4Q16 Results. CONFERENCE CALL ON RESULTS February 10, :00 p.m. (Brazil) / a.m. (US-EST)

Transcription

1 CONFERENCE CALL ON RESULTS February 10, :00 p.m. (Brazil) / a.m. (US-EST) 4Q16 Results Access in Portuguese: Access in English: Password: Lojas Renner Replay: Password in English: Conference Number: Access to the Webcast: d=loc8kn97dcvvmmmc6guxtq%3d%3d *The conference call will be held in Portuguese only but with simultaneous translation into English.

2 February 9, 2017 LOJAS RENNER S.A. (BM&FBOVESPA: LREN3), the largest fashion retailer in Brazil, announces its results for the fourth quarter (4Q16). MANAGEMENT COMMENTS 4Q16 4Q16 4Q15 Var. % Var. % Net Revenue from Merchandise Sales 1, , % 5, , % Growth in Same Store Sales (%) -0.8% 4.5% % 10.8% - Gross Profit from Merchandise Sales 1, , % 3, , % Gross Margin from Retailing Operation (%) 55.8% 55.7% 0.1p.p. 55.7% 54.8% 0.9p.p. Operating Expenses (SG&A) (560.2) (529.6) 5.8% (2,068.6) (1,859.1) 11.3% SG&A as a % of Net Revenue from Merchandise Sales (%) 29.2% 28.8% 0.4p.p. 36.2% 34.1% 2.1p.p. Ajusted EBITDA from Retailing Operation % 1, , % Ajusted EBITDA Margin from Retailing Operation (%) 26.3% 24.7% 1.6p.p. 19.0% 19.1% -0.1p.p. Financial Products Result % % Ajusted Total EBITDA (Retail + Financial Products) % 1, , % Ajusted Total EBITDA Margin (%) 29.6% 26.8% 2.8p.p. 23.4% 22.9% 0.5p.p. Net Income % % Net Margin (%) 15.6% 13.7% 1.9p.p. 10.9% 10.6% 0.3p.p. ROIC (%) 9.5% 8.8% 0.7p.p. 21.4% 22.0% -0.6p.p. Businesses Breakdown 4Q Stores in Operation Selling Area (thousand m²) Net Revenue 1, , % of Growth 3.0% 16.0% 85.4% 3.5% 18.2% 96.5% Gross Margin (%) 55.8% 54.3% 59.8% 55.8% 52.8% 59.6% The fourth quarter 2016 was characterized by the Company s agility both in managing operating expenses, adjusted down in the light of lower sales volume, together with good commercial management despite the prevailing promotional environment in the sector, ensuring that the Company was able to record an EBITDA Margin from the Retailing Operation of 26.3%. In addition, the good results from Financial Products also contributed to growth of 2.8p.p. in the Total Adjusted EBITDA Margin of 29.6%. Throughout the final quarter of 2016, sales performance continued the gradual recovery that had already been started at the end of the preceding quarter when the Company had made some necessary changes to two brands of women s apparel, which also impacted positively into customer acceptance of the summer and high summer collections. Year-end sales were also in line with Renner s forecasts, albeit insufficient to counteract the reduced traffic through the shopping malls and the general macroeconomic scenario which continued to significantly influence consumer behavior and consequently, the dynamics of the retailing sector overall where a frankly promotional market continued to be the norm. Camicado and Youcom once more indicated resilience in the face of the economic cycle and again contributing positively to the businesses. Improvements in store layout and visual merchandising implemented at Camicado together with changes in product mix and an increased number of proprietary branded items resulted in a Gross Margin of 54.3% in the quarter. Youcom, in turn continued to consolidate its position in its segment through operational improvements and greater maturity in the development of collections, so contributing to greater brand recognition. Net Revenue from Merchandise Sales in 4Q16 recorded growth of 4.5%, reaching R$ 1,920.5 million while Same Store Sales stood at -0.8% against 4.5% in 4Q15. The operations of Camicado and Youcom posted growth in sales of 16.0% and 85.4%, respectively. Gross Profit from the Retailing Operation was R$ 1,072.0 million, growth of 4.8% compared with 4Q15. Gross Margin