(A free translation of the original in Portuguese)

Transcription

1 (A free translation of the original in Portuguese) B2W - Companhia Global do Varejo Financial statements in accordance with the accounting practices adopted in Brazil and with IFRS and independent auditor's report

2 (A free translation of the original in Portuguese) Independent auditor's report To the Board of Directors and Shareholders B2W - Companhia Global do Varejo We have audited the accompanying financial statements of B2W - Companhia Global do Varejo ("Parent Company"), which comprise the balance sheet as and the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. We also have audited the accompanying consolidated financial statements of B2W - Companhia Global do Varejo (""), which comprise the consolidated balance sheet as and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of the parent company financial statements in accordance with accounting practices adopted in Brazil, and for the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. PricewaterhouseCoopers, Av. José Silva de Azevedo Neto 200, 1º e 2º, Torre Evolution IV, Barra da Tijuca, Rio de Janeiro, RJ, Brasil T: (21) , F: (21) , PricewaterhouseCoopers, Rua da Candelária 65, 20º, Rio de Janeiro, RJ, Brasil , Caixa Postal 949, T: (21) , F: (21) , 2

3 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion on the parent company financial statements In our opinion, the parent company financial statements referred to above present fairly, in all material respects, the financial position of B2W - Companhia Global do Varejo as at December 31, 2011, and its financial performance and cash flows for the year then ended, in accordance with accounting practices adopted in Brazil. Opinion on the consolidated financial statements In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of B2W - Companhia Global do Varejo and its subsidiaries as at December 31, 2011, and their financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil. Emphasis of matter As discussed in note 2 to these financial statements, the parent company financial statements have been prepared in accordance with accounting practices adopted in Brazil. In the case of B2W - Companhia Global do Varejo, these practices differ from IFRS applicable to separate financial statements only in relation to the measurement of investments in subsidiaries and jointly-controlled entities based on equity accounting, while IFRS requires measurement based on cost or fair value, and the maintenance of the balances of deferred charges as at December 31, 2008, which are being amortized. Our opinion is not qualified in respect of this matter. Other matters Supplementary information - statement of value added We also have audited the parent company and consolidated statements of value added for the year ended December 31, 2011, prepared by the Company's management, the presentation of which is required by the Brazilian corporate legislation for listed companies, but is considered supplementary information for IFRS. These statements were subject to the same audit procedures described above and, in our opinion, are fairly presented, in all material respects, in relation to the financial statements taken as a whole. 3

4 Other matters Audit of prior-year information The financial statements of the Company for the year ended December 31, 2010, presented for comparison purposes, were audited by another firm of auditors whose report, dated March 16, 2011, expressed an unmodified opinion on those statements. Rio de Janeiro, March 1, 2012 PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 "F" RJ Claudia Eliza Medeiros de Miranda Contadora CRC 1RJ087128/O-0 4

5 Balance sheet at December 31 (A free translation of the original in Portuguese) Parent Company ASSETS 12/31/ /31/ /31/ /31/2010 CURRENT Cash and cash equivalents Marketable securities Accounts receivables Inventories Recoverable taxes Prepaid expenses Other current assets Total current assets NON CURRENT Long-term assets: Marketable securities Deferred income tax and social contribution Escrow deposits Related parties Other non current assets Investments Fixed assets Intangible Deferred Total non current assets TOTAL ASSETS of 84

6 Balance sheet at December 31 Parent Company LIABILITIES AND SHAREHOLDERS' EQUITY 12/31/ /31/ /31/ /31/2010 CURRENT Suppliers 689, , , ,052 Loans and financing 442, , , ,888 Debentures 8, ,225 8, ,225 Salaries, provisions and social contributions 14,289 9,229 16,929 11,520 Recoverable taxes 4,881 1,881 8,275 6,796 Net income and social contribution ,315 2,139 Dividends proposed - 5,383-5,383 Other current 20,415 25,380 25,806 37,285 Total current liabilities 1,180,178 1,201,563 1,400,221 1,400,288 NON CURRENT LIABILITIES Long-term liabilities: Loans and financing 785,086 1,032,444 1,163,672 1,035,337 Debentures 302, , , ,879 Provisions for contingencies 15,341 12,811 15,341 12,811 Deferred income and social contribution taxes 60,355 25,457 60,355 31,080 Other non current 5,743 6,674 8,927 6,674 Total non current liabilities 1,169,188 1,577,265 1,550,958 1,585,781 SHAREHOLDERS'S EQUITY Capital stock 1,182, ,491 1,182, ,491 Capital reserves 207, ,807 (-) Treasury shares (200,000) (200,000) Equity adjustment Capital reserves 82,212 52,855 (-) Treasury shares (18,631) (18,631) Accumulated losses (26,049) - (44,578) - Additional proposed dividend Total shareholders's equity 1,157, ,302 1,138, ,945 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,506,743 3,034,130 4,090,027 3,212,014 The accompanying notes are an integral part of these financial statements. 2 of 84

