B2W Companhia Digital. Financial statements ITR at June 30, 2017 and independent auditors report on quarterly information

Transcription

1 B2W Companhia Digital and independent auditors report on quarterly information 1

2 and independente autitors KPMG Auditores Independentes Rua do Passeio, 38-17º andar - Centro Rio de Janeiro/RJ - Brasil Caixa Postal CEP Rio de Janeiro/RJ - Brasil Telefone 55 (21) , Fax 55 (21) Review report on Quarterly Information (A free translation of the original report in Portuguese, as filed with the Brazilian Securities and Exchange Commission (CVM), prepared in accordance with the accounting practices adopted in Brazil, rules of the CVM and the International Financial Reporting Standards - IFRS) To Management and Stockholders of B2W Companhia Digital Rio de Janeiro - RJ Introduction We have reviewed the individual and consolidated interim accounting information of B2W Companhia Digital ( Company ), included in the quarterly information form - ITR for the quarter ended, which comprises the balance sheet as of and the respective statements of operations and comprehensive income (loss) for the three-month and six-month periods then ended, changes in shareholders equity and cash flows for the three-month period then ended, including explanatory notes. The Company s Management is responsible for the preparation of the interim accounting information in accordance with the Accounting Pronouncement CPC 21(R1) and the international accounting rule IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of quarterly information - ITR. Our responsibility is to express our conclusion on this interim accounting information based on our review. 2

3 and independente autitors Scope of the review We conducted our review in accordance with Brazilian and International Interim Information Review Standards (NBC TR Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE Review of Interim Accounting Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries primarily of the management responsible for financial and accounting matters and applying analytical procedures and other review procedures. The scope of a review is significantly less than an audit conducted in accordance with auditing standards and, accordingly, it did not enable us to obtain assurance that we were aware of all the significant matters that could have been identified in an audit. Therefore, we do not express an audit opinion. Conclusion on the individual interim accounting information Based on our review, we are not aware of any fact that might lead us to believe that the individual interim accounting information included in the aforementioned quarterly information were not prepared, in all material respects, in accordance with the Accounting Pronouncement CPC 21(R1) applicable to the preparation of the quarterly review - ITR and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission. Conclusion on the consolidated interim accounting information Based on our review, we are not aware of any fact that might lead us to believe that the consolidated interim accounting information included in the aforementioned quarterly information were not prepared, in all material respects, in accordance with the Accounting Pronouncement CPC 21(R1) and international accounting rule IAS 34, issued by the IASB applicable to the preparation of the quarterly review - ITR, and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission. Other matters Statements of added value We also reviewed the individual and consolidated Statements of added value (DVA) for the six-month period ended, prepared under the responsibility of Company s Management, for which presentation is required in the interim information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of quarterly information - ITR, and considered as supplementary information by IFRS, which does not require the presentation of the statements of added value. These statements were submitted to the same review procedures described previously and, based on our review, we are not aware of any fact that might lead us to believe that they were not prepared, in all material respects, in accordance with the individual and consolidated interim accounting information, taken as a whole. 3

4 and independente autitors Rio de Janeiro, August 4, KPMG Auditores Independentes CRC SP /O-6 F-RJ Original in Portuguese signed by Carla Bellangero Contadora CRC 1SP196751/O-4 4

5 and independente autitors ASSETS 06/30/ 12/31/ 06/30/ 12/31/ CURRENT Cash and cash equivalents 1,691, ,112 1,693, ,248 Marketable securities 1,427,310 1,452,747 1,799,532 1,742,541 Accounts receivables 296, , , ,083 Inventories 972,584 1,518, ,875 1,541,324 Recoverable taxes 340, , , ,343 Prepaid expenses 30,237 31,793 41,634 51,952 Other current assets 416, , , ,909 Total current assets 5,175,601 4,519,715 5,656,861 4,936,400 NON CURRENT Long-term assets: Marketable securities - 35, Recoverable taxes 1,107,977 1,067,452 1,107,977 1,067,452 Deferred income tax and social contribution 820, , , ,770 Judicial deposits 25,994 17,550 26,082 17,707 Related parties 69,811 62, Other non current assets 67,093 67,188 73,525 73,620 Investments 495, , Fixed assets 487, , , ,290 Intangible 2,392,548 2,375,029 2,901,315 2,885,110 Total non current assets 5,466,749 5,293,048 5,499,284 5,304,949 TOTAL ASSETS 10,642,350 9,812,763 11,156,145 10,241,349 5

6 Balance Sheet In thousands of reais (continued) LIABILITIES AND SHAREHOLDERS' EQUITY 06/30/ 12/31/ 06/30/ 12/31/ CURRENT Suppliers 615,135 1,966, ,410 2,107,960 Borrowings and financing 910, ,165 1,116, ,129 Debentures 15, , Salaries, provisions and social contributions 38,046 45,717 63,357 65,341 Accounts payable - Business combination 13,264 12,555 16,804 36,229 Taxes payable 18,244 49,840 26,571 68,400 Income tax and social contribution - - 9,978 5,252 Advances received from clients 23,241 35,798 23,241 35,798 Other current liabilities 107, , , ,555 Total current liabilities 1,740,484 2,710,087 2,162,532 3,119,426 NON CURRENT LIABILITIES Long-term liabilities: Borrowings and financing 4,415,299 3,527,560 4,415,299 3,539,288 Debentures 200, , , ,000 Provisions for contingencies 59,452 55, , ,212 Related parties 191, , ,150 81,820 Accounts payable - Business combination 11,885 11,250 24,213 27,395 Other non current liabilities 10,540 16,053 11,158 16,206 Total non current liabilities 4,888,913 4,024,724 4,980,687 4,043,921 SHAREHOLDERS' EQUITY Capital 5,693,041 4,483,041 5,693,041 4,483,041 Capital reserve 52,485 38,927 52,485 38,927 Carrying value adjustments (928) (905) (928) (905) Accumulated losses (1,731,645) (1,443,111) (1,731,645) (1,443,111) 4,012,953 3,077,952 4,012,953 3,077,952 Participation of non controllers - - (27) 50 Total shareholders's equity 4,012,953 3,077,952 4,012,926 3,078,002 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 10,642,350 9,812,763 11,156,145 10,241,349 6