reached 55.8%, driven by good commercial management. In the quarter, the resumed charging of social taxes to payroll in the months of October and November benefited Gross Margin by 0.3p.p.. Operating Expenses (Sales, General and Administrative) came in at 29.2% of Net Revenue from Merchandise Sales due principally to the Company s projects in progress, the rolling out of a larger number of new stores, the new Distribution Center in Santa Catarina, in addition to the resumed charging of social taxes to payroll. If the resumed charging of social taxes to payroll is excluded, then Operating Expenses for same stores would have decreased by 0.6%, indicative of the Company s strict control on expenses. Página 2 de 11 Release 4Q16

3 Adjusted EBITDA from the Retailing Operation was R$ million, growth of 11.4% over 4Q15. The EBITDA Margin from the Retailing Operation was 26.3% (or 26.8%, again discounting the resumed charging of social taxes to payroll) versus 24.7% in the same period in The Result from Financial Products amounted to R$ 62.9 million, an increase of 63.5% in relation to 4Q15. This performance reflects improved credit quality, the result of initiatives implemented in the granting of credit, credit limit updates and collection strategy. It should be pointed out here that Losses on the Renner Card, Net of Recoveries, were 2.7% of the portfolio, a relevant improvement on the 4.2% recorded in 4Q15. Adjusted Total EBITDA was R$ million, 15.5% higher than the result reported for 4Q15 (R$ million), equivalent to an Adjusted Total EBITDA Margin of 29.6%. Once more, this result is a consequence of the Company s focus on protecting operating margins as well as good results from the Financial Products business. In the light of the foregoing, the Company recorded a Net Income of R$ million on a Net Margin of 15.6%, against 13.7% for 4Q15. The Company proceeded apace with its expansion plan during the quarter, opening 26 stores, 10 of them in the Renner format and a further 9 and 7 respectively under the Camicado and Youcom banner. Investments amounted to R$ million against R$ million in 4Q15. FINANCIAL PERFORMANCE NET REVENUE Net Revenue from Merchandise Sales posted a year-on-year growth of 4.5% in 4Q16, notwithstanding the current macroeconomic environment, reduced traffic flows through the shopping malls and temperatures below the seasonal average in the early part of the period. Greater caution on the part of consumers and aggressive promotional activity in the market as a whole also had an impact on the overall result. However, sales from Camicado and Youcom also positvely contributed for Lojas Renner to once more exceed the Federal Statistics Office s (IBGE) Monthly Retailing Survey Index as per figures already published. In 4Q16, Same Store Sales were -0.8% versus 4.5% in 4Q15. GROSS PROFIT Gross Profit from Merchandise Sales in 4Q16, reported growth of 4.8%, equivalent to Gross Margin from the Retailing Operation of 55.8%, benefiting from good commercial management - in spite of the period experiencing a higher than usual level of promotional activity and the effect of contracted exchange rates for imported products. The resumed charging of social taxes to payroll also positively influenced margins by 0.3 p.p.. OPERATING EXPENSES Operating Expenses (SG&A) reported an increase of 5.8%, or 2.2% excluding the effect of the resumed charging of social taxes to payroll and reflecting the Company s rigid budgetary control. Operating Expenses 4Q16 4Q15 Var. % Var. % Operating Expenses (SG&A) (560.2) (529.6) 5.8% (2,068.6) (1,859.1) 11.3% % Over Net Revenue from Merchandise Sales 29.2% 28.8% 0.4p.p. 36.2% 34.1% 2.1p.p. Selling Expenses (424.7) (399.4) 6.4% (1,547.5) (1,389.7) 11.3% General and Administrative Expenses (135.5) (130.3) 4.0% (521.1) (469.4) 11.0% Other Operating Expenses (6.9) (39.9) -82.6% (28.7) (86.8) -67.0% Management Remuneration (2.6) (2.7) -4.0% (9.8) (10.0) -1.7% Tax Expenses (8.9) (9.1) -2.5% (43.1) (39.8) 8.2% Employee Profit Sharing (29.9) (32.0) -6.6% (47.3) (64.3) -26.5% Recovery of Tax Credits % % Other Operating Expenses 6.8 (3.3) (21.4) - Total Operating Expenses (567.2) (569.5) -0.4% (2,097.3) (1,945.9) 7.8% Página 3 de 11 Release 4Q16

