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What changed in BETTERWARE DE MEXICO, S.A.P.I. DE C.V's 20-F — 2022 vs 2023

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Paragraph-level year-over-year comparison of BETTERWARE DE MEXICO, S.A.P.I. DE C.V's 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+406 added−219 removedSource: 20-F (2024-04-30) vs 20-F (2023-05-15)

Top changes in BETTERWARE DE MEXICO, S.A.P.I. DE C.V's 2023 20-F

406 paragraphs added · 219 removed · 162 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

96 edited+31 added−35 removed111 unchanged
Biggest changeRisks Related to Ownership of our Ordinary Shares As a “foreign private issuer” under the rules and regulations of the SEC, Betterware is permitted to, and is expected to, file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules and is expected to follow certain home country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers.
Biggest changeIn the past, Mexican courts have enforced judgments rendered in the United States by virtue of the legal principles of reciprocity and comity, consisting of the review in Mexico of the United States judgment, in order to ascertain, among other matters, whether Mexican legal principles of due process and public policy ( orden público ) have been complied with, without reviewing the merits of the subject matter of the case. 17 Risks Related to Ownership of our Ordinary Shares As a “foreign private issuer” under the rules and regulations of the SEC, Betterware is permitted to, and is expected to, file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules and is permitted to follow certain home country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers.
As a result, we need to make significant efforts to retain existing and recruit or attract others. To increase our revenue, we must increase the number and/or the productivity of our distributors, leaders and consultants.
As a result, we need to make significant efforts to retain existing distributors, leaders, and consultants and to recruit or attract others. To increase our revenue, we must increase the number and/or the productivity of our distributors, leaders and consultants.
We cannot guarantee there will not be a future judicial or administrative determination adverse to the current criteria, which would substantial and materially adversely affect our business and financial condition. Inflation could adversely affect our business and results of operations.
We cannot guarantee there will not be a future judicial or administrative determination adverse to the current criteria, which would substantial and materially adversely affect our business, results of operations and financial condition. Inflation could adversely affect our business and results of operations.
Multiparty rule is still relatively new in Mexico and could result in economic or political conditions that could materially and adversely affect our operations. We cannot predict the impact that this new political landscape will have on the Mexican economy.
Multiparty rule is still relatively new in Mexico and could result in economic or political conditions that could materially and adversely affect our operations. We cannot predict the impact that this political landscape will have on the Mexican economy.
Tax and labor legislation, in particular, in Mexico is subject to continuous change, and we cannot guarantee that the Mexican government will maintain current economic or other policies in force or if any the changes to such laws and policies would have a material adverse effect on us or on our financial performance.
Tax and labor legislation, in particular, in Mexico is subject to continuous change, and we cannot guarantee that the Mexican government will maintain current economic or other policies in force or if any changes to such laws and policies would have a material adverse effect on us or on our financial performance.
If any of the analysts who may cover the Company change their recommendation regarding the Company shares adversely, or provide more favorable relative recommendations about the Company’s competitors, the price of the Company shares would likely decline.
If any of the analysts who may cover the Company change their recommendation regarding the Company’s shares adversely or provide more favorable relative recommendations about the Company’s competitors, the price of the Company’s shares would likely decline.
The number and productivity of our distributors, leaders and consultants also depends on several additional factors, including: ● adverse publicity regarding of any company of the Group, our products or our distribution channel; ● aggressive new competitors in the market looking to increase their market share; ● failure to motivate our distributors, leaders and consultants with new products; ● failure to provide an attractive compensation plan for distributors, leaders and consultants; 1 ● issues with our new product’s quality; ● the public’s perception of our products; ● competition for distributors, leaders and consultants from other direct selling companies; ● the public’s perception of our distributors, leaders and consultants, and direct selling businesses in general; and ● general economic and business conditions.
The number and productivity of our distributors, leaders and consultants also depends on several additional factors, including: ● adverse publicity regarding of any company of the Group, our products or our distribution channel; ● aggressive new competitors in the market looking to increase their market share; ● failure to motivate our distributors, leaders and consultants with new products; ● failure to provide an attractive compensation plan for distributors, leaders and consultants; 1 ● issues with the quality of new products; ● the public’s perception of our products; ● competition for distributors, leaders and consultants from other direct selling companies; ● the public’s perception of our distributors, leaders and consultants, and direct selling businesses in general; and ● general economic and business conditions.
The following factors, among others, could harm our business in Mexico: ● worsening economic conditions, including a recession in the United States and/or Mexico; ● fluctuations in currency exchange rates and inflation; ● longer collection cycles; ● potential adverse changes in tax laws or price controls; ● changes in labor conditions; ● burdens and costs of compliance with a variety of laws; 11 ● political, social and economic instability; ● increases in taxation; and ● outbreaks of disease and health epidemics, such as the COVID-19 pandemic.
The following factors, among others, could harm our business in Mexico: ● worsening economic conditions, including a recession in the United States and/or Mexico; ● fluctuations in currency exchange rates and inflation; ● longer collection cycles; ● potential adverse changes in tax laws or price controls; ● changes in labor conditions; ● burdens and costs of compliance with a variety of laws; ● political, social and economic instability; ● increases in taxation; and ● outbreaks of disease and health epidemics, such as the COVID-19 pandemic.
The laws and regulations in our current markets often: ● impose on it order cancellations, product returns, inventory buy-backs and cooling-off rights for consumers, distributors, leaders and consultants; ● require us or our distributors, leaders and consultants to register with governmental agencies; ● impose on it reporting requirements to regulatory agencies; and/or ● require it to ensure that distributors, leaders and consultants are not being compensated solely based upon the recruitment of new of them.
The laws and regulations in our current markets often: ● impose on us order cancellations, product returns, inventory buy-backs and cooling-off rights for consumers, distributors, leaders and consultants; ● require us or our distributors, leaders and consultants to register with governmental agencies; ● impose on us reporting requirements to regulatory agencies; and/or ● require us to ensure that distributors, leaders and consultants are not being compensated solely based upon the recruitment of new of them.
See “Company Information—Environment, Social and Governance.” Customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, energy and water use, plastic waste and other sustainability concerns. Concern over climate change may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment.
See “Company Information—Environment, Social and Governance.” 10 Customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, energy and water use, plastic waste and other sustainability concerns. Concern over climate change may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment.
We cannot make assurances that any events in the United States or elsewhere will not materially and adversely affect us. Mexico is an emerging market economy, with attendant risks to our results of operations and financial condition. The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy.
We cannot make assurances that any events in the United States or elsewhere will not materially and adversely affect us. 14 Mexico is an emerging market economy, with attendant risks to our results of operations and financial condition. The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy.
The federal administration has significant power to implement substantial changes in law, policy and regulations in Mexico, including Constitutional reforms, which could negatively affect our business, results of operations, financial condition and prospects. We cannot predict whether potential changes in Mexican governmental and economic policy could adversely affect Mexico’s economic conditions or the sector in which we operate.
The federal administration has significant power to implement substantial changes in law, policy, and regulations in Mexico, including Constitutional reforms, which could affect our business, results of operations, financial condition, and prospects. We cannot predict whether potential changes in Mexican governmental and economic policy could adversely affect Mexico’s economic conditions or the sector in which we operate.
Holders of our securities who acquire shares in violation of these provisions will not be able to vote, or receive dividends, distributions or other rights in respect of, these securities and would be obligated to pay us a penalty. For a description of these provisions, see “Item 10. Additional Information—Bylaws——Anti-takeover Protections.”
Holders of our securities who acquire shares in violation of these provisions will not be able to vote, or receive dividends, distributions or other rights in respect of, these securities and would be obligated to pay us a penalty. For a description of these provisions, see “Item 10. Additional Information—Bylaws——Anti-takeover Protections.” 20
Certain of our indebtedness contain customary covenants, including, among other things, limits on the ability of the company and any restricted subsidiary to, subject to certain exceptions, incur liens, incur debt, merge, consolidate or dispose of all or substantially all of its assets. 8 Changes in taxes and other assessments may adversely affect us.
Certain of our indebtedness contain customary covenants, including, among other things, limits on the ability of the company and any restricted subsidiary to, subject to certain exceptions, incur liens, incur debt, merge, consolidate or dispose of all or substantially all of its assets. Changes in taxes and other assessments may adversely affect us.
However, there is uncertainty whether a U.S. court would enforce the exclusive jurisdiction provision for actions for breach of fiduciary duty and other claims. 16 The anti-takeover protections included in our Bylaws and others provided under Mexican Law may deter potential acquirors.
However, there is uncertainty whether a U.S. court would enforce the exclusive jurisdiction provision for actions for breach of fiduciary duty and other claims. The anti-takeover protections included in our Bylaws and others provided under Mexican Law may deter potential acquirors.
Significant unscheduled downtime or a reduction in capacity at this facility, whether due to equipment breakdowns, power failures, natural disasters (due to climate change or otherwise), pandemics (including COVID-19), weather conditions hampering delivery schedules, shortages of raw materials and products, technology disruptions or other disruptions, including those caused by transitioning manufacturing across these facilities, or any other cause could have a material adverse effect on our ability to provide products to our leaders, consultants and customers, which could have a material adverse effect on our sales, business, prospects, reputation, results of operations, financial condition and/or cash flows.
Significant unscheduled downtime or a reduction in capacity at this facility, whether due to equipment breakdowns, power failures, natural disasters (due to climate change or otherwise), pandemics, weather conditions hampering delivery schedules, shortages of raw materials and products, technology disruptions or other disruptions, including those caused by transitioning manufacturing across these facilities, or any other cause could have a material adverse effect on our ability to provide products to our leaders, consultants and customers, which could have a material adverse effect on our sales, business, prospects, reputation, results of operations, financial condition and/or cash flows.
Such events, if not promptly remedied, could have a material adverse effect on our business, prospects, reputation, results of operation, financial condition and/or cash flows. Competition could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. The markets in which we operate are competitive.
Such events, if not promptly remedied, could have a material adverse effect on our business, prospects, reputation, results of operations, financial condition and/or cash flows. Competition could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. The markets in which we operate are competitive.
If securities or industry analysts do not publish or cease publishing research or reports about Betterware, our business, or markets, or if they change their recommendations regarding the Company shares adversely, the price and trading volume of the Company shares could decline.
If securities or industry analysts do not publish or cease publishing research or reports about Betterware, our business, or markets, or if they change their recommendations regarding the Company shares adversely, the price and trading volume of the Company’s shares could decline.
Although we attempt to reduce our exposure to short-term exchange rate fluctuations by using foreign currency exchange contracts, it cannot be certain that these contracts or any other hedging activity will effectively reduce exchange rate exposure.
Although we attempt to reduce our exposure to short-term exchange rate fluctuations by using foreign currency exchange contracts, we cannot be certain that these contracts or any other hedging activity will effectively reduce exchange rate exposure.
Our operations would be harmed if we fail to generate continued interest and enthusiasm among our distributors, leaders and consultants or we fail to attract new, or if our distributors, leaders and consultants are unable to operate due to internal or external factors.
Our operations would be harmed if we fail to generate continued interest and enthusiasm among our distributors, leaders and consultants or we fail to attract new ones, or if our distributors, leaders and consultants are unable to operate due to internal or external factors.
The trading market for the Company shares is influenced by the research and reports that industry or securities analysts may publish about the Company, our business, market or competitors. Securities and industry analysts do not currently, and may never, publish research on the Company.
The trading market for the Company’s shares is influenced by the research and reports that industry or securities analysts may publish about the Company, our business, market, or competitors. Securities and industry analysts do not currently, and may never, publish research on the Company.
In addition, increased or perceptions of increased economic protectionism in the United States, Mexico and other countries could potentially lead to lower levels of trade and investment and economic growth, which could have a similarly negative impact on the Mexican economy. These economic and political consequences could adversely affect our business, operating results and financial condition.
In addition, increased or perceptions of increased economic protectionism in the United States, Mexico and other countries could potentially lead to lower levels of trade and investment and economic growth, which could have a similarly negative impact on the Mexican economy. These economic and political consequences could adversely affect our business, results of operations and financial condition.
Any event that negatively affects the general public perception of our industry, business or products could have a material effect in our results of operations. Failure of our technology initiatives to create sustained enthusiasm in our distributors, leaders and consultants and incremental cost savings could negatively impact our business.
Any event that negatively affects the general public perception of our industry, business or products could have a material effect on our results of operations. 4 Failure of our technology initiatives to create sustained enthusiasm in our distributors, leaders and consultants and incremental cost savings could negatively impact our business.
These systems may, from time to time, require modifications or improvements as a result of changes in technology, the growth of our business and the functioning of each of these systems. The risk of cyber-crime continues to augment across all industries and geographies as infiltrating technology is becoming increasingly sophisticated.
These systems may, from time to time, require modifications or improvements as a result of changes in technology, the growth of our business and the functioning of each of these systems. The risk of cyber-crime continues to increase across all industries and geographies as infiltrating technology is becoming increasingly sophisticated.
Complying with these sometimes inconsistent rules and regulations can be difficult and requires the devotion of significant resources on the Group’s part. In addition, Mexico could change its laws or regulations to negatively affect or prohibit completely network or direct sales efforts.
Complying with these rules and regulations can be difficult and requires the devotion of significant resources on the Group’s part. In addition, Mexico could change its laws or regulations to negatively affect or prohibit completely network or direct sales efforts.
As of December 31, 2022, our management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
As of December 31, 2023, our management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
As a Mexican corporation listed on Nasdaq, the Company is expected to follow our home country practice with respect to the composition of the board of directors and nominations committee and executive sessions.
As a Mexican corporation listed on Nasdaq, the Company is permitted to follow our home country practice with respect to the composition of the board of directors and nominations committee and executive sessions.
We are in the process of implementing several measures to strength our internal control over financial reporting such as the deployment of IT applications to enable and automate the consolidation and ITGC process.
We are in the process of implementing several measures to strengthen our internal control over financial reporting such as the deployment of IT applications to enable and automate the consolidation and ITGC process.
Consequently, Mexican federal government actions and policies related to the economy, state-owned and controlled companies, and financial institutions financed or influenced, could have a significant impact on private sector entities in general, including us, in particular and on market conditions, prices and returns on Mexican securities, including counterparty risk.
Consequently, Mexican federal government actions and policies related to the economy, state-owned and controlled companies, and financial institutions, could have a significant impact on private sector entities in general, including us, in particular and on market conditions, prices and returns on Mexican securities, including counterparty risk.
We are incorporated under the laws of Mexico and most of our operations and assets are located in Mexico. As a consequence of the foregoing, our financial situation and operating results could be negatively affected. The Mexican government has exercised, and continues to exercise, a strong influence on the country’s economy.
We are incorporated under the laws of Mexico and most of our operations and assets are located in Mexico. As a consequence of the foregoing, our financial condition and results of operations could be negatively affected. The Mexican government has exercised, and continues to exercise, a strong influence on the country’s economy.
The number of our active distributors, leaders and consultants, may not increase and could decline in the future. Our operating results could be harmed if existing and new business opportunities and products do not generate sufficient interest to retain existing distributors, leaders and consultants recruit new of them.
The number of our active distributors, leaders and consultants, may not increase and could decline in the future. Our operating results could be harmed if existing and new business opportunities and products do not generate sufficient interest to retain existing distributors, leaders and consultants or to recruit new ones.
Any determination that our operations or activities are not in compliance with applicable regulations could negatively impact our business and our reputation with regulators in the markets in which we operate. 13 Laws and regulations may restrict our direct sales efforts and harm our revenue and profitability. Various government agencies throughout the world regulate direct sales practices.
Any determination that our operations or activities are not in compliance with applicable regulations could negatively impact our business and our reputation with regulators in the markets in which we operate. Laws and regulations may restrict our direct sales efforts and adversely affect our revenue and profitability. Various government agencies throughout the world regulate direct sales practices.
Volatility in costs, along with delays and disruptions in the supply of materials and services, as a result of the recent global supply chain disruptions, could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. We purchase raw materials, including essential oils, alcohols, chemicals, containers and packaging components, from various third-party suppliers.