7 Statement of Operations Period ended In thousands of reais 06/30/ 06/30/ 06/30/ 06/30/ Net revenue 2,935,508 3,282,014 3,239,547 3,511,488 Cost of goods and services sold (2,247,691) (2,476,112) (2,576,100) (2,788,872) Gross profit 687, , , ,616 Operating income (expenses) Selling expenses (442,846) (505,912) (380,987) (399,085) General and administrative expenses (187,490) (167,500) (208,782) (179,378) Other operating income (expenses) (18,773) (17,878) (12,301) (15,555) Result before financial result 38, ,612 61, ,598 Financial revenue 243, , , ,408 Financial expenses (734,380) (673,264) (755,209) (711,841) Financial result (490,820) (469,063) (497,229) (484,433) Equity accounting 10,929 (3,219) - - Loss before income tax and social contribution (441,183) (357,670) (435,852) (355,835) Income tax and social contribution Current - - (10,768) (3,543) Deferred 152, , , ,755 Loss of the period (288,534) (238,666) (288,611) (238,623) Atributed to controlling shareholers (288,534) (238,666) (288,534) (238,666) Atributed to non controlling shareholers - - (77) 43 Loss of the period (288,534) (238,666) (288,611) (238,623) 7

8 Statement of Comprehensive Result Period ended In thousands of reais 06/30/ 06/30/ 06/30/ 06/30/ Loss of the period (288,534) (238,666) (288,611) (238,623) Itens to be posteriorly reclassified to the result Accumulated conversion adjustment of foreign investments (23) (524) (23) (524) Total comprehensive result (288,557) (239,190) (288,634) (239,147) Atributed to controlling shareholers (288,557) (239,190) (288,557) (239,190) Atributed to non controlling shareholers - - (77) 43 8

9 Statement of Changes in Shareholders Equity In thousands of reais Valuation Acumulated Capital Stock Capital Reserve Adjustment losses Total Balance at January 1st, 4,483,041 38,927 (905) (1,443,111) 3,077,952 Total Comprehensive result Net loss for the period (288,534) (288,534) Foreign exchange variation of offshore investments (23) (23) Contribution of shareholders and distributions to shareholders Advance for future capital increase - Capital increase 1,210,000 1,210,000 Stock option plan 13,558 13,558 Balance at 5,693,041 52,485 (928) (1,731,645) 4,012,953 Valuation Acumulated Capital Stock Capital Reserve Adjustment losses Total Balance at January 1st, 3,635,970 27,691 (368) (957,251) 2,706,042 Total Comprehensive result Net loss for the period (238,666) (238,666) Increase of participation in controlled companies - Foreign exchange variation of offshore investments (524) (524) Contribution of shareholders and distributions to shareholders Advance for future capital increase 550, ,878 Stock option plan 5,365 5,365 Balance at 3,635, ,934 (892) (1,195,917) 3,023,095 9

10 Statement of Changes in Shareholders Equity Period ended In thousands of reais Capital Stock Capital Reserve Valuation Adjustment Acumulated losses Non controlling shareholders participation Total Balance at January 1st, 4,483,041 38,927 (905) (1,443,111) 50 3,078,002 Total Comprehensive result Net loss for the period (288,534) (288,534) Foreign exchange variation of offshore investments (23) (23) Contribution of shareholders and distributions to shareholders Capital increase 1,210,000 1,210,000 Resourses to capital increase non controlling shareholders (77) (77) Stock option plan 13,558 13,558 Balance at 5,693,041 52,485 (928) (1,731,645) (27) 4,012,926 Capital Valuation Acumulated shareholders Capital Stock Reserve Adjustment losses participation Total Balance at January 1st, 3,635,970 27,691 (368) (957,251) 91 2,706,133 Total Comprehensive result Net loss for the period (238,666) 43 (238,623) Increase of participation in controlled companies - Foreign exchange variation of offshore investments (524) (524) - Contribution of shareholders and distributions to shareholders - - Advance for future capital increase 550, ,878 Stock option plan 5,365 5,365 Balance at 3,635, ,934 (892) (1,195,917) 134 3,023,229 10