4 Selling Expenses accounted for 22.1% of Revenue from Merchandise Sales, in large part a reflection of resumed charging of social taxes to payroll and to the larger number of stores opened. General and Administrative Expenses were 7.1% of Revenue from Merchandise Sales, a reflection again of resumed charging of social taxes to payroll and overheads incurred at the new Distribution Center in Santa Catarina, which in 4Q15, was still not fully operational. Other Operational Expenses declined largely due to the identification of credits following the process of tax reviews. ADJUSTED EBITDA FOR THE RETAILING OPERATION The efficient control over expenses, a continued high gross margin level and the results of tax reviews and notwithstanding the resumption of debiting social charges to payroll and the larger number of store openings during the quarter resulted in year-on-year growth of 11.4% in Adjusted EBITDA from the Retailing Operation (12.7% if resumed social charges on payroll are not taken into account). The Adjusted EBITDA from the Retailing Operation was 26.3% (26.8% if resumed social charges on payroll are not taken into account) against 24.7% in 4Q15. FINANCIAL PRODUCTS RESULT Financial Products Result Breakdown 4Q16 4Q15 Var. % Var. % Revenues, Net of Funding and Taxes % % Renner Card (Private Label) % % Co-branded Card Meu Cartão % % Quick Withdrawal and Insurances % % Credit Losses, Net of Recoveries (65.7) (85.0) -22.7% (262.2) (281.1) -6.7% Renner Card (Private Label) (34.0) (53.2) -36.1% (126.2) (164.7) -23.4% Co-branded Card Meu Cartão (26.3) (21.4) 22.7% (103.6) (76.7) 35.0% Quick Withdrawal (5.4) (10.4) -47.5% (32.4) (39.7) -18.3% Operating Expenses (Cards and Other Products) (54.8) (44.2) 24.0% (177.9) (159.6) 11.4% Financial Products Result % % % of Company's Total Adjusted EBITDA 11.1% 7.8% 3.3p.p. 18.8% 16.7% 2.1p.p. The Result from Financial Products in 4Q16 totaled R$ 62.9 million with growth of 63.5% compared with 4Q15, representing 11.1% of the Company s Total EBITDA, reflecting improvements in revenue and lower level of losses from the Renner Card and Saque Rápido (Quick Withdrawal) businesses. Revenues, Net of Funding and Taxes were 9.4% higher than for the same period in 2015, driven largely by the Co-branded Meu Cartão business. Revenues from the Private Label operation in turn also reported recovery thanks to initiatives adopted earlier on in the year. However, revenues continue to be squeezed due to the reduction on average term of receivables and the declining participation of the 0+8 interest bearing credit plan, basically a reflection of customer behavior. Credit Losses, Net of Recoveries also warrant mention, this item reporting a decrease of 22.7% in relation to 4Q15 and reflecting the initiatives and strategies adopted over the past few years involving improvement in the granting of credit, credit limit updates and greater efficiency in collection. Operating Expenses rose 24.0% compared with this same item in 4Q15, principally a consequence of the new projects such as the process for constituting the Financial Institution and the new Financial Products platform, and also the resumed collection of social taxes against payroll. Payment Conditions (%) 27.7% 27.8% 38.8% 38.7% 4Q16 4Q % 8.5% 24.3% 9.2% At the end of December, Renner Cards issued by the Company totaled 27.4 million, accounting for a 47.3% share of merchandise sales compared with 47.9% in 4Q15, 38.8% from sales under the interest-free 0+5 installment plan and 8.5% under the interest-bearing 0+8 installment credit plan. Renner Card 0+5 and Co-Branded Renner Card 0+8 Third Party Cards Cash The average Renner Card sales ticket reached R$ in 4Q16, 3.5% greater than 4Q15. On the other hand, the Company s average ticket was R$ , 3.7% higher than 4Q15. Página 4 de 11 Release 4Q16