Volatility in costs, along with delays and disruptions in the supply of materials and services, could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. We purchase raw materials, including essential oils, alcohols, chemicals, containers and packaging components, from various third-party suppliers.
If inflation in Mexico increases while economic growth slows, our business, results of operations and financial condition will be affected. In addition, high interest rates and economic instability could increase our costs of financing. For the years ended December 31, 2021, and 2022, GDP increased 4.8% and decreased to 3.1%, respectively.
If inflation in Mexico increases while economic growth slows, our business, results of operations and financial condition will be affected. In addition, high interest rates and economic instability could increase our costs of financing. For the years ended December 31, 2021, 2022 and 2023, GDP in Mexico grew by 4.8%, decreased by 3.9% and increased by 3.1% respectively.
Although our reviews applicable local laws in developing our plans, our efforts to comply with them may be harmed by an evolving regulatory climate and subjective interpretation of laws by the authorities.
Although we review applicable local laws in developing our plans, our efforts to comply with them may be harmed by an evolving regulatory climate and subjective interpretation of laws by the authorities.
In particular, BWM currently employs a hedging strategy comprised of forwards U.S. dollar–Mexican peso derivatives that are designed to protect us against devaluations of the Mexican peso. The hedging contracts cover 100% of the home organization product needs until August 2023.
In particular, BWM currently employs a hedging strategy comprised of forwards U.S. dollar–Mexican peso derivatives that are designed to protect us against devaluations of the Mexican peso. The hedging contracts cover 100% of the home organization product needs until December 2024.
If we are unable to satisfactorily negotiate those labor contracts with the labor unions on terms acceptable to us or without a strike or work stoppage, the effects on our business could be materially adverse.
If we are unable to satisfactorily negotiate those labor contracts with the labor unions on terms acceptable to us or without a strike or work stoppage, our business could be materially adversely affected.
Increases in inflation raise our costs for commodities, labor, materials and services and other costs required to grow and operate our business, and failure to secure these on reasonable terms may adversely impact our financial condition.
An increase in inflation could raise our costs for commodities, labor, materials and services and other costs required to grow and operate our business, and failure to secure these on reasonable terms may adversely impact our financial condition.
The risks associated with current and potential changes in the Mexican economy are significant and could have a material adverse effect on our business and results of operations.
The risks associated with current and potential changes in the Mexican economy are significant and could have a material adverse effect on our business, results of operation and financial condition.
The impact of COVID-19, geopolitical developments such as the Russia-Ukraine conflict and global supply chain disruptions continue to increase uncertainty in the outlook of near-term and long-term economic activity, including whether inflation will continue and how long, and at what rate.
The impact of geopolitical developments such as the Russia-Ukraine conflict and Israeli-Palestinian conflict, and the global supply chain disruptions could increase uncertainty in the outlook of near-term and long-term economic activity, including whether inflation will continue and how long, and at what rate.
If we do not adapt to or comply with new regulations, or fail to meet evolving investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in our Company, and customers and consumers may choose to stop purchasing our products, which could have a material adverse effect on our reputation, business or financial condition. 9 Our products are subject to federal, state and international regulations that could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.
If we do not adapt to or comply with new regulations, or fail to meet evolving investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in our Company, and customers and consumers may choose to stop purchasing our products, which could have a material adverse effect on our reputation, business, results of operations or financial condition.
We are subject to environmental laws and regulations risks that could affect our operations and results of operations Our operations are subject to a wide range of environmental laws and regulations in each of the jurisdictions in which we operate. These laws and regulations impose increasingly rigorous environmental protection standards.
Our operations are subject to a wide range of environmental laws and regulations in each of the jurisdictions in which we operate. These laws and regulations impose increasingly rigorous environmental protection standards.
To the extent federal, state, local and/or foreign regulatory changes occur in the future, whether due to changes in applicable laws or regulations or evolving interpretations and enforcement policies by regulatory authorities, they could require us to reformulate or discontinue certain of our products or revise its product packaging or labeling, any of which could result in, among other things, increased our costs, delays in product launches, product returns or recalls and lower net sales, and therefore could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows Risks Related to Mexico Since more that 90% our operations are concentrated in Mexico, economic developments in Mexico may adversely affect our business and results of operations.
To the extent federal, state, local and/or foreign regulatory changes occur in the future, whether due to changes in applicable laws or regulations or evolving interpretations and enforcement policies by regulatory authorities, they could require us to reformulate or discontinue certain of our products or revise its product packaging or labeling, any of which could result in, among other things, increased our costs, delays in product launches, product returns or recalls and lower net sales, and therefore could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. 11 Risks Related to Mexico Since more that 90% our operations are concentrated in Mexico, we are subject to political, economic, legal, and regulatory risks specific to Mexico and are vulnerable to an economic downturn, other changes in market conditions, acts of violence, or natural disasters in s in Mexico which may adversely affect our business and results of operations.
If these suppliers have unscheduled downtime or are unable to fulfill their obligations under these manufacturing agreements because of political or regulatory restrictions, equipment breakdowns, labor strikes, natural disasters, health diseases or health epidemics, such as the COVID-19 pandemic, or any other cause, this could adversely affect our overall operations and financial condition.
If these suppliers have unscheduled downtime or are unable to fulfill their obligations under these manufacturing agreements because of political or regulatory restrictions, equipment breakdowns, labor strikes, natural disasters, health diseases on health epidemics or pandemics, or any other cause, this could adversely affect our overall business, results of operations and financial condition.
Betterware’s shares are listed on Nasdaq under the symbol “BWMX.” If Nasdaq delists the Company’s securities from trading on its exchange for failure to meet the listing standards, the Company and its shareholders could face significant material adverse consequences including: ● a limited availability of market quotations for the Company’s securities; ● a determination that the Company shares are “penny stock” which will require brokers trading in the Company shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the Company shares; ● a limited amount of analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future. 15 If Betterware is characterized as a passive foreign investment company, or a PFIC, adverse U.S. federal income tax consequences may result for U.S. holders of Company shares.
Betterware’s shares are listed on Nasdaq under the symbol “BWMX.” If Nasdaq delists the Company’s securities from trading on its exchange for failure to meet the listing standards, the Company and its shareholders could face significant material adverse consequences including: ● a limited availability of market quotations for the Company’s securities; ● a determination that the Company shares are “penny stock” which will require brokers trading in the Company shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the Company’s shares; ● a limited amount of analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
Because of the costs and difficulties inherent in managing cross-border business operations, our results of operations may be negatively impacted. Managing our business, operations, personnel or assets in multiple jurisdictions is challenging and costly. Management may be inexperienced in cross-border business practices and unaware of significant differences in accounting rules, legal regimes and labor practices.
Managing our business, operations, personnel or assets in multiple jurisdictions is challenging and costly. Management may be inexperienced in cross-border business practices and unaware of significant differences in accounting rules, legal regimes and labor practices.
There can be no assurance that the overall business environment in which we operate will improve and we cannot predict the impact any future economic downturn could have on our results of operations and financial condition.
There can be no assurance that the overall business environment in which we operate will improve and we cannot predict the impact any future economic downturn could have on our results of operations and financial condition. However, consumer demand generally decreases during economic downturns, which will negatively affect our business, results of operations and financial condition.
Our business is subject to numerous laws, regulations and trade policies. We are subject to regulation by the FTC and the FDA in the U.S., as well as various other federal, state, local and foreign regulatory authorities, including those in the countries in which the Company operates.
We are subject to regulation by the FTC and the FDA in the U.S., as well as various other federal, state, local and foreign regulatory authorities, including those in the countries in which the Company operates.
Therefore, the Company keep working and improving about the implementation of a formal internal control over financial reporting program based on a top-down risk assessment to validate the existence of controls over significant, accounts, processes, applications and IT environments.
The Company continues working on the implementation of a formal internal control over financial reporting program based on a top-down risk assessment ensure the existence of controls over significant accounts, processes, applications and IT environments.
These events could have adverse effects on the economic conditions and securities markets of other emerging market countries, including Mexico. 12 investments in Mexican companies entail substantial risk; the Mexican government has exercised, and continues to exercise, an important influence on the Mexican economy Investments in Mexico carry significant risks, including the risk of expropriation or nationalization laws being enacted or imposing exchange controls, price controls, taxes, inflationary, hyperinflationary, exchange rate risk, credit risk, among other governmental or political restrictions.
Investments in Mexican companies entail substantial risk; the Mexican government has exercised, and continues to exercise, an important influence on the Mexican economy. Investments in Mexico carry significant risks, including the risk of expropriation or nationalization laws being enacted or imposing exchange controls, price controls, taxes, inflationary, hyperinflationary, exchange rate risk, credit risk, among other governmental or political restrictions.
For details of the controls and remediation plan, see “ Item 15—Controls and Procedures—Disclosure Controls and Procedures .” 6 In 2021, the Company changed its status from an emerging growth company to an large accelerated filer, and during 2022 the Company change its status again to an accelerated filer.
For details of the controls and remediation plan, see “ Item 15—Controls and Procedures—Disclosure Controls and Procedures .” At the end of 2021, the Company changed its status from an emerging growth company to a large, accelerated filer.
Securities of companies in emerging market countries tend to be influenced by economic and market conditions in other emerging market countries. Emerging market countries, including Argentina and Venezuela, have recently been experiencing significant economic downturns and market volatility.
Securities of companies in emerging market countries tend to be influenced by economic and market conditions in other emerging market countries. Emerging market countries, including Argentina and Venezuela, have recently been experiencing significant economic downturns and market volatility. These events could have adverse effects on the economic conditions and securities markets of other emerging market countries, including Mexico.
As a result, any difficulties encountered by the third-party manufacturer that result in product defects, production delays, cost overruns, or the inability to fulfill orders on a timely basis, due to, for instance, sanctions or blocks imposed to Chinese products, could have a material adverse effect on our business, financial condition and operating results 2 Disruptions or delays at our facility in Queretaro, Mexico could have a material adverse effect on our business, particularly with respect to the beauty and personal care segment.
As a result, any difficulties encountered by the third-party manufacturer that result in product defects, production delays, cost overruns, or the inability to fulfill orders on a timely basis, due to, for instance, sanctions or blocks imposed on Chinese products, could have a material adverse effect on our business, financial condition and results of operations.
Our facility in Queretaro, Mexico, manufactures a substantial portion of the products of our beauty and personal care segment, which accounts 85% of JAFRA sales, and as of December 31, 2022 represented 38% of our total sales at a consolidated level.
Our facility in Queretaro, Mexico, manufactures a substantial portion of the products of our beauty and personal care segment, which accounted for 84.3% of JAFRA sales, and as of December 31, 2023, represented 56% of our total sales at a consolidated level.
The financial crisis that arose in the United States during the third quarter of 2008, unleashed a global recession that directly and indirectly affected the economy and the Mexican stock markets and caused, among other things, fluctuations in purchase prices the sale of securities issued by publicly traded companies, shortage of credit, budget cuts, economic slowdowns, volatility in exchange rates, and inflationary pressures.
The financial crisis that arose in the United States during the third quarter of 2008, unleashed a global recession that directly and indirectly affected the economy and the Mexican stock markets and caused, among other things, fluctuations in purchase prices the sale of securities issued by publicly traded companies, shortage of credit, budget cuts, economic slowdowns, volatility in exchange rates, and inflationary pressures. 12 Financial problems or an increase in risk related to investment in emerging economies or a perception of risk could limit foreign investment in Mexico and adversely affect the Mexican economy.
The presence of violence among drug cartels, and between these and the Mexican law enforcement and armed forces, or an increase in other types of crime, pose a risk to our business, and might negatively impact business continuity.
The presence of violence among drug cartels, and between drug cartels and the Mexican law enforcement and armed forces, or an increase in other types of crime, pose a risk to our business, and could negatively impact business continuity. This situation in Mexico could worsen if the economy continues to deteriorate.
We are very dependent upon our distributors, leaders, consultants and the general public perception of the overall integrity of our business, as well as the safety and quality of our products and similar products distributed by other companies.
If the industry in which we operate, our business or our products are subject to adverse publicity, our business may suffer. We are very dependent upon our distributors, leaders, consultants and the general public perception of the overall integrity of our business, as well as the safety and quality of our products and similar products distributed by other companies.
Consequently, to successfully compete in this market and attract and retain distributors, leaders and consultants, we must ensure that our business opportunities and compensation plans are financially rewarding.
Consequently, to successfully compete in this market and attract and retain distributors, leaders and consultants, we must ensure that our business opportunities and compensation plans are financially rewarding. We may not be able to continue to successfully compete in this market for distributors, leaders and consultants, which would ultimately affect our business operations.
During 2022 and 2021, BWM encountered an increased number of non-material phishing attempts which consisted of fake e-mails requesting minor payments and/or confidential information and e-mails with malicious files successfully quarantined and contained as well as sporadic attempted attacks, minor and unsuccessful, on our infrastructure.
During 2023, we experienced an increased number of non-material phishing attempts which consisted of fake e-mails requesting minor payments and/or confidential information and e-mails with malicious files that we were able to successfully quarantine and contain, as well as sporadic attempted attacks, that were minor and unsuccessful, on our infrastructure.
See “ Disclosure Controls and Procedures—Control and Procedures .” If we fail to establish and maintain proper and effective internal controls over financial reporting or adequately resolve our existing material weaknesses, our results of operations and our ability to operate our business may be harmed. Our controlling shareholder may have interests that conflict with your interests.
See “ Item 15—Controls and Procedures—Disclosure Controls and Procedures .” If we fail to establish and maintain proper and effective internal controls over financial reporting or fail to adequately resolve our existing material weaknesses, our results of operations and our ability to operate our business may be materially adversely affected.
Further, we seek out acquisitions of companies that maintain the same high quality standards that we maintain, and if we misjudge or overestimate products quality standards, we may not be able to use these products or implement the strategies that were the primary reason for the corresponding acquisition, such as may be the case with the JAFRA Acquisition, which would lead to a significant loss both financially and in time spent by our teams trying to integrate the products or implement the strategy. 7 In addition, our ability to realize the benefits we anticipate from our acquisition activities, including the JAFRA Acquisition, including any anticipated sales growth, cost synergies and other anticipated benefits, will depend in large part upon whether we are able to integrate such businesses efficiently and effectively.
Further, we seek out acquisitions of companies that maintain the same high quality standards that we maintain, and if we misjudge or overestimate products quality standards, we may not be able to use these products or implement the strategies that were the primary reason for the corresponding acquisition, such as may be the case with the JAFRA Acquisition, which would lead to a significant loss both financially and in time spent by our teams trying to integrate the products or implement the strategy.
If any analyst who may cover the Company were to cease coverage of the Company or fail to regularly publish reports on it, the Company could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.
If any analyst who may cover the Company were to cease coverage of the Company or fail to regularly publish reports on it, the Company could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline. 18 There can be no assurance that Betterware will be able to comply with the continued listing standards of Nasdaq.
In addition, this concentration of ownership may discourage, delay or prevent a change in control which could deprive you of an opportunity to receive a premium for your Ordinary Shares as part of a sale of the Group.
These actions may be taken in many cases even if they are opposed by the Group’s other shareholders. In addition, this concentration of ownership may discourage, delay or prevent a change in control which could deprive you of an opportunity to receive a premium for your Ordinary Shares as part of a sale of the Group.
Based on the projected composition of our income and assets, including goodwill, it is not expected that the Company will be a PFIC for the foreseeable future. However, the tests for determining PFIC status are applied annually after the close of the taxable year, and it is difficult to predict accurately future income and assets relevant to this determination.
However, the tests for determining PFIC status are applied annually after the close of the taxable year, and it is difficult to predict accurately future income and assets relevant to this determination. Accordingly, there can be no assurance that the Company will not be considered a PFIC for any taxable year.
