58466816 2020-12-31 e:ReceivablesFromOwnersAndManagementMember 58466816 2020-01-01 e:FixturesFittingsToolsAndEquipmentMember 58466816 2020-01-01 2020-12-31 e:FixturesFittingsToolsAndEquipmentMember 58466816 2020-12-31 e:FixturesFittingsToolsAndEquipmentMember 58466816 2020-01-01 e:LeaseholdImprovementsMember 58466816 2020-01-01 2020-12-31 e:LeaseholdImprovementsMember 58466816 2020-12-31 e:LeaseholdImprovementsMember 58466816 2020-01-01 e:PropertyPlantAndEquipmentInProgressMember 58466816 2020-01-01 2020-12-31 e:PropertyPlantAndEquipmentInProgressMember 58466816 2020-12-31 e:PropertyPlantAndEquipmentInProgressMember 58466816 2019-01-01 e:ContributedCapitalMember 58466816 2020-01-01 e:ContributedCapitalMember 58466816 2020-12-31 e:ContributedCapitalMember 58466816 2020-01-01 e:RetainedEarningsMember 58466816 2020-01-01 2020-12-31 e:RetainedEarningsMember 58466816 2020-12-31 e:RetainedEarningsMember 58466816 2019-01-01 e:RetainedEarningsMember 58466816 2019-01-01 2019-12-31 e:RetainedEarningsMember 58466816 2020-01-01 e:DepositsLongtermInvestmentsAndReceivablesMember 58466816 2020-01-01 2020-12-31 e:DepositsLongtermInvestmentsAndReceivablesMember 58466816 2020-12-31 e:DepositsLongtermInvestmentsAndReceivablesMember iso4217:DKK xbrli:pure