5 Losses on Renner Card business, Net of Recoveries were 2.7% of the total portfolio in 4Q16, versus 4.2% in 4Q15, due to the initiatives adopted and already mentioned. In December 2016, Meu Cartão reached 2.7 million cards and a total portfolio of R$ million, reflecting growth of 16.3% compared with the portfolio in December In the quarter, revenue from the product was R$ 66.1 million, 29.3% greater than recorded in 4Q15. Losses from the Co-branded Meu Cartão, Net of Recoveries, were 5.0% of the total portfolio in 4Q16 against 4.7% in 4Q16, mainly due to slower portfolio growth. The total Quick Withdrawal (Saque Rápido) portfolio amounted to R$ million at the end of December 2016 (R$ 98.4 million when adjusted to present value) against R$ million in 4Q15, equivalent to a year-on-year decrease of 19.3%, and representing 7.5% of the total Financial Products portfolio. Despite the reduction in the portfolio amount, Losses from Saque Rápido, Net of Recoveries, in 4Q16, declined from 5.8% to 3.8% of the total portfolio due to greater restrictions on the concession of loans and improved collection efficiency. As of December 31, 2016, Accounts Receivable Dec.16 Sep.16 Dec.15 Customer Accounts Receivable totaled R$ 2,209.3 million, 4.2% more than the Renner Card (Private Label) - Total Portfolio (Adjusted to Present Value) 1, ,270.5 position for December Renner Card (Private Label) - Net Portfolio On Due Receivable Overdue Receivable Present Value Adjustment Allowance for Losses to the Realizable Value Others 1, , (39.2) (57.9) (60.3) (25.5) (62.0) (45.5) 1, , (36.9) (75.0) (60.4) This increase is in line with sales growth in the period and breaks down into R$ 1,138.6 million for the Renner Card (Private Label), R$ million for Meu Cartão (Co-Branded) and R$ million for Saque Rápido. Third Party Card Companies and Other Meu Cartão (Co-Branded) - Total Portfolio Accounts totaled R$ million. Meu Cartão (Co-Branded) - Net Portfolio On Due Receivable Overdue Receivable Allowance for Losses to the Realizable Value (24.1) (23.8) (20.2) Accounts Receivable Quick Withdrawal - Total Portfolio Quick Withdrawal - Net Portfolio Fees and Transactions Receivable Allowance for Losses to the Realizable Value (35.0) (36.5) (36.1) Total Third-Party Credit Card Companies Other Accounts Receivable Total Credit Portfolio, Net 2, , , % 5.0% Dec % Private Label Quick Withdrawal 51.5% Co-branded Others Página 5 de 11 Release 4Q16

6 ADJUSTED TOTAL EBITDA: RETAIL + FINANCIAL PRODUCTS In 4Q16, the Adjusted Total EBITDA posted growth of 15.5% with an Adjusted Total EBITDA Margin of 29.6%, reflecting in a 2.8p.p. improvement in relation to the margin for 4Q15, a reflection of the Company s focus on protecting operating margins with rigid control of expenses, and the result from the Financial Products operations. If the effects of the resumed charging of social taxes to payroll and those resulting from the tax reviews are excluded, the Adjusted Total EBITDA Margin would have been 28.7%, exceeding the margin in 4Q15 by 2.3 p.p. EBITDA Reconciliation 4Q16 4Q Net Income ( + )Income and Social Contribution Taxes ( + )Financial Result, Net ( + )Depreciation and Amortization Total EBITDA , ,198.0 ( + ) Stock Option Plan ( + ) Statutory Participation ( + ) Result on