If we are unable to successfully integrate the operations of JAFRA, or any other acquired business, into our business, we may be unable to realize the sales growth, cost synergies and other anticipated benefits of such transactions, and our business, results of operations and cash flow could be adversely affected.
If we are unable to successfully integrate the operations of JAFRA, or any other acquired business, into our business, we may be unable to realize the sales growth, cost synergies and other anticipated benefits of such transactions, and our business, results of operations and cash flow could be materially adversely affected. 8 Our indebtedness and any future inability to meet any of our obligations under our indebtedness, could adversely affect us by reducing our flexibility to respond to changing business and economic conditions.
In addition, we purchase certain finished goods, raw materials, packaging and other components from single-source suppliers or a limited number of suppliers and if we are required to find alternative sources of supply, these new suppliers may have to be qualified under applicable industry, governmental and Company-mandated vendor standards, which can require additional investment and be time-consuming.
In addition, we purchase certain finished goods, raw materials, packaging and other components from single-source suppliers or a limited number of suppliers and if we are required to find alternative sources of supply, these new suppliers may have to be qualified under applicable industry, governmental and Company-mandated vendor standards, which can require additional investment and be time-consuming. 3 Any significant disruption to our manufacturing or sourcing of products or raw materials, packaging and other components for any reason (including the continued global supply chain disruptions) could materially impact our inventory levels and interrupt and delay our supply of products to our leaders and consultants.
However, our security framework allows us to minimize and manage these risks through the use of enabling technologies such as, but not limited to, firewalls, mail & web filtering, end point protection, antivirus and anti malware, access lists, encryption and hardening. 4 In addition, our business operations routine involves gathering personal information about vendors, distributors, leaders, consultants, customers and employees among others, through the use of information technologies.
However, our security framework allows us to minimize and manage these risks through the use of enabling technologies such as, but not limited to, firewalls, mail & web filtering, end point protection, antivirus and anti-malware, access lists, encryption and hardening.
During 2022, Mexico’s sovereign debt rating has been confirmed and a stable outlook has been maintained. We cannot ensure that the rating agencies will not announce an outlook revision and/or any downgrades of Mexico or any of its state owned companies.
During 2023, Mexico’s sovereign debt rating has been confirmed and a stable outlook has been maintained. We cannot ensure that the rating agencies will not announce an outlook revision and/or any downgrades of Mexico or any of its state-owned companies. These revisions and downgrades could adversely affect the Mexican economy and, consequently, our business, financial condition, operating results and prospects.
As of the date of this annual report, Campalier owns approximately 53.65% of our outstanding Ordinary Shares. As the controlling shareholder, Campalier may take actions that are not in the best interests of the Group’s other shareholders. These actions may be taken in many cases even if they are opposed by the Group’s other shareholders.
Our controlling shareholder may have interests that conflict with your interests. As of the date of this annual report, Campalier owns approximately 53.91% of our outstanding Ordinary Shares. As the controlling shareholder, Campalier may take actions that are not in the best interests of the Group’s other shareholders.
Factors that could affect our ability to continue to introduce new products include, among others, government regulations, proprietary protections of competitors that may limit our ability to offer comparable products and any failure to anticipate changes in consumer tastes and buying preferences.
Factors that could affect our ability to continue to introduce new products include, among others, government regulations, proprietary protections of competitors that may limit our ability to offer comparable products and any failure to anticipate changes in consumer tastes and buying preferences. 2 We depend on multiple contract manufacturers mostly located in China, and the loss of the services provided by any of our manufacturers could harm our business and results of operations.
Additionally, the Mexican federal government has implemented protectionist policies in the past and could implement certain national policies in the future that could restrict our operations, including restrictions on imports from certain countries. Mexico may experience high levels of inflation in the future, which could affect our results of operations.
Additionally, the Mexican federal government has implemented protectionist policies in the past and could implement certain national policies in the future that could restrict our operations, including restrictions on imports from certain countries. 15 Our business may be significantly affected by the Mexican economy’s general condition, by the depreciation of the peso, inflation, and high-interest rates in Mexico.
In addition, future acquisitions may be made by the Group and a portion of the purchase price of these acquisitions may be allocated to acquired goodwill, property, plant and equipment and intangible assets. An impairment on property, plant and equipment or goodwill of acquired businesses could have a material adverse effect on our financial condition and results of operations.
In addition, future acquisitions may be made by the Group and a portion of the purchase price of these acquisitions may be allocated to acquired goodwill, property, plant and equipment and intangible assets.
Our revenue and profitability may be affected if we fail to acquire new companies or integrate those that we have already acquired, such as JAFRA. We consider acquisitions a useful instrument to complement our organic growth. We opportunistically explore acquiring other businesses and assets, such as the JAFRA Acquisition.
If we fail to comply with new or changed laws or regulations and standards differ, our business and reputation may be materially adversely affected. Our revenue and profitability may be affected if we fail to acquire new companies or integrate those that we have already acquired, such as JAFRA. We consider acquisitions a useful instrument to complement our organic growth.
Our results conclude thar we did not design and maintain effective controls over the (i) business combination transaction process; (ii) period-end financial reporting and consolidation process; and (iii) certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements.
Our management concluded that we did not design and maintain effective controls over the (i) the effectiveness of the controls over the business combination process, specifically, we did not design and maintain controls to determine the ongoing impairment assessment; (ii) the effectiveness of the controls in the period-end financial reporting and consolidation process, as we did not design and maintain formal accounting policies, procedures and controls to ensure complete, accurate and timely reporting in the consolidated financial statements; and; and (iii) the effectiveness of certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements.
Material weaknesses have been identified in Betterware’s internal control over financial reporting, and if we fail to establish and maintain proper and effective internal controls over financial reporting, our results of operations and our ability to operate our business may be harmed.
An impairment on property, plant and equipment or goodwill of acquired businesses could have a material adverse effect on our financial condition and results of operations. 6 Material weaknesses have been identified in Betterware’s internal control over financial reporting, and if we fail to establish and maintain proper and effective internal controls over financial reporting, our results of operations and our ability to operate our business may be materially adversely affected.
The loss of key high-level distributors, leaders or consultants could negatively impact our growth and our revenue. As of December 31, 2022, BWM had approximately 778,845 active associates and 39,413 distributors, and JAFRA had approximately 492,191 and 21,385 active consultants and leaders, respectively.
The loss of key high-level distributors, leaders or consultants could negatively impact our growth and our revenue. As of December 31, 2023, BWM had approximately 741,170 active associates and 41,825 distributors, and JAFRA had approximately 498,853 and 20,512 active consultants and leaders, respectively.
We may also incur additional working capital lines of credit to meet future financing needs, subject to certain restrictions under our indebtedness, which would increase our total indebtedness.
Recent disruptions in the global credit markets and their effect on the global and Mexican economies could materially adversely affect our business. We may also incur additional working capital lines of credit to meet future financing needs, subject to certain restrictions under our indebtedness, which would increase our total indebtedness.
We also expect the regulations to increase our legal and financial compliance costs, making it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time-consuming and costly.
We also expect the regulations to increase our legal and financial compliance costs and to make it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time-consuming and costly. 7 Existing, new and changing corporate governance and public disclosure requirements could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards.
In addition, we generally purchase our hedging instruments on a rolling twelve-month basis; instruments protecting it to the same or a similar extent may not be available in the future on reasonable terms. Unprotected declines in the value of the Mexican peso against the U.S. dollar will adversely affect our ability to pay our dollar-denominated expenses, including our supplier obligations.
In addition, we generally purchase our hedging instruments on a rolling twelve-month basis; instruments protecting it to the same or a similar extent may not be available in the future on reasonable terms.
In addition, BWM’s officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of Company securities. 14 In addition, as a “foreign private issuer” whose shares are listed on Nasdaq, the Company is permitted to, and is expected to, follow certain home country corporate governance practices in lieu of certain Nasdaq requirements.
In addition, BWM’s officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of Company securities.

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Item 4. Mine Safety Disclosures

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Biggest changeProduct Development and Innovation Program ● We offer a product portfolio with great depth in: Ø the home organization segment through six different categories: kitchen and food preservation, home solutions, bathroom, laundry & cleaning, tech and mobility and bedroom, and Ø the beauty and personal care segment through four different categories: fragrances, color, skin care and toiletries. ● We update our catalogues content and focus on constant product innovation and incentive plans in order to attract clients’ repeated purchases. ● We perform industry analyses and product development and monitoring to support and decide our commercial strategy.
Biggest changeProduct Development and Innovation Program ● We offer a product portfolio with great depth in: Ø the home organization segment through seven different categories: kitchen and food preservation, home solutions, bathroom, laundry & cleaning, tech and mobility, bedroom, and well-being. Ø the beauty and personal care segment through four different categories: fragrances, color, skin care and toiletries. ● We update our catalogues content and focus on constant product innovation and incentive plans in order to attract clients’ repeated purchases. ● We perform industry analyses and product development and monitoring to support and decide our commercial strategy. 23 Distributors, Associates, Leaders and Consultants Network & Loyalty and Reward Programs ● Our home organization segment has a unique two-tier sales model and one of the most robust networks with more than 41,825 distributors and 741,170 associates as of December 31, 2023. ● Our home organization segment’s distributors and associates have approximately 24.5% household penetration in Mexico and 77% of distributors and 27% of associates place orders every week. ● Our beauty and personal care segment has a multilevel program, with 10 levels of seniority determined by the amount of sales and consultants they have, offering attractive benefits and incentives.
Our distributors and associates are monitored tightly through an in-house developed business intelligence platform that tracks weekly performance and has a detailed mapping system of the country to identify potential areas to penetrate and increase the network.
Our distributors and associates are monitored tightly through an in-house developed business intelligence platform that tracks weekly performance and has a detailed mapping system of the country to identify potential areas to penetrate and increase our network.
JAFRA environment: ● Energy efficiency: we have implemented a system that produces heat and electricity simultaneously in a single plant (Co-generation “CHP”), which allows to reduce our greenhouse gas emissions up to 92 tons CO2e annually. ● Energy saving: we implemented good energy consumption practices such as natural lighting in operational areas and warehouses, use of LED technology for facilities’ lighting, photocells for outdoor lighting, automatic lighting shutdown program and awareness campaigns on the efficient use of electrical energy. ● Waste reduction and recovery: we have also focused on waste recovery processes, which have allowed to recover more than 90% of the waste generated, reducing the load on landfills, and integrating them into reuse or recycling processes, in addition to the 10% reduction in waste generation for each product produced. 23 ● Water saving: good water consumption practices have also been implemented, such as improving the efficiency of the demineralization process, installation of water-saving technologies, reuse of discharge water, treatment of water discharges and awareness campaigns on the efficient use of water.
JAFRA environment: ● Energy efficiency: we have implemented a system that produces heat and electricity simultaneously in a single plant (Co-generation “CHP”), which allows to reduce our greenhouse gas emissions up to 92 tons CO2e annually. ● Energy saving: we implemented good energy consumption practices such as natural lighting in operational areas and warehouses, use of LED technology for facilities’ lighting, photocells for outdoor lighting, automatic lighting shutdown program and awareness campaigns on the efficient use of electrical energy. ● Waste reduction and recovery: we have also focused on waste recovery processes, which have allowed to recover more than 90% of the waste generated, reducing the load on landfills, and integrating them into reuse or recycling processes, in addition to the 10% reduction in waste generation for each product produced. ● Water saving: good water consumption practices have also been implemented, such as improving the efficiency of the demineralization process, installation of water-saving technologies, reuse of discharge water, treatment of water discharges and awareness campaigns on the efficient use of water.
Some of the initiatives that have been developed during 2022 include: Environment: BWM Environment: ● All the carboard boxes that come from China are recycled and all our catalogs are printed in paper PEFC (Program for the Endorsement of Forest Certification) certified. ● Around 55% of the collaborators use the collective transport service provided by BWM and 2% is in the carpooling scheme, under which BWM provides money for gas and a preferred parking spaces. ● We are promoting ECO products so that their participation within our catalog becomes more significant. ● Twice a year, we deliver an endowment of ecological bags to all its distributors according to their registered associates.
Some of the initiatives that have been developed during 2022 include: Environment: BWM Environment: ● All the carboard boxes that come from China are recycled and all our catalogs are printed in paper PEFC (Program for the Endorsement of Forest Certification) certified. ● Around 55% of the collaborators use the collective transport service provided by BWM and 2% is in the carpooling scheme, under which BWM provides money for gas and preferred parking spaces. 27 ● We are promoting ECO products so that their participation within our catalog becomes more significant. ● Twice a year, we deliver an endowment of ecological bags to all its distributors according to their registered associates.
We conduct a survey on employees’ experience (Workplace Climate Survey) that helps us understand better, from the perspective of our employees, which organizational, digital, physical, and interpersonal elements of our company need to be reinforced or developed to offer a positive work experience to our employees. ● Equal and competitive compensation between women and men and balance in work opportunities and promotions. ● Daycare in Campus Betterware available for all BWM’s employees to support them during their workday.
We conduct a survey on employees’ experience (Workplace Climate Survey) that helps us understand better, from the perspective of our employees, which organizational, digital, physical, and interpersonal elements of our company need to be reinforced or developed to offer a positive work experience to our employees. 28 ● Equal and competitive compensation between women and men and balance in work opportunities and promotions. ● Daycare in Campus Betterware available for all BWM’s employees to support them during their workday.
These environmental and social impact projects are mainly focused on: ● Allowing us to reduce electricity and water consumption. ● Using recyclable materials for construction of our products. ● Developing products with environmentally friendly packaging. ● Developing internal tools for measuring our environmental impact. ● Employment generation through new sources of income. ● Supporting vulnerable groups and empowering women. ● Strong relationship with local suppliers.
These environmental and social impact projects are mainly focused on: ● Allowing us to reduce electricity and water consumption. 25 ● Using recyclable materials for construction of our products. ● Developing products with environmentally friendly packaging. ● Developing internal tools for measuring our environmental impact. ● Employment generation through new sources of income. ● Supporting vulnerable groups and empowering women. ● Strong relationship with local suppliers.
ORGANIZATIONAL STRUCTURE The following diagram depicts the organizational structure of the Group as of the date of this annual report: D. PROPERTY, PLANT AND EQUIPMENT We own the following properties in Mexico: ● BWM’s principal executive offices are located in El Arenal, Jalisco, Mexico.
ORGANIZATIONAL STRUCTURE The following diagram depicts the organizational structure of the Group as of the date of this annual report: 30 D. PROPERTY, PLANT AND EQUIPMENT We own the following properties in Mexico: ● BWM’s principal executive offices are located in El Arenal, Jalisco, Mexico.
Specifically, we will focus on ten SDGs: Strategic Sustainability Model 22 Within the three ESG’s dimensions, environment, social and governance, we determined several focuses and action lines. We developed a strategic sustainability model around these focuses and action lines.
Specifically, we will focus on ten SDGs: Strategic Sustainability Model Within the three ESG’s dimensions, environment, social and governance, we determined several focuses and action lines. We developed a strategic sustainability model around these focuses and action lines.
Our home organization segment is focused on creating innovative products that solve specific needs regarding organization, practicality, space-saving and hygiene within the household, with a wide product portfolio including home solutions, kitchen and food preservation, technology and mobility, bedroom, bathroom, laundry and cleaning and other categories that include products and solutions for every corner of the household.
Our home organization segment is focused on creating innovative products that solve specific needs regarding organization, practicality, space-saving and hygiene within the household, with a wide product portfolio including home solutions, kitchen and food preservation, technology and mobility, bedroom, bathroom, laundry and cleaning, well-being and other categories that include products and solutions for every corner of the household.
With this program we have managed to offset carbon emissions, contributing to the conservation of forests, promoting environmental and social awareness among employees and families. ● “ Reciclatón & Recolectrón ” Programs: consist of collecting waste generated at the collaborators homes (Paper / cardboard / electronics) and offering alternatives for the correct disposal of waste.