11 Statement of Cash Flows Period ended In thousands of reais Cash flows from operating activities 06/30/ 06/30/ 06/30/ 06/30/ Loss of the period (288,534) (238,666) (288,611) (238,623) Adjustments to net loss: Depreciation and amortization 169, , , ,979 Deferred income tax and social contribution (152,649) (119,004) (158,009) (120,755) Interest and indexation and exchange variances 275, , , ,041 Equity accounting (10,929) 3, Others (15,435) 3,850 (12,181) (6,943) Adjusted loss (23,071) 39,729 (4,522) 87,699 Decrease (increase) in operational assets: Accounts receivable 486, , , ,984 Inventories 545,882 (39,697) 543,277 (12,312) Recoverable taxes 37,740 (207,299) 36,433 (218,508) Prepaid expenses 1,556 8,400 10,318 13,123 Judicial deposits (8,444) 1,209 (8,375) 1,315 Other accounts receivable (current and non-current) (172,067) (63,253) (173,667) (64,461) 890,689 78, ,315 98,141 Decrease (increase) in operational liabilities: Suppliers (1,471,584) (787,504) (1,505,297) (792,259) Payroll and related charges (7,671) (6,288) (1,984) (3,701) Taxes and contributions (current and non current) (31,596) (4,997) (39,810) (14,916) Other accounts payable (current and non current) (58,630) (50,361) (114,594) (100,237) Accounts payble affiliate companies (29,573) (106,830) 65,330 13,677 (1,599,054) (955,980) (1,596,355) (897,436) Interest Expense on Loans and Debentures (164,822) (141,605) (171,406) (227,249) Paid Income Tax and Social Contribution - - (2,019) (1,303) Net cash provided by (used in) operational activities (896,258) (979,599) (867,987) (940,148) Cash flow from investing activities: Marketable securities 60, ,252 (56,991) 642,784 Fixed assets (1,347) (15,748) (2,116) (17,795) Intangible (158,640) (214,417) (159,010) (216,607) Capital increase in controlled companies Value paid for the acquisition of subsidiaries - (200) (26,022) (36,825) Value received for the sale of subsidiaries Net cash used in investment activities (99,072) 596,887 (244,139) 371,557 Fluxo de caixa das atividades de financiamento Borrowings and financing 1,767,560 49,702 1,767,560 54,702 Payments of borrowings and financing (513,890) (288,451) (396,182) (109,027) Capital increase in cash 1,210,000-1,210,000 - Advance for future capital increase - 550, ,878 Net cash provided by financing activities 2,463, ,129 2,581, ,553 Increase (decrease) in cash and cash equivalents 1,468,340 (70,583) 1,469,252 (72,038) Opening balance of cash and cash equivalents 223, , , ,424 Closing balance of cash and cash equivalents 1,691, ,938 1,693, ,386 Increase in cash and cash equivalents 1,468,340 (70,583) 1,469,253 (72,038) 11

12 Statement of Value Added Period ended In thousands of reais 06/30/ 06/30/ 06/30/ 06/30/ Revenues Sales of goods and services 3,602,328 3,992,683 3,998,446 4,302,865 Other revenues (452) 452 (493) 1,397 Reversal (allowance) for doubtful accounts (13,087) (6,546) (17,875) 1,054 3,588,789 3,986,589 3,980,078 4,305,316 Goods acquired from third parties Costs of goods and services sold (2,731,498) (3,068,385) (3,149,478) (3,432,301) Materials, energy, third party services and others (291,807) (294,003) (162,355) (154,198) Lost / Recuperation of asset value - 9,044-9,078 (3,023,305) (3,353,344) (3,311,833) (3,577,421) Gross value added 565, , , ,895 Depreciation and amortization (169,261) (138,862) (173,411) (143,979) Net value added generated 396, , , ,916 Value added received in transfer Equity result 10,929 (3,219) - - Financial income 243, , , ,408 Total value added to distribute 650, , , ,324 Distribution of value added Employees Direct compensation 87, , , ,741 Benefits 37,798 34,511 45,061 41,992 Guarantee fund for years of service 12,177 16,171 17,206 19, , , , ,499 Taxes and contributions Federal (151,593) (101,598) (148,280) (91,481) State 155,417 95, , ,586 Municipal 2,861 3,213 6,058 5,956 6,685 (3,147) 19,999 17,061 Compensation of third party capital Interest 734, , , ,841 Rentals 59,772 64,058 66,234 74,986 Others , , , ,387 Remuneration of own capital Loss for the period (288,534) (238,666) (288,534) (238,666) Participation of non controlling shareholers in retained profits - (77) 43 (288,534) (238,666) (288,611) (238,623) Distribution of value added 650, , , ,324 12

13 and independente autitors Explanatory Notes to the Individual and Quarterly Information In thousands of reais, except when otherwise mentioned 1 Operational context B2W - Companhia Digital ("B2W" or "Company ), with head offices at Rua Sacadura Cabral, 102, in the City and State of Rio de Janeiro, incorporated through the merger of Americanas.com S.A. - Comércio Eletrônico (Americanas.com) and Submarino S.A., with shares traded on the Brazilian Securities, Commodities and Futures Exchange (BM&FBOVESPA), under the ticker symbol BTOW3. B2W is controlled by Lojas Americanas S.A. ("LASA" or ""), an also publicly held company with shares traded on BM&FBOVESPA under the ticker symbols LAME3 - ON and LAME4 - PN. The Company and its subsidiaries are engaged in the following sectors: e-commerce, through its brands, Americanas.com, Submarino, Shoptime and Sou Barato; its consumer finance service platforms, Submarino Finance and Digital Finance; technology platform; logistics, distribution and customer service platform; and its Marketplace. B2W offers technology services through BIT Services, which is the result of the construction of a disruptive, robust and innovative technology platform to support the growth of the Company. On the logistics vertical, B2W offers services on storage, distribution and customer services to its partners through its B2W Fulfillment (BFF) platform. Finally, consumer finance services are another of B2W Digital s platforms, through which the Company offers private label credit cards for its four main brands, Americanas.com, Submarino, Shoptime and Sou Barato. The issue of these individual and consolidated quarterly information was authorized by the Board on August 4th,. 2 Summary of significant accounting policies 2.1 Intermediate financial information The quarterly information, individual and consolidated, are being presented in accordance with the Brazilian Securities Exchange Comission (CVM), applicable for the preparation of the Quarterly Information ITR, with the technical pronouncement CPC 21 (R1) Intermediate Demonstration, issued by Brazilian Accounting Pronouncements Committee (CPC), and with the international rules IAS 34, issued by the International Accounting Standards Board (IASB). 2.2 Accounting practices and policies In the individual and consolidated quarterly information the accounting practices are being presented consistently with the accounting practices adopted in the individual and consolidated financial statements as of, issued on February 8,. Because of that these individual and consolidated quarterly information should be read together with the information as disclosed in the financial statements for the year ended. 13