Disposal or Write-Off of Fixed Assets Total Adjusted EBITDA* , ,247.2 Total Adjusted EBITDA Margin* 29.6% 26.8% 23.4% 22.9% *Pursuant to Article 4 of CVM Instruction 527, the Company has chosen to show its Adjusted EBITDA as in the above table in order to provide the information that best reflects the gross operational cash generation from its activities. These adjustments are based on: a) the Stock Option Plan corresponding to the fair value of the respective financial instruments recorded pro rata temporis, during the period services are rendered and offset by the Equity Capital Reserve and thus not representing a cash outflow; b) Statutory Participations are of a contingent nature and are related to the generation of profits pursuant to Article 187 of Law 6.404/76; and c) the Write-off of Fixed Assets relates to the results recorded from the divestment or write-off of fixed assets, largely without a cash impact. CASH FLOW Cash Flow 4Q16 4Q15 Var Var. Total Adjusted EBITDA , , (+/-) Income and Social Contribution Taxes/Others (26.0) (41.4) 15.4 (165.9) (225.0) 59.1 Operating Cash Flow , , (+/-) Changes in Working Capital (197.0) (69.1) (127.9) (176.3) (149.0) (27.3) Accounts Receivable, Net of Operating Financing (529.5) (498.7) (30.8) (90.3) (164.4) 74.1 Inventories (134.8) (159.7) (10.2) (149.5) In 4Q16, the Company generated Free Cash Flow of R$ million, a decrease of 5.2% and a negative variation of R$ 10.2 million in relation to 4Q15. This largely reflects a larger investment in working capital, principally in inventory, as a consequence of commercial management decisions in order to improve store product mix and supply. Suppliers (8.0) Other Accounts Receivable/Payable (64.8) (52.6) 33.6 (86.2) (-) Capex (160.2) (186.4) 26.3 (477.2) (571.3) 94.1 (=) Free Cash Flow (10.2) FINANCIAL RESULT, NET Financial Result, Net 4Q16 4Q15 Var. % Var. % Financial Revenue % % Gains on Cash Equivalents % % Other finance revenues % % In 4Q16, Net Financial Result was negative in R$ 25.9 million, an increase of 8.3%, compared with 4Q15, in large part the impact of discontinued hedge operations. Financial Expenses (40.4) (39.4) 2.7% (166.9) (169.1) -1.3% Interest on Loans, Borrowings, Debentures and SWAP (33.6) (34.6) -3.0% (142.7) (149.9) -4.8% Other Finance Expenses (6.9) (4.7) 44.4% (24.1) (19.2) 25.6% Exchange Variation, Net % (0.1) Hedge Operations (NDF), Net (2.2) (6.9) Financial Result, Net (25.9) (23.9) 8.3% (103.3) (104.6) -1.2% Página 6 de 11 Release 4Q16

7 NET DEBT Net Debt Dec.16 Sep.16 Dec.15 Borrowings and Financing (1,008.3) (989.2) (1,057.1) Current (615.4) (594.1) (317.3) Noncurrent (392.9) (395.1) (739.8) Operational Financing (795.6) (818.2) (796.5) Current (378.3) (401.4) (380.9) Noncurrent (417.4) (416.9) (415.6) Cash and Cash Equivalents Net Debt (909.0) (1,089.7) (1,116.1) Net Debt / Total Adjusted EBITDA (12M) 0.68x 0.86x 0.89x Company Net Debt on December 31, 2016 was R$ milion, 18.6% lower than recorded on December 31, 2015 and 16.6% less than the position for the preceding quarter, due principally to a higher cash position at the end of the period. This debt reflects capital management decisions taken by the Company and is currently made up of debentures and by loans from the Brazilian Development Bank BNDES and the Banco do Nordeste in addition to working capital lines. Operational financing is dedicated to funding the Financial Products portfolios and its variation is a reflection of fluctuations in the financed volume of these products. Debt servicing charges related to capital management are booked to the Net Financial Result. Conversely, the costs of Operational Financing - a reflection of the volume of Financed Products - are incorporated in the Operating Result. INVESTMENTS (CAPEX) CAPEX Summary 4Q16 