With this program we have managed to offset carbon emissions, contributing to the conservation of forests, promoting environmental and social awareness among employees and families. ● “ Reciclatón & Recolectrón ” Programs: consist of collecting waste generated at the collaborator’s homes (Paper / cardboard / electronics) and offering alternatives for the correct disposal of waste.
On March 8, 2023, Silvia Davila was appointed as the first woman to become Independent Board Member of the Company. This action is in line with our commitment to include at least two women in our Board of Directors by 2025. 24 C.
On March 8, 2023, Silvia Davila was appointed as the first woman to become Independent Board Member of the Company. This action is in line with our commitment to include at least two women in our Board of Directors by 2025.
Sales & Marketing ● Our main advertising expenditures are sales catalog design and printing expenses, particularly with respect to our catalogues that are delivered to our distributors, associates, leaders and consultants who then distribute them to customers. As of December 31, 2022, sales and marketing expenses represented 3.9% of our net revenue.
Sales & Marketing ● Our main advertising expenditures are sales catalog design and printing expenses, particularly with respect to our catalogues that are delivered to our distributors, associates, leaders and consultants who then distribute them to customers. As of December 31, 2023, sales and marketing expenses represented 3.1% of our net revenue.
We built this facility to concentrate our corporate offices, storage and distribution of our home organization segment activities. The facility was completed in 2021 and the total investment amounted to Ps.1,108 million. ● JAFRA’s production facility was built in October 2008, and is located in Querétaro, Mexico.
We built this facility to concentrate our corporate offices, storage and distribution of our home organization segment activities. The facility was completed in 2023 and the total investment amounted to Ps.1,111 million. ● JAFRA’s production facility was built in October 2008, and is located in Querétaro, Mexico.
See” Indebtedness—Long Term Bond Offering.” ● On January 18, 2022, we entered into a share purchase agreement to acquire 100% of JAFRA’s operations in Mexico and the United States. The transaction was consummated on April 7, 2022.
See “Indebtedness—Long Term Bond Offering.” ● On January 18, 2022, we entered into a share purchase agreement to acquire 100% of JAFRA’s operations in Mexico and the United States. The transaction was consummated on April 7, 2022.
All of our home organization’s products are branded with unique characteristics and manufactured by +365 certified manufactures in China and México, and then delivered to BWM’s warehouse in Guadalajara, Jalisco where we process and pack the products.
All of our home organization’s products are branded with unique characteristics and manufactured by more than 350 certified manufactures in China and México, and then delivered to BWM’s warehouse in Guadalajara, Jalisco where we process and pack the products.
Strategic business acquisitions. 20 Customers ● We are 100% committed to provide products to our customers that serve as everyday solutions for modern space organization and beauty and personal care for all kind of clients.
Customers ● We are 100% committed to provide products to our customers that serve as everyday solutions for modern space organization and beauty and personal care for all kind of clients.
BUSINESS OVERVIEW We are a leading company in the direct sales industry, offering a product portfolio divided two segments: ● Home organization segment (BWM) integrated by six different categories: kitchen and food preservation, home solutions, bathroom, laundry & cleaning, tech and mobility and bedroom.
BUSINESS OVERVIEW We are a leading company in the direct sales industry, offering a product portfolio divided into two segments: ● Home organization segment (BWM) comprised of seven different categories: kitchen and food preservation, home solutions, bathroom, laundry & cleaning, tech and mobility, bedroom and wellness.
In addition, another advertising costs includes videos, radio and tv spots, social media, promotional campaigns, marketing campaigns, billboards and transit advertising in bus lines and subways, which as of December 31, 2022, represented 0.5% of our net revenue.
In addition, another advertising costs includes videos, radio and tv spots, social media, promotional campaigns, marketing campaigns, billboards and transit advertising in bus lines and subways and events, which as of December 31, 2023, represented 2.4% of our net revenue.
As of December 31, 2022, we had a network of more than 21,385 leaders and 492,191 consultants. ● Our beauty and personal care segment has one of the biggest distribution networks of leaders and consultants in Mexico reaching more than 7,500 cities.
As of December 31, 2022, we had a network of more than 20,512 leaders and 498,853 consultants. ● Our beauty and personal care segment has one of the biggest distribution networks of leaders and consultants in Mexico reaching more than 7,500 cities.
Such filings and other information on our website are not incorporated by reference in this annual report. Interested parties may request a copy of this filing, and any other report, at no cost, by writing to the following email address: ir@better.com.mx. A. HISTORY AND DEVELOPMENT OF THE COMPANY ● Founded in 1995, Betterware is a leading direct-to-costumer company in Mexico.
Such filings and other information on our website are not incorporated by reference in this annual report. Interested parties may request a copy of this filing, and any other report, at no cost, by writing to the following email address: ir@better.com.mx. A.
Likewise, we took advantage of the characteristics of the land, and we incorporated local flora species of the place into the outdoor recreation areas. 21 Some of the environmental friendly practices that were implemented in the construction of the Campus, include: ● Approximately, 90% of the materials were recyclable materials such as glass and aluminum. ● Installation of LED lighting throughout the Campus. ● Insulating materials were used to prevent the walls of the buildings from raising their temperatures, avoiding the excessive use of air conditioners. ● Installation of drip irrigation systems to take care of the local vegetation. ● Installation of a nursery to care for endemic trees and plants.
Some of the environmentally friendly practices that were implemented in the construction of the Campus, include: ● Approximately, 90% of the materials were recyclable materials such as glass and aluminum. ● Installation of LED lighting throughout the campus. ● Insulating materials were used to prevent the walls of the buildings from raising their temperatures, avoiding the excessive use of air conditioners. ● Installation of drip irrigation systems to take care of the local vegetation. ● Installation of a nursery to care for endemic trees and plants.
Almost all of our beauty and personal care segment’s products are produced in our facility located in Queretaro, México and distributed across Mexico and in some cities of the United States through our distribution center located in Lerma, Mexico.
JAFRA develops approximately 160 new products in average for all categories every year. Almost all of our beauty and personal care segment’s products are produced in our facility located in Queretaro, México and distributed across Mexico and in some cities of the United States through our distribution center located in Lerma, Mexico.
As of December 2022, the total investment amounted to Ps.1,108,458. ● On March 13, 2020, the Merger with DD3 was closed and consummated. ● On December 14, 2020, the Forteza Merger was closed and consummated. ● On August 2, 2021, Betterware’s corporate name changed from Betterware de México, S.A.B. de C.V. to Betterware de México, S.A.P.I. de C.V. ● On August 30, 2021, we completed an offering of a two-tranche sustainability bond issuance for a total of Ps.1,500,000, with maturities across 4 and 7 years, offered in the Mexican Market.
See “The Business Combination.” ● In August 2019, Betterware started building a distribution center which was ready for use in 2021, with construction completed in 2023, for a total investment of Ps.1,110,807. ● On March 13, 2020, the Merger with DD3 was closed and consummated. ● On December 14, 2020, the Forteza Merger was closed and consummated. ● On August 2, 2021, Betterware’s corporate name changed from Betterware de México, S.A.B. de C.V. to Betterware de México, S.A.P.I. de C.V. ● On August 30, 2021, we completed an offering of a two-tranche sustainability bond issuance for a total of Ps.1,500,000, with maturities across 4 and 7 years, offered in the Mexican market.
This broad focus on our stakeholders gave us a specific materiality matrix that was used to prioritize the key subjects that are material for the Group. We were able to identify our “Sustainable Development Goal” standards (SDGs). In performing the assessment, we followed the “Global Reporting Initiative” standards (GRIs) and the “Sustainability Accountant Standards Board” (SASB).
This broad focus on our stakeholders gave us a specific materiality matrix that was used to prioritize the key subjects that are material for the Group. We were able to identify our “Sustainable Development Goal” standards (SDGs).
Once we had all the material issues identified, we created a comprehensive ESG model with focus, dimension, and lines of action. Also, this model recognizes specific SDGs that we will focus on within the sustainability strategy.
In performing the assessment, we followed the “Global Reporting Initiative” standards (GRIs) and the “Sustainability Accountant Standards Board” (SASB). 26 Once we had all the material issues identified, we created a comprehensive ESG model with focus, dimension, and lines of action. Also, this model recognizes specific SDGs that we will focus on within the sustainability strategy.
Our home organization segment’s products are sold through monthly catalogues published throughout the year. During 2022, BWM launched 568 new products (compared to 338 during 2021), with a balance of 397 new developments (compared to 281 during 2021) and 171 bring-backs (compared to 57 during 2021).
Our home organization segment’s products are sold through monthly catalogues published throughout the year where we exhibit approximately 356 products per catalogue. During 2023, BWM launched 678 new products (compared to 568 during 2022), with a balance of 506 new developments (compared to 397 during 2022) and 172 bring-backs (compared to 171 during 2022).
For the 2022 period, this segment represented 55.1% of our net revenue in a consolidated basis. ● Beauty and personal care (B&PC) segment (JAFRA) integrated by four main categories: fragrance, color, skin care and toiletries.
For the year 2023, this segment represented 44% of our net revenue on a consolidated basis. ● Beauty and personal care (B&PC) segment (JAFRA) comprised of four main categories: fragrance, color, skin care and toiletries. For the year 2023, this segment represented 56% of our net revenue on a consolidated basis.
Supported by our top-notch product innovation, business intelligence and technology units, which provide daily monitoring of key metrics and product intelligence, our home organization product segment has been able to achieve sustainable double-digit growth rates by successfully expanding our household penetration.
Supported by our top-notch product innovation, business intelligence and technology units, which provide daily monitoring of key metrics and product intelligence, our home organization product segment has been able to achieve sustainable double-digit growth rates by successfully expanding our household penetration. 22 Beauty and Personal Care Segment (JAFRA) Our beauty and personal care segment has a portfolio of more than 1,200 products within four main categories: fragrances, color, skin care and toiletries.
We sell our home organization segment’s products through a unique two-tier sales model., As of December 31, 2022, more than 39,413 distributors and 778,845 associates across Mexico, who serve + 23% household penetration in Mexico; and 79% of distributors and 28% of associates place orders every week.
We sell our home organization segment’s products through a unique two-tier sales model., As of December 31, 2023, more than 41,825 distributors and 741,170 associates across Mexico, who have approximately 24.5% household penetration in Mexico; and 77% of distributors and 27% of associates place orders every week.
In 2022, our beauty and personal care segment’s products were sold through 12 promotional catalogues published on a monthly basis offering 300 products in average per catalogue, as well as a brochure with annually available products at regular price. JAFRA develops approximately 200 new products in average for all categories every year.
JAFRA has been leader in the fragrance market since 2015. In 2023, our beauty and personal care segment’s products were sold through 12 promotional catalogues published on a monthly basis offering 400 products in average per catalogue, as well as a brochure with annually available products at regular price.
The construction of the Campus respects the ecosystem and took advantage of natural light and ventilation to reduce the environmental footprint.
The construction of the Campus respects the ecosystem and took advantage of natural light and ventilation to reduce the environmental footprint. Likewise, we took advantage of the characteristics of the land, and we incorporated local flora species of the place into the outdoor recreation areas.
Our beauty and personal care segment’s products are sold through a generational multilevel model, reaching more than 7,500 cities in Mexico. 18 Industry Overview We operate under “Direct selling” retail industry. The direct selling industry differs from broader retail mainly in the avenue where entrepreneurial-minded individuals can work independently to build a business with low start-up and overhead costs.
The direct selling industry differs from broader retail mainly in the avenue where entrepreneurial-minded individuals can work independently to build a business with low start-up and overhead costs.
All of our beauty and personal care segment’s products are internally manufactured in our facility located in Queretaro, Mexico. Experienced Management & Meritocratic Culture ● Our Board Chairman, Mr.
Unparalleled Logistics and Supply Chain Platform Our home organization segment’s products are manufactured by more than 350 third-party certified factories located in China and Mexico following BWM’s quality standards. 84.3% of our beauty and personal care segment’s products are internally manufactured in our facility located in Queretaro, Mexico. Experienced Management & Meritocratic Culture ● Our Board Chairman, Mr.
Expansion Strategy We have a plan for growth, which includes organic and inorganic initiatives. The main strategies divided by timeline are the following: ● Short Term 1. New product categories; 2. Web marketing/E-commerce; and 3. Increase service capacity. ● Medium Term 1. New product lines; 2. International expansion to North America and Latin America; and 3.
New product categories; 2. Web marketing/E-commerce; and 3. Increase service capacity. ● Medium Term 1. New product lines; 2. International expansion to North America and Latin America; and 3. Strategic business acquisitions.
Result driven management: ○ Incentives based on results; and ○ Highly professional operation and no bureaucracy. 2. Meritocratic culture: ○ Culture focused on solutions, delivery, discipline and commitment. 3. Closeness to salesforce: ○ Management is close and visible to distributors, associates, leaders and consultants; and ○ Open office spaces for efficient flow of information and data allows fast decision making.
Result driven management: ● Incentives based on results; and ● Highly professional operation and no bureaucracy. 2. Meritocratic culture: ● Culture focused on solutions, delivery, discipline and commitment. 3.
For the 2022 period, this segment represented 44.9% of our net revenue in a consolidated basis. 17 Home Organization Segment (BWM): Betterware is a leading direct-to-customer company in Mexico.
Home Organization Segment (BWM): Betterware is a leading direct-to-customer company in Mexico.
Also, 92% of leaders and 54% of consultants place orders on a monthly basis. ● We have a rewards program intended to attract, retain, and motivate distributors, associates, leaders and consultants through product discounts, points, trips, gifts and more. 19 Unparalleled Logistics and Supply Chain Platform Our home organization segment’s products are manufactured by more than 365 third-party certified factories located in China and Mexico following BWM’s quality standards.
Also, 94% of leaders and 52% of consultants place orders on a monthly basis. ● We have a rewards program intended to attract, retain, and motivate distributors, associates, leaders and consultants through product discounts, points, trips, gifts and more.
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See “The Business Combination.” ● In August 2019, Betterware started building a distribution center which was completed in the first quarter of 2021.
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HISTORY AND DEVELOPMENT OF THE COMPANY All amounts in this section marked with “Ps.” are in thousands of Mexican pesos, unless otherwise noted ● Founded in 1995, Betterware is a leading direct-to-costumer company in Mexico.
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See “—Presentation of Financial Information—The JAFRA Acquisition—Organizational Structure.” JAFRA is a leading global brand in direct sales in the beauty and personal care (B&PC) industry with a strong presence in Mexico and the United States founded in 1956. B.
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See “—Presentation of Financial Information—The JAFRA Acquisition—Organizational Structure.” JAFRA is a leading global brand in direct sales in the beauty and personal care (B&PC) industry with a strong presence in Mexico and the United States founded in 1956. ● During 2023, the Group decreased long-term debt by approximately Ps.1,000,000 compared to 2022, through the following movements (See “Indebtedness” for additional information”): a) On July 5, 2023, Betterware signed an agreement with BBVA to acquire a simple line of credit for Ps.1,500,000. b) On July 7, 2023, Betterware successfully concluded the third and fourth bond offerings for a total of Ps.813,974, with four and seven-year maturities, issued in the Mexican market. c) As of July 10, 2023, Betterware fully prepaid the debt of the syndicated loan related to the JAFRA Acquisition in 2022, using the new cash provided from the long-term debt with BBVA and the third and fourth bond issuances, plus the proceeds from short-term debt under revolving credit lines. d) On September 12, 2023, Betterware signed an agreement with HSBC to acquire a simple line of credit for Ps.950,000. 21 B.
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Despite the 6.4% reduction in the number of “Stock Keeping Unit” (SKU’s) displayed per catalogue (driven by change to monthly catalogues), increased innovation allowed Betterware to exhibit more than 3,800 SKU’s throughout the year (achieving a 12% growth compared to 3,395 during 2021).
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During 2023, BWM increased innovation in order to promote sales by focusing on market trends and to attract and maintain a diverse customer base. We added to our catalogs trend products related to babies, pets and wellness, among others.
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Beauty and Personal Care Segment (JAFRA) Our beauty and personal care segment has a portfolio of more than 500 products within four main categories: fragrances, color, skin care and toiletries. JAFRA has been leader in the fragrance market since 2015.