14 and independente autitors 2.3 Presentation of segment information The Company's activities are concentrated in the marketing of products and delivery of services by various means of non-presence marketing, especially the Internet. Despite the diversity of products sold and services provided by the Company (e-commerce retail, consumer finance platform; technology platform; logistics, distribution and customer services; and Marketplace), such activities are not controlled and managed by the Management as independent operational segments, as their accompanying results are monitored, tracked and evaluated in an integrated manner. Thus, Management understands that the Company is organized, basically, as a single business unit. The Company also operates in the area of financial products through the subsidiary Submarino Finance Promotora de Crédito Ltda., which, by not achieving the minimum quantitative and qualitative parameters, is not being presented as a separate operating segment. 2.4 Explanatory notes not presented The individual and consolidated quarterly information is presented in accordance with CPC 21 (R1), IAS 34 and the regulations issued by CVM. Based on this and management's evaluation of the material impacts of the information to be disclosed, the explanatory notes described below are not being presented. The others are being presented so as to allow the complete understanding of this individual and consolidated quarterly information when read in conjunction with the accompanying notes disclosed in the financial statements of. Explanatory notes not presented: Quality of financial assets credit; Advance revenue; Insurance coverage; 2.5 Present value adjustment The operations of long-term purchases, primarily from suppliers of goods and services, were adjusted to their present value taking into account the maturities of these transactions. The average rate used of 11.82% per annum (p.a.) at (14.06% p.a. at ), was based on funding for the respective periods. The constitution of the present value adjustment of purchases is recorded under "Inventory" (Note 9) and the counterpart entries are shown under the heading "Financial Expenses", on Note 26, through the maturity date, in the case of suppliers, and for the realization of inventories based on the amounts recorded under the heading "Cost of goods sold and services provided." The operations of long-term transactions, at the same previously-agreed prices as represented, mainly, through credit card installment sales, were brought to their present value taking into account the payment deadlines of the aforementioned transactions. The average rate used of 12.73% p.a. as of (15.35% p.a. on ), was based on receivable discounts on their respective base dates. On the identified adjustments, the tax rates were applied on the respective base of dates. The present value adjustment of installment sales has a counterpart entry under the heading 14

15 and independente autitors "Accounts receivable from clients" (Note 8) and its realization is recorded under "Financial revenues" in note 26 through the maturity date. 3 Critical accounting estimates and judgment Accounting estimates and judgment are continually evaluated, and are based on historical experience and various other factors, including expectations of future events, which are believed to be reasonable under the circumstances. Until the period of 6 months, ended on there have not occurred changes in the accounting assumptions and estimates in relation to the financial statements disclosed at. 4 Management of financial risk 4.1 Financial risk factors In the normal course of business, the Company and its affiliates are exposed to market risks related to the fluctuation of interest rates and exchange variations, as well as credit risk on its installment sales and liquidity risk. Under monitoring carried out by its officers and management, and supervised by the Board of Directors, the Company and its affiliates use hedge instruments to minimize exposure to these risks. These administrators determine what strategies are to be adopted and Management contracts appropriate hedge instruments for each circumstance and inherent risk. The Company and its affiliates have no term contracts, options, swap options, zero cost collars, flexible options, derivatives built into other products, operations structured with derivatives and "exotic derivatives." The Company and its affiliates do not operate using derivative financial instruments for speculative purposes, thereby reaffirming its commitment to conservative policies for cash management, in relation to financial liabilities or available resources. (a) Market risk (i) Exchange rate risk The Company and its subsidiaries make use of derivatives, such as traditional swaps, for the purpose of canceling exchange losses resulting from sharp devaluations of the Real (R$) against foreign currency denominated funding. On, the position of these derivative financial instruments was the following: Traditional swaps (registered in the borrowings and financing account): The counterparts to these traditional swaps are the financial institutions that provide borrowings in foreign currency (American dollars). These CDI-referenced swaps aim to cancel exchange risk, transforming the cost of the debt (Note 17) to local currency and interest rates, at 121.5% to 138.2% of the CDI. These contracts, at, amounted to a reference value of R$ 1,046,000 for the (R$ 1,092,324 in the ), and at amounted to a reference value of R$ 820,000 for the (R$ 866,324 in the ). These operations are matched in terms of amount, terms, and interest rates. The Company always seeks to liquidate such contracts, together with the respective borrowings that are the subject of the hedge transactions 15

16 and independente autitors simultaneously. There are no contractual clauses for margin calls in this type of transaction. Hedge object (debt) 1,005, ,025 1,053, ,430 Passive position (% CDI) (1,107,596) (854,222) (1,158,409) (901,410) Swap accounting balance (Note 17 (a)) (101,865) (113,197) (105,058) (114,980) Hedge object (debt) Amortized cost 1,005, ,025 1,053, ,430 Adjusted for the fair value of applicable risks (1,039,981) (770,955) (1,088,386) (818,064) (34,250) (29,930) (35,035) (31,634) Swaps Active position Amortized cost (1,005,731) (741,025) (1,053,351) (786,430) (Dollar + Pre) Fair value 1,039, ,955 1,088, ,064 34,250 29,930 35,035 31,634 Passive position (% CDI) Amortized cost (1,107,596) (854,222) (1,158,409) (901,410) Fair value 1,142, ,921 1,193, ,824 34,477 6,699 35,257 8,414 34,477 6,699 35,257 8,414 Considering that the Company's exposure to the risk of wide swings in currency exchange rates is mitigated by traditional swap operations, contracted for exchange protection purposes and, therefore, simultaneously with the respective foreign currency borrowings, the change in the rate of the US dollar compared to the real due to the current market conditions does not produce any significant impacts on the Company's financial information. (ii) Interest rate risk The Company and its subsidiaries use resources produced by operational activities to manage its operations, as well as to guarantee investments and growth. To meet the cash requirements for growth, as well as sustain the cash applications, when necessary, the Company and its subsidiaries obtain borrowings and financing from Brazil's principal financial institutions, and raises funds through debentures, which is substantially (around 60% of total) indexed to the variation of the Interbank Deposit Certificate (CDI). Relevant fluctuations in the CDI (see sensitivity analysis in item (d) below) raise the possibility of inherent risk. Financial investment policies indexed by the CDI partially mitigate this effect. 16