4Q New Stores Remodeling of Installations IT Equipament & Systems Distribution Centers Others Total In 4Q16, Investments in fixed assets amounted to R$ million. Of this amount, R$ 49.8 million was dedicated to the opening of new stores, R$ 47.3 million to store modernization, R$ 48.4 million to IT Systems and Equipment such as the R$ 4.5 million invested in Distribution Centers, and R$ 10.2 million in Others. During the quarter, 26 stores were opened, 10 of these in the Renner format, 9 Camicado and 7 Youcom stores, in line with Renner s ongoing expansion plan. In December 2016, Renner operated 300 stores and Youcom, 59 units, with total selling areas of thousand m 2 and 8.7 thousand m 2, respectively. In turn the Camicado network had a total of 85 stores, with a combined selling area of 37.5 thousand m 2. Depreciation and Amortization expenses were R$ 82.4 million in 4Q16, a year-on-year increase of 15.3%. These increased overheads are mainly due to the greater number of store rollouts in the light of the expansion plan, currently being implemented. NET INCOME The Company posted a 4Q16 Net Income of R$ million, a growth of 19.2% in relation to 4Q15, equivalent to a Net Margin of 15.6% against 13.7% in 4Q15. Improved results can largely be ascribed to improved operational margins and good result from the Financial Products business and notwithstanding the noncomparable impact of the resumed deductibility of social taxes to payroll. If this factor is excluded, Net Income would have reached R$ million and the Net Margin would have been 16.0%. DIVIDENDS In 4Q16, Lojas Renner credited Shareholders with dividends in the form of Interest on Capital in the amount of R$ 46,6 million, equivalent to R$ per share, considering the amount of 642,550,575 common shares, of which those held as treasury stock have been excluded. Página 7 de 11 Release 4Q16

8 ABOUT THE COMPANY The Company was incorporated in 1965 and has been listed since A pure, widely held company since 2005, with a 100% free float, Lojas Renner was deemed the first Brazilian corporation. Renner s equities are traded under the LREN3 symbol on BM&FBOVESPA s Novo Mercado, the highest level of Corporate Governance. As of December 29, 2016, the final trading day of the year on the BM&FBOVESPA, the closing price of the LREN3 share was R$ 23.17, the Company reporting a market capitalization of R$ 14.9 billion. Lojas Renner is the largest fashion retailer in Brazil, in December 2016 with 300 stores, 85 Camicado units and 59 Youcom stores, the large majority of which are located in shopping centers, as well as its online platforms. Renner designs and sells quality apparel, footwear and underwear for women, men, adolescents and children under 17 private labels of which 6 represent the Lifestyle concept, each one reflecting a style of being and dressing. Lojas Renner also sells accessories and cosmetics under two proprietary brands as well as offering specific items bearing third party labels. In May 2011, Renner acquired Camicado, a company in the home decor segment and in 2013, launched Youcom, a new business model focused on the younger generation in a specialized store environment. The target customers of Renner and Camicado are women between the ages of 18 and 39 who are in the medium-high consumer groups in Brazil. Conversely, Youcom caters for the younger consumer between the ages of 18 and 35. Lojas Renner offers its customers fashion products in various styles with quality and competitive prices in practical and pleasant shopping environments. LEGAL NOTICE This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Lojas Renner S.A. and are merely projections and, as such, are based exclusively on the expectations of the Company s management concerning the future of the business. Such forward-looking statements depend substantially on changes in market conditions, the performance of the Brazilian economy, the sector and the international markets and are therefore subject to change without prior notice. INVESTOR RELATIONS CONTACTS Laurence Gomes CFO and IRO laurence.gomes@lojasrenner.com.br Paula Picinini Tel paula.picinini@lojasrenner.com.br Diva Freire Tel diva.freire@lojasrenner.com.br Carla Sffair Tel carla.sffair@lojasrenner.com.br Felipe Gaspar Tel felipe.gaspar@lojasrenner.com.br Página 8 de 11 Release 4Q16