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In 2023 our products included more than 4,277 SKUs (product codes) throughout the year (achieving a 12.5% growth compared to 3,800 SKUs during 2022).
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Distributors, Associates, Leaders and Consultants Network & Loyalty and Reward Programs ● Our home organization segment has a unique two-tier sales model and one of the most robust networks with more than 39,413 distributors and 778,845 associates as of December 31, 2022. ● Our home organization segment’s distributors and associates serve around 23% Household Penetration in Mexico and 79% of distributors and 28% of associates place orders every week. ● Our beauty and personal care segment has a multilevel program, with 10 levels of seniority determined by the amount of sales and consultants they have, offering attractive benefits and incentives.
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Our beauty and personal care segment’s products are sold through a generational multilevel model, reaching penetration in sales of 13% in fragrances, 3.5% in color and 1.1% in skin care in México. Industry Overview We operate under “Direct selling” retail industry.
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Closeness to salesforce: ● Management is close and visible to distributors, associates, leaders and consultants; and ● Open office spaces for efficient flow of information and data allows fast decision making. 24 Expansion Strategy We have a plan for growth, which includes organic and inorganic initiatives. The main strategies divided by timeline are the following: ● Short Term 1.
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Seasonality We have not experienced and do not expect to experience, any material seasonal fluctuations which could affect our business and results of operations.
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Sustainability Events during 2023 During the last quarter of 2023, we devoted our efforts on sustainability to the development of a comprehensive strategy that recognizes that our impact on the environment and society is material to our financial performance, with a focus on our core values and views: People, Planet and Profit.
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These three pillars encompass our short and mid-term vision regarding what we are striving to accomplish not only as a Group, but also in our commitment towards the UN Sustainable Development Goals. People: Our mission is to create opportunities for those who can and want to seize them.
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Our business model allows over a million people (90% of them women) to have a source of income that brings them independence, flexibility, and amazing growth opportunities. Additionally, we care for the wellbeing of all our workforce with excellent working conditions that promote the integrity of our employees prioritizing their physical, emotional, and mental health.
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Our goals for 2024 include: ● The re-launch of our Non-Profit organization ● Social projects that will benefit our neighbor communities ● Strategic alliances with other non-profit organizations that will increase our impact. Planet: We are committed to preserving the environment and to compensating for the carbon footprint that our activities have on the environment.
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We are aware of the urgent water and climate-change crisis that our world is going through, and we believe that awareness and education are key to shifting this crisis.
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Therefore, our main efforts will focus on creating conscience on our employees and sales force on how each one of us can take action and contribute to assume responsibility of the impact we generate on the environment.
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Our key goals for 2024 include: ● Measurement of our carbon footprint (scope 1 and 2) ● Investment in solar panels ● Nation-wide recycling campaign ● Printing reduction goals ● Reforestation of more than a thousand species in two states in Mexico ● Education on water conservation, circular economy, climate change and upcycling for our employees and sales force. 29 Profit: Our view on business growth is aligned with our social view.
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If our sales force grows, we grow. However, we want to ensure that our growth is fair and in sync with our core ethical values.
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Our governance goals for 2024 include: ● Communication of our new code of ethics ● Gender equality across all levels of our group ● Long-term ESG goals ● Publishing of our 2023 sustainability report ● JAFRA’s recognition that its impact on the environment and society is material to its financial performance. C.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 26 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 41 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 47 ITEM 8. FINANCIAL INFORMATION 47 ITEM 9. THE OFFER AND LISTING 48 ITEM 10. ADDITIONAL INFORMATION 49 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISK 58 ITEM 12.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Our discussion and analysis of our results of operations and financial condition are based upon our Audited Consolidated Financial Statements, which have been prepared in accordance with IFRS.
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DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 61 PART II CONTROLS AND PROCEDURES 62 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 62 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 62 ITEM 15. CONTROLS AND PROCEDURES 62 ITEM 16. Reserved 65 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT 65 ITEM 16B.
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Our operating and financial review and prospects should be read in conjunction with our Audited Consolidated Financial Statements, the accompanying notes thereto and other financial information appearing elsewhere in this annual report. A.
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CODE OF ETHICS 66 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES 66 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 66 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 67 ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT 67 ITEM 16G. CORPORATE GOVERNANCE 67 ITEM 16H. MINE SAFETY DISCLOSURE 67
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Operating Results Factors Affecting Our Results of Operations of the Group A number of factors have a significant impact on our business and results of operations, the most important of which are regulations, fluctuations in exchange rates in the currencies in which we operate, external factors, such as the COVID-19 pandemic and our capital investment plans.
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Betterware’s distributors and associates BWM sells its products through a unique two-tier sales model that is comprised of distributors and associates. Distributors act as link between BWM and the associates. BWM distributes products in a weekly basis to distributors’ domicile, who in turn deliver the products to the associates.
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BWM provides distributors a two-week credit line for them to pay BWM back the price for the products. JAFRA’s leaders and consultants JAFRA sells its products through a multilevel program with 10 levels of leaders and consultants. Leaders and consultants are the link between JAFRA and final customers.
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JAFRA provides a 30-day credit line to leaders and consultants to pay JAFRA back for the price of the products. 31 Net Revenue We generate revenue mainly through sale of products within two main segments: Ø Home organization segment, under the Betterware® brand.
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Some of the categories through which Betterware offers its product line include kitchen and food preservation, home solutions, bathroom, laundry & cleaning, tech and mobility, bedroom and wellness. BWM’s products are sold through catalogues and are distributed to the end customer by its network of distributors and associates.
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BWM sells its products to a wide array of customers but focuses on the C and D segments of the Mexico’s socioeconomic pyramid; and Ø Beauty and personal care (B&PC) segment, under JAFRA’s brand. Our beauty and personal care segment include four main categories: fragrance, color, skin care and toiletries.
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JAFRA’s products are sold through 12 promotional catalogues published on a monthly basis and are distributed to the end customer by its network of leaders and consultants. JAFRA offers monthly promotions focused on the “D” segment of the Mexico’s socioeconomic pyramid. For the year ended December 31, 2023, JAFRA contributed 56% of our consolidated net revenue and BWM contributed 44%.
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We report net revenue, which represents its gross revenue less sales discounts, adjustments and allowances.
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We also have deferred revenue due to undelivered performance obligations related to the promotional points program as per IFRS 15 “Revenue from Contracts with Customers.” Deferred revenue relates to the accumulated points than distributors, associates, leaders and consultants have gained from their purchases and recruitment of new sales force.
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They can redeem these points for rewards (furniture, electronics, domestic appliances, among others). Revenue from the points program is recognized when points are actually redeemed and exchanged by distributors, associates, leaders and consultants.
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Our revenue is recognized using a five-step model: ● Identify the contract with client (verbal or written). ● Identify the performance obligations committed in the contract. ● Consider the contractual terms and our business model in order to determine the transaction price.
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The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. ● Allocate the transaction price to the performance obligations identified in the contract (generally each distinct good or service), to depict the amount of consideration to which an entity expects to be entitled in exchange for transferring the promised goods or services to the customer. ● Recognize revenue when or as it satisfies a performance obligation by transferring a good or service to a customer, either at a point in time (when) or over time (as).
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Cost of Sales Our cost of sales consists of the purchase of raw materials, finished goods, air and maritime freight costs, land freight costs, customs costs, provisions for defective inventory, among others. 32 Selling Expenses Our selling expenses include all costs related to the sale of products, such as printing and design of sales catalogues, packaging materials, events, marketing and advertising, promotional points program expenses, and employee compensation and social contributions.
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Costs related to sales catalog and rewards or points program products account for most of the weight of total selling expenses. Administrative Expenses Administrative expenses primarily include employees’ compensation, social contributions and associated expenses.
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Also, includes research and development, leases, professional services relating to our statutory corporate audit and tax advisory fees, legal fees, outsourcing fees relating to information technology, and corporate site and insurance costs. Distribution Expenses Distribution expenses include the cost to carry the products from distribution centers to the final distributors.
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Financing Income (Cost) Our financing income (cost) consists primarily of: (i) interest expense and charges in connection with financings, (ii) income derived from investments of excess cash, (iii) loss/gains from foreign exchange changes, and (iv) loss /gains in valuation of derivative financial instruments.
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Income Taxes We are subject to (i) a 30% income tax rate under Mexican Income Tax Law, (ii) 25% income tax rate under Guatemalan law, and (iii) 21% income tax rate under U.S. law. See “Taxation” section below for more information.
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Fluctuations in Exchange Rates in the Currencies in which We Operate Our primary foreign currency exposure gives rise to market risks associated with exchange rate movements of the, Mexican Peso against the U.S. dollar See “—Quantitative and Qualitative Disclosure about Market Risk—Exchange Rate Risk.” 33 Previously Issued Financial Statement Corrections for the Year 2021 During the preparation of the Company’s consolidated financial statements as of and for the year 2022, management concluded that certain prior year errors that were deemed to be immaterial, on an individual and aggregate basis, to the Company’s previously reported consolidated financial statements as of and for the year 2021 under the SEC’s Staff Accounting Bulletin No. 99, could not be corrected on an out-of-period basis in the 2022 financial statements because to do so would cause a material misstatement in those financial statements.
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Due to the decrease in profit before taxes from 2021 to 2022, materiality levels in the year 2022 for accounting purposes decreased to approximately half of the materiality levels established in the year 2021.
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Therefore, the Company referred to the guidance prescribed by the SEC’s Staff Accounting Bulletin No. 108 which specifies, among other things, that the errors must be corrected as an immaterial restatement of the prior year financial statements the next time those financial statements are filed.
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Accordingly, we made corrections of immaterial errors related to our consolidated financial statements for the year 2021.
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Below we provide a representation of the effects of these immaterial corrections: Consolidated Statement of Financial Position as of December 31, 2021 ( In Thousands of Mexican pesos) 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 ) 34 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended December 31, 2021 ( In Thousands of Mexican pesos) 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 ) Income taxes: 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 ) The adjustments relate to the following matters: (a) Cut-off for revenue where control was not transferred to the customer.
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(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.
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(d) Immaterial provisions for labor and tax matters not recorded. (e) Reclassification between capital stock and retained earnings for combination instead of consolidation of capital in 2020.
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(f) Accrual for the tax contingency explained in note 28 of our Audited Financial Statements, which was not recorded previously. 35 Results of Operations — For the Year 2023 Compared to the Year 2022: All amounts in this section marked with “Ps.” are in thousands of Mexican pesos unless otherwise noted Net Revenue December 31, December 31, 2023 2022 Var. $ Var.% The Group’s net revenue BWM Ps. 5,726,608 6,343,344 (616,736 ) (9.7 )% JAFRA (1) 7,282,899 5,164,205 2,118,694 41.0 % Total net revenue Ps. 13,009,507 11,507,549 1,501,958 13.1 % (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA.
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BWM: Net revenue decreased by 9.7%, or Ps.616,736, to Ps.5,726,608 for the year 2023 compared to Ps.6,343,344 for the year 2022, due to the Company continuing to stabilize the number of distributors and associates that comprise our sales network post-pandemic.
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During the year ended December 31, 2023, distributors increased by 6.1% to 41,825 (compared to 39,413 in 2022), and associates decreased by 4.8% to 741,170 (compared to 778,845 in 2022), which resulted in a decrease of approximately 2.3% in the average monthly order.
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Volume of units sold decreased 20.8% from 100.3 million in 2022 to 79.4 million in 2023, while the average price per unit increased 13.1% during the same period. JAFRA: Net revenue increased by 41.0%, or Ps.2,811,694, to Ps.7,282,899 for the year 2023 compared to Ps.5,164,205 for the year 2022.
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This increase resulted mainly from (i) the implementation and execution of our business model, which included refreshing the brand and accelerating product innovation with time-to-market being reduced to 7.8 months in 2023 (compared to 18 months in 2022), applying commercial technology, redesigning our catalog, enhancing incentive programs, and boosting overall sales force motivation, among other initiatives, and (ii) consolidation of a full year of net revenue from JAFRA in 2023 compared to only nine months of net revenue in 2022 (April to December).
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Cost of Sales December 31, December 31, 2023 2022 Var. $ Var.% The Group’s cost of sales BWM Ps. 2,443,229 2,576,179 (132,950 ) (5.2 )% JAFRA (1) 1,258,026 1,002,914 255,112 25.4 % Total cost of sales Ps. 3,701,255 3,579,093 122,162 3.4 % (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA.
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BWM: Cost of sales decreased 5.2%, or Ps.132,950, to Ps.2,443,229 for the year 2023 compared to Ps.2,576,179 for the year 2022 as a result of decreased revenue, resulting in a gross profit of Ps.3,283,379 for the year 2023 compared to Ps.3,767,165 for the year 2022.
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As a percentage of net revenue, cost of sales was 42.7% for the year 2023 and 40.6% for the year 2022.
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The increase of cost of sales as a percentage of net revenues was primarily due to promotions resulting in discounts to our distributors which increased volume of sales but decreased gross margin. 36 JAFRA: Cost of sales increased 25.4%, or Ps.255,112, to Ps.1,258,026 for the year 2023 compared to Ps.1,002,914 for the year 2022, as a result of increased revenue of 41.0%.
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JAFRA historically has had higher gross margins, because of manufacturing most of its products within Mexico and not having to bear international freight costs as does BWM.
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Gross profit increased 44.8%, or Ps.1,863,582 to Ps.6,024,873 for the year 2023 compared to Ps.4,161,291 for the year 2022.As a percentage of net revenue, cost of sales decreased 2.1% to 17.3% for the year 2023 compared to 19.4% for the year 2022, due to (i) reduced costs achieved through supplier negotiations, (ii) a favorable exchange rate, (iii) a favorable variation in production volume and mix.
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Administrative Expenses December 31, December 31, 2023 2022 Var. $ Var.% The Group’s administrative expenses BWM Ps. 987,981 1,098,426 (110,445 ) (10.1 )% JAFRA (1) 1,920,964 1,498,216 422,748 28.2 % Total administrative expenses Ps. 2,908,945 2,596,642 312,303 12.0 % (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA.
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Administrative expenses by department are as follows: December 31, 2023 December 31, 2022 Var. $ Var.% BWM JAFRA GROUP BWM JAFRA (1) GROUP BWM JAFRA GROUP BWM JAFRA GROUP Operations Ps. 549,070 1,150,289 1,699,359 641,575 785,416 1,426,991 (92,505 ) 364,873 272,368 (14.4 )% 46.5 % 19.1 % Depreciation 128,450 246,684 375,134 109,055 178,647 287,702 19,395 68,037 87,432 17.8 % 38.1 % 30.4 % IT 82,853 193,733 276,586 107,304 172,392 279,696 (24,451 ) 21,341 (3,110 ) (22.8 )% 12.4 % (1.1 )% Finance 115,906 146,669 262,575 128,832 148,450 277,282 (12,926 ) (1,781 ) (14,707 ) (10.0 )% (1.2 )% (5.3 )% Marketing 46,557 111,107 157,664 44,562 146,516 191,078 1,995 (35,409 ) (33,414 ) 4.5 % (24.2 )% (17.5 )% Quality 23,767 - 23,767 27,845 - 27,845 (4,078 ) - (4,078 ) (14.6 )% - % (14.6 )% Others 41,378 72,482 113,860 39,253 66,795 106,048 2,125 5,687 7,812 5.4 % 8.5 % 7.4 % Total Ps. 987,981 1,920,964 2,908,945 1,098,426 1,498,216 2,596,642 (110,445 ) 422,748 312,303 (10.1 )% 28.2 % 12.0 % (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA.
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BWM: Administrative expenses decreased 10.1%, or Ps.110,445, to Ps.987,981 for the year 2023 compared to Ps.1,098,426 for the year 2022, mainly due to a more streamlined operational structure and effective administrative expenses control as a result of decreased revenue, which resulted in: (i) a reduction in wages paid to employees (due to our slimer structure in 2023), (ii) a reduction in warehouse rent payments and (iii) a lower impairment loss on trade account receivable compared to 2022 due to a greater loss on collection recoverability that occurred post pandemic in 2022.