17 and independente autitors (b) (c) Credit risk Credit risk is managed at the corporate level. Credit risk stems from cash and cash equivalents, derivative financial instruments, deposits in banks and other financial institutions as well as exposure to client credit. With regard to banks and other financial institutions, the individual risk limits are determined based on internal or external classifications according to the limits set by the Board of Directors. The use of credit limits is regularly monitored. Sales to retail clients are settled in cash or through the main credit cards existing in the market. The credit risk is minimized by the fact that approximately 72% of the Company's sales and those of its subsidiaries are conducted through credit cards administered by the main credit card operators, which have excellent levels of risk classification. The Company and its subsidiaries maintain provisions for doubtful accounts at an amount that is considered by Management sufficient to cover possible losses on its receivables. Liquidity risk Management continuously monitors forecasts for the liquidity requirements of the Company in order to ensure that it has sufficient cash to satisfy its operating needs. This forecast takes into consideration plans for financing the Company's debt, compliance with clauses, compliance with internal targets for the asset balance quotient and, if applicable, external or legal regulatory requirements - for example, currency restrictions. The Treasury invests excess cash in interest-bearing bank accounts, term deposits, short-term deposits and securities, choosing instruments with appropriate maturities with sufficient liquidity that offer a sufficient margin as determined by the aforementioned forecasts. The following table analyzes the non-derivative financial liabilities of the Group and the derivative financial liabilities that are settled on a liquid basis by the Group, through common maturity periods that correspond to the period remaining between the date of the calculation of the net equity balance and the contracted date of maturity. Derivative financial liabilities are included in the analysis if their maturities are essential for an understanding of the cash flows. Less than one year Between one and two years Between two and five years Parent Company More than five years Suppliers 615, Borrowings, financing and debentures 810,393 1,599,858 4,277, ,066 Suppliers 1,966, Borrowings, financing and debentures 477,986 1,509,281 2,404, ,127 17

18 and independente autitors Less than one year Between one and two years Between two and five years More than five years Suppliers 722, Borrowings, financing and debentures 1,246,014 1,599,858 4,277, ,066 Suppliers 2,107, Borrowings, financing and debentures 563,043 2,058,312 2,404, ,127 (d) Analysis of additional sensitivity Sensitivity analysis of swap transactions Swap transactions recorded by the Company and its affiliates were contracted, simultaneously, for foreign currency loan transactions, contemplating terms, rates, and equivalent values, exchanging the borrowings' exchange exposure for exposure to the CDI. At the Company's gross debt, in U.S. dollars, was R$ 1,005,731 () and R$ 1,053,351 (). According to data drawn from the Brazilian Central Bank ("Relatório Focus") July 14, market expectations were indicating an exchange rate for the end of the year (probable scenario) of R$ /US$ compared to R$ /US$ at. Scenarios I and II were estimated with a deterioration from 25% to 50%, respectively. Above the probable expectation, as shown in the table below: Operation Risk Probable scenario Scenario I - Deterioration of 25% Scenario II - Deterioration of 50% Dollar Exchange rate at March 31, ,3082 3,3082 Estimated exchange rate at ,1250 4,9500 Foreign currency borrowings Swaps (Long position in foreign currency) (variation US$) (2,493) 248, ,126 (variation US$) 2,493 (248,317) (499,126) Net effect Null Null Null 18

19 and independente autitors Operation Risk Probable scenario Scenario I - Deterioration of 25% Scenario II - Deterioration of 50% Dollar Exchange rate at March 31, ,3082 3,3082 Estimated exchange rate at Foreign currency borrowings Swaps (Long position in foreign currency) ,1250 4,9500 (variação US$) (2,611) 260, ,759 (variação US$) 2,611 (260,074) (522,759) Net effect Null Null Null Análise de sensibilidade à variação da taxa do CDI The Company and its affiliates maintain a large part of their debt and cash and equivalents indexed to the variation of the CDI (considering the exchange of debts in foreign currency for variation in the CDI with traditional swaps). As of, the Company () had net debt of R$ 2,421,788 (net cash of R$ 2,465,150 at ), which represented the borrowings, financing and debentures, net cash and negotiable securities. In the, the net cash was R$ 2,253,987 (R$ 2,299,390 at ). According to data from the Brazilian Central Bank ("Relatório Focus") at July 14,, market expectations were indicating an effective average CDI rate of 7.89% (probable scenario) for the calendar year, against the effective rate of 10.14% as applied in. In addition, Management ran sensitivity tests for adverse scenarios, CDI rate deterioration at 25% or 50% above the probable scenario (Management's opinion), as shown below: Operation Probable scenario Scenario I - Deterioration of 25% Scenario II - Deterioration of 50% CDI effective annual interest rate on June 30, - % 10.14% 10.14% 10.14% Net debt 2,421,788 2,421,788 2,421,788 CDI estimated annual interest rate in - % 7.89% 9.86% 11.84% Annual effect on net debt: Reduction (54,490) (6,720) - Increase ,049 19