9 CONSOLIDATED INCOME STATEMENT Income Statement (in R$ '000) 4Q16 4Q15 Var % Var % Net Operating Revenues 2,110,802 2,014, % 6,451,578 6,145, % Net Revenues from Sales of Goods 1,920,504 1,837, % 5,721,757 5,450, % Net Revenue from Financial Products and Services 190, , % 729, , % Costs of Sales and Services (855,368) (823,863) 3.8% (2,575,083) (2,511,352) 2.5% Cost of Goods Sold (848,461) (814,610) 4.2% (2,536,630) (2,466,180) 2.9% Cost of Financial Products and Services (6,907) (9,253) -25.4% (38,453) (45,172) -14.9% Gross Profit 1,255,434 1,190, % 3,876,495 3,633, % Operating Expenses (790,639) (798,234) -1.0% (2,900,805) (2,700,593) 7.4% Selling (424,735) (399,367) 6.4% (1,547,462) (1,389,728) 11.3% General and Administrative (135,497) (130,254) 4.0% (521,149) (469,389) 11.0% Losses on Receivables, Net (65,692) (84,961) -22.7% (262,203) (281,141) -6.7% Other Operating Results (164,715) (183,652) -10.3% (569,991) (560,335) 1.7% Financial Products Expenses (54,845) (44,221) 24.0% (177,899) (159,638) 11.4% Other Operating Results (109,870) (139,431) -21.2% (392,092) (400,697) -2.1% Operating profit before Financial Results 464, , % 975, , % Financial Result (25,885) (23,893) 8.3% (103,310) (104,586) -1.2% Financial Revenue 17,155 22, % 87,472 93, % Financial Expense (43,040) (46,826) -8.1% (190,782) (198,439) -3.9% Profit Before Income & Soc. Cont. Taxes 438, , % 872, , % Income and Social Contribution Taxes (139,079) (116,742) 19.1% (247,322) (249,829) -1.0% Profit for the Period 299, , % 625, , % Earnings per Share - Basic R$ % % Earnings per Share - Diluted R$ % % Number of shares outstanding at End of Year (in thousands) 643, , , , Página 9 de 11 Release 4Q16

10 CONSOLIDATED BALANCE SHEET Balance Sheet (in R$ '000) Assets Dec.16 Sep.16 Dec.15 TOTAL ASSETS 6,475,212 5,674,332 5,863,719 Current Assets 4,085,477 3,356,909 3,721,211 Cash and Cash Equivalents 894, , ,527 Trade Accounts Receivable 2,209,271 1,702,339 2,119,836 Inventories 782, , ,534 Taxes Recoverable 135,841 90,497 87,630 Derivative Financial Instruments ,469 Other Accounts Receivable 56,654 48,609 48,879 Prepaid Expenses 6,198 8,693 5,336 Noncurrent Assets 2,389,735 2,317,423 2,142,508 Judicial Deposits 10,444 10,293 10,825 Taxes Recoverable 66,624 64,341 59,108 Derivative Financial Instruments Other Accounts Receivable 10,692 10,936 8,563 Deferred Taxes 156, ,916 97,899 Investments Property, Plant and Equipment 1,645,069 1,603,876 1,544,202 Intangible 500, , ,797 Liabilities and Shareholders' Equity Dec.16 Sep.16 Dec.15 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 6,475,212 5,674,332 5,863,719 Current Liabilities 2,917,751 2,384,018 2,319,127 Borrowings, Financing and Debentures 615, , ,346 Financing - Financial Products Operations 378, , ,914 Finance Lease Payable 2,521 12,081 8,329 Suppliers 679, , ,453 Taxes and Contributions Payable 404, , ,976 Accrued Salaries and Social Charges 179, , ,704 Rentals Payable 55,608 42,963 51,152 Statutory Obligations 156, , ,858 Provision for Civil and Labor Risks 33,656 32,899 29,866 Obligations with Credit Card Administrators 291, , ,086 Derivative Financial Instruments 57,530 75,603 2,601 Other Obligations 62,265 64,888 68,842 Noncurrent Liabilities 