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The decrease in administrative expenses was mostly offset by the increase in depreciation of fixed assets. As a percentage of net revenues, administrative expenses remained at the same percentage of 17.3% for the years 2023 and 2022 due to the stabilization of our operational structure.
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JAFRA: Administrative expenses increased 28.2%, or Ps.422,748, to Ps.1,920,964 for the year 2023 compared to Ps.1,498,216 for the year 2022, primarily due to consolidation of a full year of administrative expenses from JAFRA in 2023 compared to only nine months of net revenue in 2022 and to increases in wages paid to employees, services fee payments, depreciation of fixed assets including machinery, leases of vehicles, warehouses and buildings, all of which supported operation growth.
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As a percentage of net revenues, these expenses represented 26.4% and 29.0% for the years 2023 and 2022, respectively, due to operating leverage. 37 Selling Expenses December 31, December 31, 2023 2022 Var. $ Var.% The Group’s selling expenses BWM Ps. 770,008 1,021,281 (251,273 ) (24.6 )% JAFRA (1) 2,690,359 1,786,749 903,610 50.6 % Total of selling expenses Ps. 3,460,367 2,808,030 652,337 23.2 % (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA.
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The selling expenses major line items include: December 31, 2023 December 31, 2022 Var. $ Var.% BWM JAFRA GROUP BWM JAFRA (1) GROUP BWM JAFRA GROUP BWM JAFRA GROUP Reward program Ps. 144,374 908,037 1,052,411 364,945 525,818 890,763 (220,571 ) 382,219 161,648 (60.4 )% 72.7 % 18.1 % Sales commission - 1,271,953 1,271,953 -. 853,198 853,198 - 418,755 418,755 - % 49.1 % 49.1 % Sales catalogue 282,245 117,258 399,503 345,265 100,488 445,753 (63,020 ) 16,770 (46,250 ) (18.3 )% 16.7 % (10.4 )% Sales bonuses and wages 157,821 136,178 293,999 117,235 108,941 226,176 40,586 27,237 67,823 34.6 % 25.0 % 30.0 % Events and conventions 48,449 197,529 245,978 34,966 38,477 73,443 13,483 159,052 172,535 38.6 % 413.4 % 234.9 % Others 137,119 59,404 196,523 158,870 159,827 318,697 (21,751 ) (100,423 ) (122,174 ) (13.7 )% (62.8 )% (38.3 )% Total Ps. 770,008 2,690,359 3,460,367 1,021,281 1,786,749 2,808,030 (251,273 ) 903,610 652,337 (24.6 )% 50.6 % 23.2 % (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA.
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BWM: Selling expenses decreased 24.6%, or Ps.251,273, to Ps.770,008 for the year 2023 compared to Ps.1,021,281 for the year 2022, due to efficient promotions to the sales force, and reduced catalogs and packaging materials costs. BWM’s selling expenses were 13.4% of net revenue for the year 2023 compared to 16.1% of net revenue for the year 2022.
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The decrease in selling expenses as a percentage of net revenues was mainly due to the efficient management of selling expenses.
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JAFRA: Selling expenses increased 50.6%, or Ps.903,610, to Ps.2,690,359 for the year 2023 compared to Ps.1,786,749 for the year 2022, primary due to consolidation of a full year of selling expenses from JAFRA in 2023 compared to only nine months of net revenue in 2022 and to an increase in our rewards program, sales commissions, expenses incurred in the volume of sales catalogues printed in order to promote and satisfy the demand of our leaders and consultants.
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JAFRA’s selling expenses was 36.9% of the net revenue for the year 2023 compared to 34.6% for the year 2022.
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Distribution Expenses December 31, December 31, 2023 2022 Var. $ Var.% The Group’s distribution expenses BWM Ps. 219,339 218,084 1,255 0.6 % JAFRA (1) 373,835 255,432 118,403 46.4 % Total of distribution expenses Ps. 593,174 473,516 119,658 25.3 % (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA. 38 BWM: Distribution expenses increased 0.6%, or Ps.1,255, to Ps.219,339 for the year 2023 compared to Ps.218,084 for the year 2022.
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During 2023, BWM maintained an efficient management of distribution expenses.
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JAFRA: Distribution expenses increased 46.4%, or Ps.118,403, to Ps.373,835 for the year 2023 compared to Ps.255,432 for the year 2022, as a result of the increase in net revenue by 41.0% and consolidation of a full year of distribution expenses from JAFRA in 2023 compared to only nine months of net revenue in 2022.
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Financing Income (Cost) December 31, 2023 December 31, 2022 Var. $ Var.% Financing income (cost) BWM JAFRA GROUP BWM JAFRA (1) GROUP BWM JAFRA GROUP BWM JAFRA GROUP Interest expense (1) Ps (794,231 ) (26,031 ) (820,262 ) (532,282 ) (11,039 ) (543,321 ) (261,949 ) (14,992 ) (276,941 ) 49.2 % 135.8 % 51.0 % Interest income 10,033 35,023 45,056 10,607 18,082 28,689 (574 ) 16,941 16,367 (5.4 )% 93.7 % 57.0 % Unrealized loss in valuation of financial derivative instruments (2) (32,591 ) - (32,591 ) (43,522 ) - (43,522 ) 10,931 - 10,931 (25.1 )% - % (25.1 )% Foreign exchange gain (3) 230,536 36,827 267,363 233,903 20,295 254,198 (3,367 ) 16,532 13,165 (1.4 )% 81.5 % 5.2 % Foreign exchange loss (3) (340,645 ) (33,565 ) (374,210 ) (315,115 ) (22,451 ) (337,566 ) (25,530 ) (11,114 ) (36,644 ) 8.1 % 49.5 % 10.9 % Total Ps (926,898 ) 12,254 (914,644 ) (646,409 ) 4,887 (641,522 ) (280,489 ) 7,367 (273,122 ) 43.4 % 150.7 % 42.6 % (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA.
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GROUP: (1) Interest expense increased 51.0% or Ps.276,941 to Ps.820,262 in 2023 as compared to Ps.543,321 in 2022, mainly due to interest payments on loans obtained to fund the JAFRA Acquisition as of March 31, 2022 (and interest payments associated with our bonds issuance in Mexico in 2023, which increased compared to 2022 due to: (i) cancellation of issuance cost of Syndicated Credit for Ps.50,447, and (ii) increase in the annual average variable rates (TIIE 28 days) of 11.40% in 2023 compared to the 7.91% in 2022, related to interest on our credit lines.
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(See “—Liquidity and Capital Resources—Indebtedness”). (2) To reduce the risks related to fluctuations in the exchange rate of the US dollar, we use derivative financial instruments such as forwards to mitigate foreign currency exposure resulting from inventory purchases made in US dollars.
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As of December 31, 2023, Betterware had US$97.3 million of forwards contracts, with an average exchange rate of Ps.17.96 compared to US$41.8 million of forwards contracts as of December 31, 2022, with an average exchange rate of Ps.20.31.
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The difference between the average exchange rate of the forward contracts and the real average exchange rate of Ps.17.74 and Ps.20.12 in each year resulted in the losses in 2023 and 2022.
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(3) Our exposure to currency exchange rate fluctuations and how we mitigate this risk is described in the sections entitled “Risk Factors—Risks Related to Mexico” and “Currency Exchange Rate Fluctuations.” The unrealized loss in valuation of financial derivative instruments as of December 31, 2022 resulted in a foreign exchange loss due to the difference between the agreed exchange rate and exchange rate used to pay the forwards during 2023. 39 Income Tax Expense December 31, 2023 December 31, 2022 Var. $ Var.% Income tax expense BWM JAFRA GROUP BWM JAFRA (1) GROUP BWM JAFRA GROUP BWM JAFRA GROUP Current Ps. 282,187 363,334 645,521 350,320 183,202 533,522 (68,133 ) 180,132 111,999 (19.4 )% 98.3 % 21.0 % Deferred (141,425 ) (119,712 ) (261,137 ) 16,846 (33,448 ) (16,602 ) (158,271 ) (86,264 ) (244,535 ) (939.5 )% 257.9 % 1,472.9 % Total Ps. 140,762 243,622 384,384 367,166 149,754 516,920 (226,404 ) 93,868 (132,536 ) (61.7 )% 62.7 % (25.6 )% (1) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA.
Added
BWM: Income taxes decreased 61.7% or Ps.226,404 to Ps.140,762 for the year 2023 compared to Ps.367,166 for the year 2022, due to higher pre-tax profits paid during the year 2022 as compared to the year 2023, where BWM’s net revenue decreased by 9.7% and interest expense increased by 49.2%.
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JAFRA: Income taxes increased 62.7% or Ps.93,868 to Ps.243,622 for the year 2023 compared to Ps.149,754 for the year 2022, because of the increase in net revenue of 41.0% and consolidation of JAFRA for a full year in 2023 compared to only nine months in 2022.
Added
GROUP: The effective income tax rate was 27% in 2023 and 37% in 2022 The difference is derived principally from a decrease in certain non-deductible expenses of JAFRA and lower inflation effects in 2023.
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Reconciliation of Non-IFRS Measures Non-IFRS Financial Measures We define “EBITDA” as profit for the year adding back the depreciation of property, plant and equipment and right of use assets, amortization of intangible assets, financing cost, net and total income taxes. EBITDA is not a measure required or presented in accordance with IFRS.
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The use of EBITDA has limitations as an analytical tool, and you should not consider it in isolation from, or as a substitute for analysis of, our results of operations or financial condition as reported under IFRS.
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We believe that this non-IFRS financial measure is useful to investors because (i) we use this measure to analyze our financial results internally and believe they represent a measure of operating profitability and (ii) this measure will serve investors to understand and evaluate our EBITDA and provide more tools for their analysis as it makes our result comparable to industry peers that also prepare this measure.
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EBITDA Reconciliation to Net Income/(Loss) from Continuing Operations December 31, 2023 December 31, 2022 Var. $ Var.% In thousands of Mexican pesos BWM JAFRA GROUP BWM JAFRA (2) GROUP BWM JAFRA GROUP BWM JAFRA GROUP Net income for the year Ps. 90,847 955,891 1,046,738 376,902 493,062 869,964 (286,055 ) 462,829 176,774 (75.9 )% 93.9 % 20.3 % Add: Total income taxes 140,762 243,622 384,384 367,166 149,754 516,920 (226,404 ) 93,868 (132,536 ) (61.7 )% 62.7 % (25.6 )% Add: Financing cost, net (1) 1,074,442 (159,798 ) 914,644 661,104 (19,582 ) 641,522 413,338 (140,216 ) 273,122 62.5 % 716.0 % 42.6 % Add: Depreciation and amortization 128,450 246,684 375,134 109,055 178,647 287,702 19,395 68,037 87,432 17.8 % 38.1 % 30.4 % EBITDA Ps. 1,434,501 1,286,399 2,720,900 1,514,227 801,881 2,316,108 (79,726 ) 484,518 404,792 (5.3 )% 60.4 % 17.5 % (1) The amount of financing cost net is presented before elimination of interest expense between BWM and JAFRA of Ps.147,550 in 2023 and Ps.14,695 in 2022 (See —Note 27 “Segment Information” to the Audited Consolidated Financial Statements).
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(2) The period ended December 31, 2022, covers the period from April 7 to December 31 in the case of JAFRA. 40 BWM: For the year 2023, EBITDA decreased 5.3% or Ps.79,726, to Ps.1,434,501 compared to Ps.1,514,227 in 2022, mainly due to a decrease in net revenue of 9.7% and offset by the stabilization of operating expenses in 2023.
Added
JAFRA: For the year 2023, EBITDA increased 60.4% or Ps.484,518, to Ps.1,286,399 compared to Ps.801,881 in 2022, mainly due to an increase in net revenue of 41.0% and reduced costs achieved through supplier negotiations (1.7-pps), among other factors during 2023.
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Betterware’s Capital Expenditures Our capital expenditures were mainly related to the construction settlements after guarantee period of our new headquarters and distribution center in Jalisco, Mexico. Our capital expenditures of property for the years 2023, 2022 and 2021 amounted to Ps.2,349, Ps.37,500, and Ps.397,000 respectively.
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The total investment of our new headquarters and distribution center amounted to Ps.1,110,807, and it was completed in 2023.
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Results of Operations — For the Year 2022 Compared to the Year 2021 (as adjusted): All amounts in this section marked with “Ps.” are in thousands of Mexican pesos unless otherwise noted Net Revenue December 31, December 31, 2022 2021 The Group’s net revenue (as adjusted) BWM Ps. 6,343,344 10,067,683 JAFRA 5,164,205 - Total net revenue Ps. 11,507,549 10,067,683 The Group: Net revenue increased by 14.3%, or Ps.1,439,866, to Ps.11,507,549 for the year 2022 compared to Ps.10,067,683 for the year 2021, due to the fact that in 2022 as a result of the JAFRA Acquisition we increased the number of consultants and leaders by 492,191 and 21,385, respectively, which contributed to increase our consolidated net revenue by Ps.5,164,205 in our beauty and personal care product segments sales with: (i) Ps.3,472,919 from the fragrances product line, (ii) Ps.642,876 from color product line, (iii) Ps.611,905 from skin care product line, and (iv) Ps.321,806 from toiletries product line.
Added
This increase was offset by a decrease of 37.0% in our net revenue from our home organization segment in comparison to prior year due to a decline in the number of distributors and associates by 22.7% and 26.8%, respectively.
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BWM: Net revenue decreased by 37.0%, or Ps.3,724,339, to Ps.6,343,344 for the year 2022 compared to Ps.10,067,683 for the year 2021, due to the decline in the number of distributors and associates that integrate our sales network in the outcome of the COVID-19 pandemic in comparison to the extraordinary growth during the year ended December 31, 2021.
Added
During the year ended December 31, 2022, distributors decreased by 22.7% to 39,413 (compared to 50,972 in 2021), and associates decreased by 26.8% to 778,845 (compared to 1,063,720 in 2021). 41 Cost of Sales December 31, December 31, 2022 2021 The Group’s cost of sales (as adjusted) BWM Ps. 2,576,179 4,498,008 JAFRA 1,002,914 - Total cost of sales Ps. 3,579,093 4,498,008 The Group: Cost of sales decreased 20.4%, or Ps.918,915, to Ps.3,579,093 for the year 2022 compared to Ps.4,498,008 for the year 2021, mainly because JAFRA historically has had higher gross margins than BWM, as a result of manufacturing most of its products within Mexico and not having to bear international freight costs as does BWM.
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Gross profit increased by Ps.2,358,781 from Ps.5,569,675 for the year 2021 to Ps.7,928,456 for the year 2022. As a percentage of net revenue, cost of sales was 31.1% for the year 2022 and 44.7% for the year 2021.
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BWM: Cost of sales decreased 42.7%, or Ps.1,921,829, to Ps.2,576,179 for the year 2022 compared to Ps.4,498,008 for the year 2021 as a result of decreased revenue, resulting in a gross profit of Ps.3,767,165 for the year 2022 compared to Ps.5,569,675 for the year 2021.
Added
As a percentage of net revenue, cost of sales was 40.6% for the year 2022 and 44.7% for the year 2021. The decrease of cost of sales as a percentage of net revenues was primarily due to a decrease in international air and sea freight costs during 2022.
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Administrative Expenses December 31, December 31, 2022 2021 The Group’s administrative expenses (as adjusted) BWM Ps. 1,098,426 1,247,742 JAFRA 1,498,216 - Total administrative expenses Ps. 2,596,642 1,247,742 The Group: Administrative expenses increased 108.1%, or Ps.1,348,900, to Ps.2,596,642 for the year 2022 compared to Ps.1,247,742 for the year 2021 primarily due to an increase of (i) 105.3% in wages paid to employees and social security contributions, (ii) 82.9% in repairs, maintenance and other general expenses, and (iii) 250.3% in depreciation.