20 and independente autitors Scenario I - Scenario II - Operation Probable scenario Deterioration of 25% Deterioration of 50% CDI effective annual interest rate on June 30, - % 10.14% 10.14% 10.14% Net debt 2,253,987 2,253,987 2,253,987 CDI estimated annual interest rate in - % 7.89% 9.86% 11.84% Annual effect on net debt: Reduction (50,715) (6,255) - Increase , Capital management The goal of the Company and its subsidiaries with regard to capital management is to ensure the continuity of its operations, to offer a return to shareholders and benefits to other stakeholders, as well as maintaining the ideal capital structure to minimize associated costs. The Company monitors the levels of its indebtedness through the Net Debt/EBITDA ratio, which in its understanding represents the most appropriate manner to present the debt metric, because it reflects consolidated net financial obligations requiring immediate cash for payments, considering its operating cash generation. 4.3 Fair value estimate It is assumed that the book value of the balances of client accounts receivable and suppliers accounts payable, minus impairment in the case of accounts receivable, are close to their fair value. The fair value of financial liabilities, for disclosure purposes, is estimated using discounted contractual future cash flows at existing market interest rates, which are available to the Group through similar financial instruments. The Group applies CPC 46/IFRS 13 to the financial instruments measured in the balance sheet at fair value, which requires disclosure of the fair value measurements by level in the following hierarchy: Price quotes (unadjusted) in asset markets for identical assets and liabilities (Level 1). Insertions different from the price quotes negotiated in active market included in Level 1 that are observed for assets or liabilities, whether directly (that is, as prices) or indirectly (that is, price derivatives) (Level 2). Insertions for assets or liabilities that are not based on data adopted by the market (that is, non-observable insertions) (Level 3). The following table presents the Group's assets and liabilities measured by fair value ats of. 20

21 and independente autitors Level 1 Level 2 Level 3 Total balance Assets Fair value through results Investment Fund in Credit Rights - FIDC 11, , ,350 Bank Deposit Certificates - CDB 1,058,441 1,058,441 Other marketable securities - 566, ,741 Total assets 11,323 1,788,209-1,799,532 Liabilities Fair value through results Borrowings and financing (Foreign currency) - 1,053,351-1,053,351 Derivatives used for hedge - swap - 105, ,058 Total liabilities - 1,158,409-1,158,409 The following table presents the Group's assets and liabilities measured by fair value at. Total Level 1 Level 2 Level 3 balance Assets Fair value through results Investment Fund in Credit Rights - FIDC 15,491 11,823-27,314 Bank Deposit Certificates - CDB - 385, ,763 Other marketable securities - 1,329,464-1,329,464 Total assets 15,491 1,727,050-1,742,541 Liabilities Fair value through results Borrowings and financing (Foreign currency) - 786, ,430 Derivatives used for hedge - swap - 114, ,980 Total liabilities - 901, ,410 There are no relevant financial assets and liabilities subject to the netting agreement. 21

22 and independente autitors 5 Financial instruments by category Loans and Receivables Fair Value Through Results Assets, according to the balance sheet Marketable securities - 1,799,532 1,799,532 Clients accounts receivable and other accounts 759, ,934 Cash and cash equivalents 30,299 1,663,202 1,693, ,233 3,462,734 4,252,967 Total Fair Value Through Results Other Financial Liabilities Liabilities, according to the balance sheet Borrowings National currency - 4,373,583 4,373,583 Foreign currency 1,053,351-1,053,351 Derivatives financial instruments - swap 105, ,058 Suppliers and other liabilities, excluding Debentures - 930, ,907 Borrowings - 215, ,028 1,158,409 5,519,518 6,677,927 Total Loans and Receivables Fair Value Through Results Total Assets, according to the balance sheet - 1,742,541 1,742,541 Marketable securities 934, ,992 Clients accounts receivable and other accounts 4, , , ,706 1,962,075 2,901,781 Fair Value Through Results Amortized cost Liabilities, according to the balance sheet Borrowings National currency - 3,164,007 3,164,007 Foreign currency 786, ,430 Derivatives financial instruments - swap 114, ,980 Suppliers and other liabilities, excluding - 2,453,542 2,453,542 Total 22

23 and independente autitors Debentures - 200, , ,410 5,818,311 6,719,721 6 Cash and cash equivalents Cash and cash equivalents 2,309 3,578 4,358 4,714 Certificates of bank deposits CDBs and debentures 1,689, ,534 1,689, ,534 1,691, ,112 1,693, ,248 Certificates of Bank Deposits are remunerated at a rate of up to 102.8% of CDI as of (and of up to 102.8% on ). CDI s classified as cash have immediate liquidity without risk of value change in the event of early redemption. 7 Marketable Securities Fair value through result Investment Fund in Credit Rights - FIDC ,027 11,823 Titles of National Treasure - FIDC ,323 15,491 Bank Deposit Certificates - CDB 895, ,300 1,058, ,763 Committed operations 492,902 1,123, ,741 1,329,464 Junior Quota (FIDC) 38,838 35, ,427,310 1,488,225 1,799,532 1,742,541 Non-current 1,427,310 1,452,747 1,799,532 1,742,541 Current - 35, (a) Fênix Retail Credit Rights Investment Fund The Fênix Fund ("FIDIC FIDC of Retail") has the purpose of acquiring creditor rights owned by Lojas Americanas and the Company ("Grantors"), originating from credit card operations used for the purchase and sale of products and Services between the Grantors and their final customers, whose electronic transactions were captured and processed by their processing systems. The Fenix FIDC of Retail will exist for an indefinite period of time, where every issue / series of shares has a specific maturity date. The structure of the Fênix FIDC of Retail, as well as the remuneration of the quotas is thus represented: 23