920, ,191 1,233,696 Borrowings, Financing and Debentures 392, , ,769 Financing - Financial Services Operations 417, , ,551 Finance Lease Payable 69,497 70,604 41,103 Taxes and Contributions Payable Provision for Tax Risks 37,356 37,116 34,848 Other Accounts Payable 3,508 4,413 2,256 Shareholders' Equity 2,636,796 2,366,123 2,310,896 Capital 1,178,368 1,170,192 1,136,124 Treasury Stocks (19,021) (10,140) (6,016) Capital Reserves 298, , ,291 Revenue Reserves 1,216, , ,271 Carrying Value Adjustments (37,825) (49,556) 64,226 Retained Earnings Accumulated - 198, Página 10 de 11 Release 4Q16

11 CONSOLIDATED CASH FLOW Statement of Cash Flows - Indirect Method (in R$ '000) 4Q16 4Q Cash Flow from Operating Activities Profit for the Year 299, , , ,838 Adjustment to Reconcile Net Income to Cash and Cash Equivalents Provided from Operating Activities Depreciation and Amortization 82,383 71, , ,780 Result on Disposal or Write-Off of Fixed Assets, Net 8,130 10,714 21,677 12,324 Structuring Costs of Debentures ,038 Interest Expense on Loans, Debentures, Law 4,131 and Lease 35,874 34, , ,660 Stock Option Plan and Restricted Shares 6,625 6,923 27,330 26,431 Provision for Tax, Civil and Labor Risks 997 5,262 6,298 14,457 Deferred Taxes 139, , , ,829 Loss on Derivative Financial Instruments - 1,520 12,824 1,931 Net Foreign Exchange Variation (238) (334) 86 (3,840) Reversals for Adjustment to Net Realizable Value 22,935 16,464 8, (Reversals) Provision for Loss on Assets (5,715) 34,855 (22,539) 52,440 Changes in Assets and Liabilities 590, ,036 1,389,893 1,354,276 Increase in Accounts Receivable (524,015) (480,668) (80,505) (244,913) Reduction (Increase) in Inventories 6, ,209 (156,662) (29,393) Increase in Other Assets (52,600) (27,174) (72,941) (51,777) (Increase) Reduction in Judicial Deposits (151) (3,992) (Reduction) Increase in Funding - Financial Products Operations (22,599) (49,316) (830) 46,087 Reduction in Financing Imports (8,442) Increase (Reduction) in Suppliers 138,103 35, ,774 (6,047) Increase in Taxes and Contribution Payable 186, ,890 1,086 16,247 Increase in Salaries and Social Charges 14,613 37,349 3,436 32,690 Increase in Rent Payable 12,645 18,104 4,456 9,886 Increase (Reduction) in Statutory Obligations 6,600 9,944 (3,074) (1,713) Increase in Obligations with Card Administrators 48,080 41,125 50,805 44,098 Reduction in Other Liabilities (3,528) (576) (5,325) (525) Cash Generated Operating Activities 400, ,873 1,257,494 1,156,482 Payment of Income Tax and Social Contribution (28,010) (59,323) (193,074) (284,359) Payment of Interest on Loans, Financing and Debentures (18,077) (14,466) (150,212) (100,519) Net cash Generated Operating Activities 354, , , ,604 Cash Flow from Investing Activities Purchases of Property, Plant and Equipment Assets (110,569) (132,692) (340,541) (443,819) Additions to Intangible Assets (49,652) (53,742) (136,653) (127,493) Proceeds from Disposal of Fixed Assets Net Cash Used in Investing Activities (159,975) (186,414) (476,917) (570,954) Cash Flow from Financing Activities Increase of Capital Stock 8,176 5,760 42,244 30,963 Buyback Shares (8,881) (6,016) (13,005) (6,016) Borrowings 11,410 25, ,038 85,975 Repayment of loans and financing (9,439) (7,690) (263,024) (218,984) Consideration of financial leasing (11,544) (527) (21,093) (10,829) Interest on capital and dividend paid (6,510) (6) (240,448) (178,954) Net Cash Generated by Financing Activities (16,788) 17,135 (279,288) (297,845) Effect of exchange rate changes on cash and cash equivalents (443) 105 (649) 382 Increase (Reduction) in Cash and Cash Equivalents 177, , ,354 (96,813) Cash and Cash Equivalents at the Beggining of the Quarter 717, , , ,340 Cash and Cash Equivalents at the End of the Quarter 894, , , ,527 Página 11 de 11 Release 4Q16