Added
All these expenses increased mainly as a result of the JAFRA Acquisition.

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Biggest changeBOARD PRACTICES Board Committees The Group’s Audit and Corporate Practices Committee has the following specifications: Composition ● The Audit and Corporate Practices Committee of the Group consists of three members appointed by the board itself, in accordance with the provisions of Nasdaq, the Group’s bylaws and other legal provisions, in the understanding, however, that the chairman of the Audit and Corporate Practices Committee will be elected by the General Assembly of Shareholders of the Group. ● The members of the Audit and Corporate Practices Committee are independent as under Nasdaq requirements. 44 ● The Audit and Corporate Practices Committee may create one or more sub-committees, to receive support in the performance of its functions.
Biggest changeBoard Diversity Matrix (as of December 31, 2023) Country of Principal Residence Mexico Foreign Private Issuer Yes, Mexico Disclosure Prohibited Under Home Country Law No Total Number of Directors 11 Country of Principal Residence Mexico Board Diversity Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 2 9 - - Part II: Demographic Background African American or Black - - - - Alaskan Native or American Indian - - - - Asian - - - - Hispanic or Latinx 2 9 - - Native Hawaiian or Pacific Islander - - - - White - - - - Two or More Races Ethnicities - - - - LGBTQ+ - - - - Did Not Disclose Demographic Background - - - - 58 Board Diversity Matrix (as of December 31, 2022) Country of Principal Residence Mexico Foreign Private Issuer Yes, Mexico Disclosure Prohibited Under Home Country Law No Total Number of Directors 9 Country of Principal Residence Mexico Board Diversity Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors - 9 - - Part II: Demographic Background African American or Black - - - - Alaskan Native or American Indian - - - - Asian - - - - Hispanic or Latinx - 9 - - Native Hawaiian or Pacific Islander - - - - White - - - - LGBTQ+ - - - - Did Not Disclose Demographic Background - - - - Board Committees The Group’s Audit and Corporate Practices Committee has the following specifications: Composition ● The Audit and Corporate Practices Committee of the Group consists of three members appointed by the board itself, in accordance with the provisions of Nasdaq, the Group’s bylaws and other legal provisions, in the understanding, however, that the chairman of the Audit and Corporate Practices Committee will be elected by the General Assembly of Shareholders of the Group. ● The members of the Audit and Corporate Practices Committee are independent as under Nasdaq requirements. ● The Audit and Corporate Practices Committee may create one or more sub-committees, to receive support in the performance of its functions.
He has a bachelor’s degree in Economics from ITAM, where he also received a Diploma in Credit and Financial Risk Management; and also holds an MBA from Yale University and has an Executive Diploma in Real Estate Management from Harvard University. ● Mauricio Alvarez joined to Betterware as CIO in August 2020 responsible for information technology spanning applications, data, cybersecurity and infrastructure, all a vital part of nearly every aspect of our customer and service experience.
He has a bachelor’s degree in economics from ITAM, where he also received a Diploma in Credit and Financial Risk Management; and holds an MBA from Yale University and has an Executive Diploma in Real Estate Management from Harvard University. ● Mauricio Alvarez joined to Betterware as CIO in August 2020 responsible for information technology spanning applications, data, cybersecurity and infrastructure, all a vital part of nearly every aspect of our customer and service experience.
Dr. Ortiz is also a member of the Quality of Life Advisory board of the Government of Mexico City. Dr. Ortiz holds a bachelor’s degree in economics from Universidad Nacional Autónoma de México (UNAM), a master’s degree and a Ph.D. in economics from Stanford University. Dr.
Ortiz is also a member of the Quality of Life Advisory board of the Government of Mexico City. Dr. Ortiz holds a bachelor’s degree in economics from Universidad Nacional Autónoma de México (UNAM), a master’s degree and a Ph.D. in economics from Stanford University. Dr.
They will also perform all those functions of which they must render a report in accordance with the provisions of the Securities Market Law.
They will also perform all those functions of which they must render a report in accordance with the provisions of the Securities Market Law.
In an enunciative way, but not limited to, it will have the following functions: ○ Provide opinions regarding transactions between related parties to the General Assembly of Shareholders and the Board of Directors. ○ Develop, recommend and review corporate governance guidelines and guidelines of the Group. ○ Recommend modifications to the bylaws of the Group. 45 ○ Analyze and review all legislative, regulatory and corporate governance developments that may affect the operations of the Group, and make recommendations in this regard to the Board of Directors. ○ Prepare and propose the different manuals necessary for the corporate governance of the Group or for compliance with the applicable provisions. ○ Define the compensation and performance evaluation policies of the senior executives of the Group. ○ Use the best compensation practices to align the interests of the Shareholders and the senior executives of the Group, being able to hire any independent expert necessary for the development of this function. ○ Ensure access to market data and best corporate practices through external consultants specialized in the field. ○ Develop a plan for the succession of senior executives of the Group. ● In matters of Audit, the Audit and Corporate Practices Committee will have the functions referred to in the Securities Market Law especially the provisions of section II of its Article 42 (forty-two), and other applicable legal provisions, as well as those determined by the General Assembly of Shareholders.
In an enunciative way, but not limited to, it will have the following functions: ● Provide opinions regarding transactions between related parties to the General Assembly of Shareholders and the Board of Directors. ● Develop, recommend and review corporate governance guidelines and guidelines of the Group. ● Recommend modifications to the bylaws of the Group. ● Analyze and review all legislative, regulatory and corporate governance developments that may affect the operations of the Group and make recommendations in this regard to the Board of Directors. ● Prepare and propose the different manuals necessary for the corporate governance of the Group or for compliance with the applicable provisions. ● Define the compensation and performance evaluation policies of the senior executives of the Group. ● Use the best compensation practices to align the interests of the Shareholders and the senior executives of the Group, being able to hire any independent expert necessary for the development of this function. ● Ensure access to market data and best corporate practices through external consultants specialized in the field. ● Develop a plan for the succession of senior executives of the Group. 60 ● In matters of Audit, the Audit and Corporate Practices Committee will have the functions referred to in the Securities Market Law especially the provisions of section II of its Article 42 (forty-two), and other applicable legal provisions, as well as those determined by the General Assembly of Shareholders.
Clariond was selected to serve on Betterware’s board of directors due to his vast business experience in Mexico’s private investment matters. ● Salvador Alva is a consultant, entrepreneur and member of various boards and civil associations.
Clariond was selected to serve on Betterware’s board of directors due to his vast business experience in Mexico’s private investment matters. 56 ● Salvador Alva is a consultant, entrepreneur and member of various boards and civil associations.
Valdez is a mechanical engineer and has an MBA from Tecnológico de Monterrey (ITESM) and a master’s degree in industrial engineering from Stanford University. Mr. Valdez was selected to serve on the Company’s board of directors due to his vast experience in Mexican, US and Latin American business and market economy. 42 ● Dr. Martín M.
Valdez is a mechanical engineer and has an MBA from Tecnológico de Monterrey (ITESM) and a master’s degree in industrial engineering from Stanford University. Mr. Valdez was selected to serve on the Company’s board of directors due to his vast experience in Mexican, US and Latin American business and market economy. 55 ● Dr. Martín M.
Dr. Werner holds a bachelor degree in economics from Instituto Tecnológico Autónomo de Mexico (ITAM) and a Ph.D. in economics from Yale University. ● Dr. Guillermo Ortiz has served as Chairman of BTG Pactual Latin America ex-Brazil, a leading Brazilian financial services company with operations throughout Latin America, the U.S. and Europe, since 2015.
Dr. Werner holds a bachelor’s degree in economics from Instituto Tecnológico Autónomo de Mexico (ITAM) and a Ph.D. in economics from Yale University. ● Dr. Guillermo Ortiz has served as Chairman of BTG Pactual Latin America ex-Brazil, a leading Brazilian financial services company with operations throughout Latin America, the U.S. and Europe, since 2015.
Mr. Campos was selected to serve on Betterware’s board of directors due to his extensive experience in consumer product companies, especially in the direct sales, as well as his relevant top-level experience in American public multinational companies. Luis Campos is the father of Andres and Santiago Campos. 41 ● Andres Campos has been CEO of Betterware de México since 2018.
Mr. Campos was selected to serve on Betterware’s board of directors due to his extensive experience in consumer product companies, especially in the direct sales, as well as his relevant top-level experience in American public multinational companies. Luis Campos is the father of Andres and Santiago Campos. 53 ● Andres Campos has been CEO of Betterware de México since 2018.
Federico Clariond has served as CEO of Valores Aldabra, since 2011, and as CEO of Buro Inmobiliario Nacional. Prior to Valores Aldabra and Buro Inmobiliario Nacional, from 2007 to 2011, Mr.
Federico Clariond — Chairman — Federico Clariond has served as CEO of Valores Aldabra, since 2011, and as CEO of Buro Inmobiliario Nacional. Prior to Valores Aldabra and Buro Inmobiliario Nacional, from 2007 to 2011, Mr.
F. DISCLOSURE OF A REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION Not applicable. 46
F. DISCLOSURE OF A REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION Not applicable. 61
He is also an Officer of Zurich Insurance Group Ltd. and a Member of the Board of Directors of Wetherford International, a leading company in the oil and equipment industry, as well as of a number of Mexican companies, including Aeropuertos del Sureste, one of Mexico’s largest airport operators, Mexichem, a global leading petrochemical group, and Vitro, a leading glass manufacturer company in Mexico.
And a Member of the Board of Directors of Wetherford International, a leading company in the oil and equipment industry, as well as of a number of Mexican companies, including Aeropuertos del Sureste, one of Mexico’s largest airport operators, Mexichem, a global leading petrochemical group, and Vitro, a leading glass manufacturer company in Mexico. Dr.
D. EMPLOYEES The following table provides information regarding the number of our employees for the 2022, 2021 and 2020 periods, respectively: Number of Employees December 31, December 31, January 03, 2022 2021 2021 Operations 1,528 977 962 Finance, administration, human resources, IT 502 128 184 Sales and marketing 147 167 148 Total 2,177 1,272 1,294 E. SHARE OWNERSHIP Not applicable.
D. EMPLOYEES The following table provides information regarding the number of our employees for the years 2023, 2022 and 2021, respectively: Number of Employees December 31, December 31, December 31, 2023 2022 2021 Operations 1,348 1,528 977 Sales and marketing 520 147 167 Finance, administration, human resources, IT 426 502 128 Total 2,294 2,177 1,272 E. SHARE OWNERSHIP Not applicable.
Santiago Campos is son of Luis Campos and brother of Andres Campos. ● Jose de Jesus Valdez serves as CEO of Alpek since 1988. Mr. Valdez joined Alpek in 1976 and has held several senior management positions such as CEO of Petrocel, Indelpro and Polioles.
Jose de Jesus Valdez Mr. Valdez joined Alpek in 1976 and has held several senior management positions such as CEO of Petrocel, Indelpro and Polioles.
Silvia Davila currently serves as President of Danone LATAM. She has vast experience in financial and digital transformation achieving sustained business growth. Her leadership style is based on empowerment and team development, consistently building high-performing teams to simplify operations, adding value through processes, and promoting ideas that generate sustained growth.
She has vast experience in financial and digital transformation achieving sustained business growth. Her leadership style is based on empowerment and team development, consistently building high-performing teams to simplify operations, adding value through processes, and promoting ideas that generate sustained growth. She is determined, committed and passionate, and always a strategic leader who develops people.
The Audit and Corporate Practices Committee is empowered to designate and remove the members of said sub-committees and to determine their powers. ● As of the date of this annual report, the members of the Audit and Corporate Practices Committee are: i. Joaquin Gandara Ruiz Esparza — Chairman — Mr. Gandara serves as CEO of Stone Financial Awareness since 2017.
The Audit and Corporate Practices Committee is empowered to designate and remove the members of said sub-committees and to determine their powers. ● As of the date of this annual report, the members of the Audit and Corporate Practices Committee are: i.
Andres Campos is son of Luis Campos and brother of Santiago Campos. ● Alejandro Ulloa joined Betterware with extensive experience at large and multinational companies including Citelis (Organización Ramírez), where he served as Chief Financial Officer; General Electric, where he was Director of Equity; and Banamex Citigroup, where he held various positions of increasing responsibility, including Vice President of Financial Institutions at the Corporate and Investment Banking, Manager of Relations with Financial Institutions and Corporate and Investment Bank, Relationship Manager for Institutional Remedial Management and Credit Analyst.
Virginia, former director of Commercial Planning for Jafra Mexico and the United States became the new Jafra North America Region Director for the Group, leading the markets of Mexico, the United States and, eventually Canada, effective January 1, 2024. 54 ● Alejandro Ulloa joined Betterware with extensive experience at large and multinational companies including Citelis (Organización Ramírez), where he served as Chief Financial Officer; General Electric, where he was Director of Equity; and Banamex Citigroup, where he held various positions of increasing responsibility, including Vice President of Financial Institutions at the Corporate and Investment Banking, Manager of Relations with Financial Institutions and Corporate and Investment Bank, Relationship Manager for Institutional Remedial Management and Credit Analyst.
The Incentive Plan is aligned with the shareholders’ interest in terms of the management capacity to obtain operating results that potentially benefit the share price. If the pre-determined results are achieved, it will cause a gradual delivery of shares over a period of four to five years (see Note 23 of the Audited Consolidated Financial Statements).
The Incentive Plan is aligned with shareholder interest in management’s ability to deliver operating results that potentially benefit the stock price. If the established results are achieved, a gradual delivery of shares will be carried out over a period of 4 to 5 years (see Note 23 of the Audited Consolidated Financial Statements).
She is determined, committed and passionate, and always a strategic leader who develops people. Silvia joined Danone in 2017 as Regional President LATAM for dairy products, and since 2020, she is a member of the Global Executive Committee and responsible for the operation in Mexico and for all categories in LATAM.
Silvia joined Danone in 2017 as Regional President LATAM for dairy products, and since 2020, she is a member of the Global Executive Committee and responsible for the operation in Mexico and for all categories in LATAM. Prior to Danone, she worked in Mars (2004-2017), Procter & Gamble (1992-2003) and McDonald´s Mexico (1989-1992).
Santiago holds a bachelor’s degree in public accounting and finance from Instituto Tecnológico y de Estudios Superiores de Monterrey. Mr. Campos was selected to serve on Betterware’s board of directors due to his natural instinct in product innovation and household needs in BWM market target group.
Santiago was selected to serve on Betterware’s board of directors due to his instinct in product innovation and household needs in the Company’s market target group.
Guillermo Ortiz 74 Independent Board Member Federico Clariond 49 Independent Board Member Salvador Alva 62 Independent Board Member Joaquin Gandara 52 Independent Board Member Silvia Davila 52 Independent Board Member Reynaldo Vizcarra 57 Secretary Background of Our Officers and Directors The Group’s board of directors is composed of the following members and a non-member Secretary: ● Luis Campos has been in the direct to consumer business for more than 30 years.
(2) Pilar Sanchez Valdovinos was named the Managing Director of JAFRA Mexico since January 1, 2024. Background of Our Officers and Directors The Group’s board of directors is composed of the following members and a non-member Secretary: ● Luis Campos has been in the direct-to-consumer business for more than 30 years.
COMPENSATION For the 2022 period, we paid our top management a fix aggregate compensation of approximately MX$39 million plus a variable aggregate compensation for bonuses of approximately MX$8 million. The amounts payable under the performance bonus depend on the results achieved and include certain qualitative and/or quantitative objectives. Overall, the total executive compensation for the 2022 period was MX$47 million.
The amounts payable under the performance bonus depend on the results achieved and include certain qualitative and/or quantitative objectives. Overall, the total executive compensation for 2023 was Ps.62,574.
Clariond was selected to serve on Betterware’s board of directors due to his vast business experience in Mexico’s private investment matters.