24 and independente autitors Quotas Amount %Fund NAV June, 17 December,16 Benchmark - DI Sênior 11,563 92,50 1,178,005 1,184, % Mezanino 500 4,00 51,379 51, % 96,50 1,229,384 1,236,082 Junior 437 3,50 64,729 59, ,294,113 1,295,212 The financial information of the fund is as follows: Balance Sheet at and : Assets Cash and cash equivalents Marketable securities 593,608 64,205 Accounts receivable 700,762 1,231,261 B2W 205, ,805 Lojas Americanas 494, ,456 Other accounts receivable 2 - Total assets 1,294,380 1,295,489 Passivo Accounts payable (current) Financiamentos (Circulante) 1,229,384 - Financiamentos (Não circulante) - 1,236,082 Shareholders equity 64,729 59,130 Total liabilities and shareholders 1,294,380 1,295,489 Income statements for the quarters ended and, respectively: Financial Revenues 83,564 96,204 Financial Results (77,965) (92,419) Net Result 5,599 3,785 The FIDC securities portfolio is made up of: National Treasury Bills (LFTN), Bank Deposit Certificates (CDB) and Financial Investment Fund Quotas, which are available at any moment, for acquisition of receivables originating in operations with sellers. (b) Other financial assets 24

25 and independente autitors The Certificates of Deposit, all from top-ranked financial institutions, are remunerated at a rate of up to 102.8% of the CDI at (up to 102.8% of the CDI at ). There is no intention to dispose of such securities in a period superior to 1 year, so they are classified in current assets. The committed operations are composed by debentures issued by a top-ranked financial institution, and are recorded at fair value, remunerated up to 101.5% of CDI, parent company and consolidated at (up to 102.0% of the CDI, parent company and consolidated, at ) and can be traded at any time. 8 Clients accounts receivable Credit cards (i) 28,810 54,919 28,815 54,923 FIDC (iv) 205, , , ,805 Other accounts receivable (ii) 76,933 71, , , , , , ,595 Present value adjustments (iii) (812) (2,145) (812) (2,145) Provision for doubtful accounts (13,794) (17,508) (26,745) (26,367) 296, , , ,083 (i) The operations with credit cards can be paid in installments of up to twelve months. The Company's and its subsidiaries' credit risks are minimized as the portfolio receivables are monitored by the credit card management companies. (ii) Other accounts receivable mainly represent sales to companies through corporate transactions, consumer loyalty projects and commercial agreements. (iii) Present value adjustment was calculated on accounts receivable, net of FIDC anticipations. (IV) The Company securitized its credit righs represented by accounts receivable from credit card companies, through the Retail Credit Rights Investment Fund (FIDC), Note 7(a), whose quarterly information are consolidated by the Company. In the parent company, the Company maintained the acknowledgement of the receivable in the amount of R$ 205,822 (R$ 523,804 on ), as a counterparty to borrowings and financing in non current liabilities, as described in Note

26 and independente autitors Falling due 278, , , ,453 Overdue: up to 30 days 1,643 9,173 10,346 17, to 60 days 1,933 5,821 5,049 9, to 90 days 4, ,624 3, to 120 days 5,675 3,347 9,834 4, to 180 days 10,927 3,192 16,319 4,930 > 180 days 7,634 4,217 18,585 18, , , , ,595 The amount of the provision for doubtful accounts considers the average of the effect of losses over the last 180 days, combined with a Management analysis of the probable losses from due and past due accounts. Changes in the provisions for doubtful accounts is shown as follows: Parent Company Balance on January 1, (12,136) (21,725) Reversals 1,329 8,325 Balance on March 31, (10,807) (13,400) Additions (6,701) (12,967) Balance on (17,508) (26,367) Reversals 3,714 (378) Balance on March 31, (13,794) (26,745) 9 Inventories 31 de dezembro de Goods for resale 967,087 1,511, ,378 1,534,343 Supplies and packaging 5,497 6,981 5,497 6, ,584 1,518, ,875 1,541,324 26

27 and independente autitors The provision for losses is presented in the above accounts, by its net amount. The movement of the provision for losses is shown as follows: Balance on January 1, (54,614) Additions (7,935) Balance on March 31, (62,549) Additions (10,668) Balance on (73,217) Reversals (12,334) Balance on (85,551) 10 Recoverable taxes Income tax withheld at source 8,897 28,298 9,501 33,969 Social Integration Program (PIS) and Contribution for the financing of social 1,000, ,040 1,004, ,704 security (COFINS) Taxes on Goods and Services (ICMS) 172, , , ,142 Deferred income tax ("IRPJ") and Contribution 257, , , ,113 Others 8,340 8,321 11,452 9,867 1,448,245 1,485,985 1,472,362 1,508,795 Current portion 340, , , ,343 Non-current portion 1,107,977 1,067,452 1,107,977 1,067,452 Considering the taxation rules currently in effect, the expectation of the main recoverable taxes is as follows: - Social Integration Program tax (PIS) and Contribution for the financing of social security (COFINS): The Company expects to recover R$ 42,009 in and R$ 958,633 in up to 4 years by offsetting other federal taxes. Additionally, the Company filed a refund claim with the Federal Revenue Service totaling R$ 404,

28 and independente autitors 42, , , , ,223 1,000,642 - Tax on goods and services (ICMS): The Company expects to recover the ICMS credit with its own operations in the amount of R$ 108,449 in and R$ 63,936 at The Company's management, aiming at the realization of the ICMS credit balance arising from the marketing of goods, conducted technical studies based on the normal course of its business operations for the next fiscal years. The study was based on current operations and future expectations, always backed by the Company s strategic plan of long-term business. 108, , , ,385 - Income tax and social contribution (IRPJ/CSLL): The Company expects to recover R$ 266,878 within 4 years (-2020), by order of restitution and/or compensation with other federal taxes. 134, , , , ,878 28

29 and independente autitors 11 Income tax and social contribution (a) Deferred income tax and social contribution Assets Tax losses 541, , , ,695 Negative bases for social contribution 194, , , ,689 Temporary differences: Contingencies 34,749 19,070 34,749 19,070 Unsettled swaps 17,945 12,376 32,469 26,186 Present value adjustments receivables 39,912 42,078 39,912 42,078 Provision for doubtful accounts 13,093 12,164 17,729 15,241 Provisions for losses on inventories 26,087 24,894 26,087 24,894 Other 7,184 7,263 16,301 14, , , , ,650 Liabilities Capitalization of interest 51,884 60,887 51,884 60,887 Review of the useful life of fixed 597 6, ,517 assets Others 2,630 1,076 6,030 4,476 55,111 68,480 58,511 71,880 Net balance 820, , , ,770 For the period ended, the company performed better than the business plan realized in the previous year, constituting deferred taxes. The Company's management reiterates confidence in its Business Plan and will continue monitoring internal and external indicators in order to better assess the evolution of its estimates. 29

30 and independente autitors (b) Expected realization of deferred taxes ,367 32, ,857 91, , , , , , , , , , ,779 (c) Reconciliation between nominal and effective tax rates The reconciliation between the income tax and social contribution, computed by the nominal and effective rates is demonstrated as follows: Losses before income tax and social contribution (441,183) (357,670) (435,852) (355,835) Nominal rate - % 34% 34% 34% 34% Effect of (additions) or deductions on net income 150, , , ,984 Participation in controlled and jointy controlled companies 3,716 (1,094) - - Other permanent deductions (additions), net (1,069) (1,510) (949) (3,772) Income tax and social contribution at effective rates 152, , , ,212 Current - - (10,768) (3,543) Deferred 152, , , ,755 Income tax and social contribution 152, , , ,212 Effective rate 34% 34% 34% 34% 30

31 Financial Statments - ITR at and independente autitors 12 Related party transactions Operations with Balances Transactions Receivable (payable) Sales Purchases Others Financial Revenue (expense) December 31, Lojas Americanas S,A, (iv) (147,150) (81,820) 291, ,341 (208,123) (107,802) (28,107) (51,331) - Rental of headquarters, distribution (3,508) (4,062) (10,208) (27,881) - Goods for resale- sale - 2, ,621 - Goods for resale -purchase (157,149) (117,426) (208,123) (107,802) - Operations in Kiosks (ii) 4,692 26,454 (17,899) (23,450) - Operations Lojas Americanas x Click 1,902 3,587 2, Operations Lojas Americanas x QSM 363 7, , ,720 - Operations Lojas Americanas x Direct 3,787-7, Operations Lojas Americanas x BIT 2,763-7,069 - Operations with subsidiaries (iii) 92,787 70,777 (395) (385) B2W Rental 39,306 39,234 Submarino Finance Click Rodo (157) (286) BIT Services (former Ideais) 50,498 27,459 Direct 1,677 3,003 (227) (99) QSM (665) (730) B2W México (11) - Infoprice Others accounts receivable Others accounts payable (24) (399) Other operations with affiliates (58,748) (129,487) (266,891) (281,374) Transportationd of merchanside Click Rodo 8) (3,158) (20,546) (19,511) (73,753) Direct (33,656)) (90,547) (218,419) (185,989) Desenvolvimento de sistemas B2W Services (antiga Uniconsult) (7,996) BIT Services (antiga Ideais) (21,934) (18,394) (28,961) (13,636) Current Assets 69,811 62,565 Non-Current Liabilities (191,737) (214,064) Debentures (iv) (215,028) (200,762) (14,266) (15,096) BWU (215,028) (200,762) (14,266) (15,096) Fees (5,252) (6,032) Services (v) (5,252) (6,032) 31

32 and independente autitors (i) (ii) (iii) (iv) (v) The Company entered into a license agreement for the use of a trademark with LASA, for which the license to use the brand Americanas.com and similar trademarks, exclusively, is granted for activities included in its corporate purpose. As established in the aforementioned agreement, trademark licensing will be free of charge as long as LASA holds a relevant corporate interest in the Company. The Company has a contract with its Controlling Shareholder, LASA, to jointly implement actions to increase synergy of its operations with the installation Americanas.com brand kiosks in LASA s commercial premises. Under that agreement, the payments for transactions on the Americanas.com website can also be made by customers in any of the LASA stores cash registers. Refers mainly to reimbursement of expenses and loan agreements and advances for future capital increase. The loan agreements are paid based on the daily CDI factor plus 4%. On December 7, 2010, the Board of Directors approved the first private issue of the Company s simple debentures, not convertible into shares, subordinated, in a single series, totaling R$ 200,000. The issue was not subject to registration with CVM, since the debentures were a private placement without any effort to sell to investors, fully subscribed by BWU Comércio Entretenimento SA, a wholly owned subsidiary of Lojas Americanas S.A. The requirements and characteristics of emissions are listed in Note 18. One of the members of the Board of Directors of the, Mr. Love Goel, appointed by the Board of Directors, holds a stake in GVG, of which he is the CEO, who provides project development services related to customers' shopping experience on the websites. The choice of the Company was based on its expertise and through benchmarking. 32