Clariond was selected to serve on Betterware’s board of directors due to his vast business experience in Mexico’s private investment matters. ii. Maria Dolores Sanchez has served as Jafra Mexico’s Managing Director for the past 18 years and as a member of the Betterware Board since June 6th, 2023.
Andres holds a bachelor’s degree in Business Administration from Instituto Tecnológico y de Estudios Superiores de Monterrey and an MBA from Cornell University.
Andres holds a bachelor’s degree in Business Administration from Instituto Tecnológico y de Estudios Superiores de Monterrey and an MBA from Cornell University. On January 4, 2024, Andres was appointed Betterware Group CEO, which includes Betterware and Jafra brands, both in Mexico and abroad. Andres will report directly to Luis Campos, Chairman of the Board.
Mr. Gandara was selected to serve on the Company’s board of directors due to his extensive knowledge in the financial and banking field. 43 ● Silvia Davila is a proven leader with over 30 years of experience working with leading consumer companies in various roles and possesses deep knowledge of the Latin American market.
Alva holds a Barchelor´s degree in Chemical Engineering from UNAM and an MBA from Universidad de las Americas. ● Silvia Davila is a proven leader with over 30 years of experience working with leading consumer companies in various roles and possesses deep knowledge of the Latin American market. Silvia Davila currently serves as President of Danone LATAM.
On July 30, 2020, Betterware modified the share-based plan incentive granted to the Chairman of the Board and certain executives and directors of the Company on August 15, 2019 (the “Incentive Plan”).
The Group has a compensation incentive plan (the “Incentive Plan”) based on Betterware’s shares with certain key officers and directors The Incentive Plan was approved at the Board of Directors meeting held on August 15, 2019, and modified on July 30, 2020, and the objective was for the officers and directors to contribute significantly to the growth of the Group and align the economic interests of management with those of the shareholders.
Removed
Name Age Position Held Luis Campos 70 Chairman of the Board Andres Campos 40 Chief Executive Officer and Board Member Alejandro Ulloa 49 Chief Corporate Financial Officer Mauricio Alvarez 53 Chief Corporate Information Officer Diana Jones 41 Chief Financial Officer of Betterware Santiago Campos 31 Board Member Jose de Jesus Valdez 70 Independent Board Member Dr. Martín M.
Added
Name Age Position Held Luis German Campos Orozco 71 Chairman of the Board Andres Campos Chevallier 41 Group Chief Executive Officer and Board Member Santiago Campos Chevallier 32 Managing Director of BWM and Board Member Maria Dolores Sanchez Cano Gascon (1) 62 Managing Director of JAFRA Mexico and Board Member Pilar Sanchez Valdovinos (2) 48 Managing Director of JAFRA Mexico Virginia Cervantes 57 Jafra North America Region Director Alejandro Ulloa Miranda 50 Corporate Chief Financial Officer Mauricio Alvarez Morphy 54 Corporate Chief Information Officer Leonardo de Jesus Ayala Latapí 52 Corporate Chief Business Intelligence Officer José Carlos Gómez Rosales 64 Vice President of JAFRA Manufacturing Eduardo Vladimir Symanski Mantey 46 Corporate Human Resources Director Jose de Jesus Valdez Simancas 71 Independent Board Member Dr.
Removed
Mauricio holds a bachelor’s degree in Computer Systems from the Universidad Iberoamericana in Mexico City. ● Diana Jones has served as Betterware CFO since 2020. Mrs. Jones previously performed as Betterware’s Director of Comptroller (2018-2019) and Director of Finance Planning (2019-2020).
Added
Martín M. Werner Wainfeld 61 Independent Board Member Dr. Guillermo Ortiz Martinez 74 Independent Board Member Federico Clariond Domene 50 Independent Board Member Salvador Alva Gomez 63 Independent Board Member Silvia Lucia Davila Kreimerman 53 Independent Board Member Reynaldo Vizcarra Mendez 58 Secretary (1) Maria Dolores Sanchez Cano was the Managing Director of JAFRA Mexico until December 31, 2023.
Removed
Prior joining the Company, she worked as Director of External Audit in KPMG Cardenas Dosal, S.C., (2003-2018), including a term at New York City from 2008 to 2010. Mrs. Jones holds a degree in Public Accounting and Finance from the Monterrey Institute of Technology and Higher Education (ITESM), as well as an MBA with specialty in Finance from Tecmilenio University.
Added
During his eleven years in Betterware, Andres has been a key contributor to the company’s different stages of outstanding growth, where his leadership strength and strategic vision added to the company´s overall success. Andres Campos is son of Luis Campos and brother of Santiago Campos. ● Santiago Campos has served as Director of Innovation and Communication at Betterware since 2018.
Removed
She is also a Certified Public Accountant on behalf of the Mexican Institute of Public Accountants. ● Santiago Campos has served as Director of Innovation and Communication at Betterware since 2018.
Added
Before assuming the CMO role in 2019, he worked rotational periods with the Sales team, and lived in China for 6 months working with our Quality team. Prior to joining Betterware, he served as Commercial Director at a local Real Estate Development company.
Removed
Prior to joining Betterware, Santiago Campos served as Commercial Director at EPI Desarrollos, a Real Estate Development company, coordinating efforts between marketing, sales, finance and also taking care of administration, he was involved in achieving successful projects in a span of 2.5 years where 100% sales were accomplished before finishing construction.
Added
On January 4, 2024, Santiago assumed the position of Managing Director of Betterware Mexico, reporting directly to Andres Campos. Santiago holds a bachelor’s degree in public accounting and finance from Instituto Tecnológico y de Estudios Superiores de Monterrey, LEAD Professional Degree from Stanford University and Design Thinking Certificate from Kellog Executive Education.
Removed
Alva holds a Barchelor´s degree in Chemical Engineering from UNAM and an MBA from Universidad de las Americas. ● Joaquin Gandara serves as CEO of Stone Financial Awareness since 2017. Prior to Stone Financial Awareness, he worked at Scotiabank for 24 years where he held several positions in different departments such as Credit, Consumer Banking, Branch Operations and Corporate Banking.
Added
Santiago Campos is son of Luis Campos and brother of Andres Campos. ● Maria Dolores Sanchez Cano served as Jafra Mexico’s Managing Director for the past 18 years and as a member of the Betterware Board since June 6th, 2023. On November 6, 2023, she was appointed as the South America Expansion Director, effective January 1, 2024. Ms.
Removed
Prior to Danone, she worked in Mars (2004-2017), Procter & Gamble (1992-2003) and McDonald´s Mexico (1989-1992).
Added
Sánchez-Cano will oversee the expansion into the South American markets where the company will initially enter Peru and Colombia. Ms. Sánchez-Cano possesses over 30-years’ experience with the company a. Ms.
Removed
The purpose of the Incentive Plan is to provide certain members of the top management with the opportunity to receive share-based incentives to encourage them to contribute significantly to the growth of the Company and to align the economic interests of those individuals with those of the shareholders.
Added
Sánchez-Cano has a B.A. in Communication from Universidad Iberoamericana. ● Pilar Sanchez joined Jafra Mexico with extensive experience in leading consumer goods organizations, driving categories growth, building brands value, launching breakthrough innovation, and developing high-performance teams.
Removed
As of December 31, 2022, we have issued and delivered 731,669 shares to Campalier, a wholly owned entity of the Chairman of the Board, under the Incentive Plan. C.
Added
In her previous experience she served as Chief Marketing Officer of Mondelez Mexico, and before that, she held various local, regional, and global positions of increasing responsibility at PepsiCo for 17 years, serving in broad functional roles such as marketing, innovation, strategy, and R&D.
Removed
Prior to Stone Financial Awareness, he worked at Scotiabank for 24 years where he held several positions in different departments such as Credit, Consumer Banking, Branch Operations and Corporate Banking. ii. America Taracido serves as Managing Partner at Consultores en Alta Direccion y Gestión de Empresas, S.C. and, she joined Desarrolladora de Ciudad as CFO. Mrs.
Added
Pilar has immersed herself into the business since joining the company in July, 2023, and has been appointed as the Managing Director of Jafra Mexico, effective January 1, 2024. ● Virginia Cervantes has extensive expertise and track record in brand building strategy and business management for multinational companies (FMCG).
Removed
Taracido served in various positions in countries such as Peru, the United States and Mexico and worked in important positions in companies such as “Ernst & Young México, Avon Cosmetics, Finanzas & CFO at Smurfit Kappa Group México”, and others.
Added
Her experience crosses multiple categories (Cosmetics & Personal Care, Food & Beverages, Nutrition), multiple geographies (North America, Latin America, Western Europe) and multiple roles as CMO and Managing Director in companies such as PepsiCo, Kellogg’s, Avon Cosmetics, and Kraft Foods. She has thus become a key industry player in areas like brand positioning, business expansion, and P&L turnarounds.
Removed
She is an active member of the Council of Americas and was a president of “Instituto Mexicano de Ejecutivos de Finanzas”. Mrs. Taracido holds a master degree in Administration in “Tecnológico Autonómo de México (ITAM)”. Since April 2020 she is part of the Audit Committee for Betterware Mexico. iii .
Added
Mauricio holds a bachelor’s degree in computer systems from the Universidad Iberoamericana in Mexico City. ● Leonardo Ayala has worked for ten years developing business analysis capabilities for Betterware. Previously he held positions in Business Analysis and Commercial Strategy for telecommunications companies such as Telefónica Movistar (2007-2012) and in the financial sector (Grupo Profuturo 1996-2006).
Added
Leonardo holds a B.A. in Business Administration from Universidad Nacional Autonoma de México (UNAM). ● José Carlos Gómez has established himself as a strategic and decisive global leader, with 32 years of experience in multinational consumer products and cosmetics.
Added
Within Jafra he has focused on elevating the Company’s brand and value, as well as improving the customer experience through the people-first approach. He maintains a leadership style that allows him to share different perspectives and bring diversity to drive change and operational excellence in the business.
Added
He graduated as a Food Engineer and has a Master’s in Finance from the Universidad de las Americas, Puebla.
Added
He also has a Diploma in Supply Chain Innovation from Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM), coursed programs in Leadership Development, Human Resources Management, Marketing, and Management Practices in different institutions such as Harvard Business School, Polytechnic University of Valencia, Spain and AOA Intercultural Nantes France. ● Eduardo Szymanski joined Betterware de Mexico as Human Resources Director in June 2022 and since May 2023 he took the position of Corporate Human Resources Officer for the Group.
Added
Prior to joining Betterware, Eduardo worked for companies such as Grupo Modelo, Grupo Posadas, Aeromexico, and Aleatica de Mexico in different leadership roles within the Human Resources areas. Mr.
Added
Szymanski holds a bachelor’s degree in psychology from the Universidad Iberoamericana and a Master’s degree in Organizational Development from the Instituto de Estudios de Posgrado en Ciencias y Humanidades. ● Jose de Jesus Valdez . Mr. Valdez joined Alpek in 1976 and has held several senior management positions such as CEO of Petrocel, Indelpro and Polioles.
Added
He is also an officer of Zurich Insurance Group Ltd.
Added
COMPENSATION All amounts in this section marked with “Ps.” are in thousands of Mexican pesos unless otherwise noted For the year ended December 31, 2023, we paid our top management a fixed aggregate compensation of approximately Ps.45,888 plus a variable aggregate compensation for bonuses of approximately Ps.16,686.
Added
There must be a performance metric based on EBITDA (earnings before interest, taxes, depreciation and amortization) and each individual’s permanence in the Group, which will be delivered based on the particular compensation plans of each individual. 57 The effects associated with the award of share-based payments were recognized in the consolidated statement of income and other comprehensive income in our Audited Consolidated Financial Statements, with the corresponding effect in stockholders’ equity, in the share premium account through December 31, 2022.
Added
In May 2021, the conditions of the share-based compensation plan for the Executive Chairman of the Board were met, so in June 2021, shares of Betterware equivalent to 2%, or 731,669, the total stipulated in the Incentive Plan, were delivered to Campalier. C.
Added
BOARD PRACTICES Board Diversity Matrix The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
Added
On November 6, 2023, she was appointed as the South America Expansion Director, effective January 1, 2024. Ms. Sánchez-Cano will oversee the expansion into the South American markets where the company will initially enter Peru and Colombia. Ms. Sánchez-Cano possesses over 30-years’ experience with the company a. Ms. Sánchez-Cano has a B.A. in Communication from Universidad Iberoamericana. 59 iii.
Added
He was also president of the “Asociación Nacional de la Industria Química” (ANIQ), of the “Comisión Energética de la Confederación de Cámaras Industriales de los Estados Unidos Mexicanos” (CONCAMIN) and of the “Cámara de la Industria de Transformación de Nuevo León” (CANAINTRA). Mr.
Added
Valdez is a mechanical engineer and has an MBA from Tecnológico de Monterrey (ITESM) and a master’s degree in industrial engineering from Stanford University. Mr. Valdez was selected to serve on the Company’s board of directors due to his vast experience in Mexican, US and Latin American business and market economy.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

3 edited+2 added−2 removed4 unchanged
Biggest changeOrdinary shares Beneficially Owned as of date of this annual report Ordinary Shares Number % Five Percent or More Holders Campalier S.A. de C.V.
Biggest changeOrdinary shares Beneficially Owned as of date of this annual report Ordinary Shares Number % Five Percent or More Holders Campalier S.A. de C.V. (1) 20,117,829 53.91 % Other Shareholders 17,126,091 45.89 % Total of all our executive officers, directors, independent board members and secretary — — (1) This entity is controlled by Luis Campos, our Board Chairman. B.
RELATED PARTY TRANSACTIONS Other than as disclosed in this annual report and the Audited Consolidated Financial Statements attached hereto and other than in the ordinary course of business, since the beginning of our preceding three financial years, have transactions or loans with the Group’s related parties as follow: On June 23, 2022, our subsidiary Programa Lazos, as borrower, entered into a loan agreement for an amount of Ps.150 million with Campalier, as lender.
RELATED PARTY TRANSACTIONS All amounts in this section marked with “Ps.” are in thousands of Mexican pesos unless otherwise noted Other than as disclosed in this annual report and the Audited Consolidated Financial Statements attached hereto and other than in the ordinary course of business, since the beginning of our preceding three financial years, we do not have transactions or loans with the Group’s related parties other than as follows: On June 23, 2022, our subsidiary Programa Lazos, as borrower, entered into a loan agreement for an amount of Ps.150,000 with Campalier, as lender.
As of December 31, 2022, Lazos has withdrawn Ps.120 million under such loan. Principal amount bears a monthly variable interest rate of TIIE plus 349 basis points, and it does not foresee a specific maturity date. C. INTERESTS OF EXPERTS AND COUNSEL Not applicable.
As of December 31, 2022, Programa Lazos had withdrawn Ps.120,000 under such loan. Principal amount beared a monthly variable interest rate of TIIE plus 349 basis points, and it did not contain a specific maturity date.
Removed
(1) 20,019,793 53.65 % Cede & Co. 17,224,127 46.16 % Our executive officers and directors: Luis Campos — — Andres Campos — — Alejandro Ulloa — — Mauricio Alvarez — — Diana Jones — — Santiago Campos — — Jose de Jesus Valdez — — Dr. Martín M. Werner — — Dr.
Added
On August 31, 2023, Programa Lazos repaid the total amount of the loan that it had with Campalier in the amount of Ps.122,500 and entered into a new loan with Betterware de Mexico as a lender, bearing a monthly interest rate of TIIE plus 349 basis points.
Removed
Guillermo Ortiz — — Federico Clariond — — Salvador Alva — — Joaquin Gandara — — Silvia Davila — — Reynaldo Vizcarra — — All directors and executive officers as a group (fourteen individuals) — — (1) This entity is controlled by Luis Campos, our Board Chairman. B.
Added
In October 2023, Betterware de México, S.A.P.I. de C.V. and Campalier, S.A. de C.V., signed a service agreement in which Betterware undertakes to provide Campalier with specialized services in an arm´s length transaction, such as: consulting, accounting and financial advice, with monthly payments. The total amount paid during the year was Ps.222. 62 C.

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