7 Income statements at December 31, 2011 and 2010, except the (losses) earnings per thousand shares in reais (A free translation of the original in Portuguese) Parent Company 12/31/ /31/ /31/ /31/2010 Net revenue 3,848,396 3,803,907 4,232,137 4,073,569 Cost of goods and services sold (2,977,218) (2,811,748) (3,172,480) (2,937,529) Gross profit 871, ,159 1,059,657 1,136,040 Operating income (expenses) Selling expenses (491,507) (451,278) (565,721) (512,448) General and administrative expenses (128,881) (120,590) (143,296) (124,810) Management fees (7,470) (7,215) (7,890) (7,565) Other Operating income (expenses) (98,044) (63,982) (106,137) (80,453) Result before financial result 145, , , ,764 Financial result Financial revenue 176, , , ,796 Financial expenses (501,776) (457,473) (591,085) (489,660) (324,874) (331,313) (372,024) (360,864) Equity pickup 18,437 10,802 Income before income and social contribution taxes (161,161) 28,583 (135,411) 49,900 Income and social contribution taxes 61,165 (5,911) 46,243 (16,313) Current - - (16,199) (12,470) Deferred 61,165 (5,911) 62,442 (3,843) (Loss) net income of the period (99,996) 22,672 (89,168) 33,587 (Losses) earnings per share of the capital stock in the end of the exercise, exding treasury shares - R$ (0.7373) (0.6575) The accompanying notes are an integral part of these financial statements. 3 of 84

8 Compreensive Income statements and 2010, except the (losses) earnings per thousand shares in reais (A free translation of the original in Portuguese) Parent Company 12/31/ /31/ /31/ /31/2010 (Loss) net income of the period (99,996) 22,672 (89,168) 33,587 Change in fair value of assets available for sale 476 (954) 476 (954) Deffered income and social contribution taxes (161) 324 (161) 324 Total comprehensive result (99,681) 22,042 (88,853) 32,957 The accompanying notes are an integral part of these financial statements. 4 of 84

9 Statements of changes in shareholders' equity and Parent company (A free translation of the original in Portuguese) Capital stock Capital reserve Treasury shares Equity adjustment Profit Reserves Legal reserve Expansion reserve Treasury shares Acumulated (losses) profits Additional proposed dividend Total Balances on January 1st, , ,291 (200,000) 1,250 8,498 56,031 (22,701) 3, ,144 Comprehensive result Net income of the exercise ,672-22,672 Change in fair value of assets available for sale (630) (630) Contributions from shareholders and distributions to shareholders Additional proposed dividend (803) Expansion reserve destination ,406 - (2,406) - - Capital increase Stock option plan 2, ,516 Sale of treasury shares (2,012) 4, ,058 Net income of the exercise destination Legal reserve , (1,134) - - Mandatory dividends (R$ per thousand shares, excluding treasury shares (5,383) - (5,383) Expansion reserve ,155 - (16,155) - - Balance on December 31, , ,807 (200,000) 620 9,632 72,580 (18,631) ,302 Comprehensive result Losses of the exercise (99,996) - (99,996) Equity adjustment Contributions from shareholders and distributions to shareholders Capital increase 1,000, ,000,000 Stock option plan - 2, ,559 Dividends payment (803) (803) Cancellation of shares (200,000) 200, (18,631) 18, Compensation of loss for the exercise: - With profit reserves (9,632) (53,949) - 63, With capital reserves - (10,366) 10,366 Balance on December 31, ,182, (26,049) - 1,157,377 The accompanying notes are an integral part of these financial statements. 5 of 84

10 Statements of changes in shareholders' equity and (A free translation of the original in Portuguese) Capital stock Capital reserve Treasury shares Equity adjustment Profit Reserves Legal reserve Expansion reserve Treasury shares Acumulated (losses) profits Additional proposed dividend Total Balances on January 1st, , ,291 (200,000) 1,250 8,498 15,759 (22,701) 3, ,872 Comprehensive result Net income of the exercise ,587-33,587 Change in fair value of assets available for sale (630) (630) Contributions from shareholders and distributions to shareholders Additional proposed dividend (803) Expansion reserve destination ,406 - (2,406) - - Capital increase Stock option plan 2, ,516 Sale of treasury shares (2,012) 4, ,058 Net income of the exercise destination Legal reserve , (1,134) - - Mandatory dividends (R$ per thousand shares, excluding treasury shares (5,383) - (5,383) Expansion reserve ,070 - (27,070) - - Balance on December 31, , ,807 (200,000) 620 9,632 43,223 (18,631) ,945 Comprehensive result Losses of the exercise (89,168) - (89,168) Equity adjustment Contributions from shareholders and distributions to shareholders Capital increase 1,000, ,000,000 Stock option plan - 2, ,559 Dividends payment (803) (803) Cancellation of shares (200,000) 200, (18,631) 18, Compensation of loss for the exercise: - With profit reserves (9,632) (24,592) - 34, With capital reserves - (10,366) , Balance on December 31, ,182, (44,578) - 1,138,848 The accompanying notes are an integral part of these financial statements. 6 of 84

11 Statements of value added at December 31 (A free translation of the original in Portuguese) Parent Company 12/31/ /31/ /31/ /31/2010 Revenues Sales of products, goods and services 4,264,541 4,212,385 4,713,520 4,748,816 Other revenues ,793 2,590 Revertion (allowance) for doubtful accounts (13,979) (8,625) (28,350) (21,073) 4,250,952 4,204,305 4,696,963 4,730,333 Goods acquired from third parties Costs of products sold (including ICMS, PIS and COFINS) (3,353,940) (3,169,276) (3,588,862) (3,496,787) Materials, energy, third party services and others (479,167) (472,761) (560,239) (578,693) (3,833,107) (3,642,037) (4,149,101) (4,075,480) Gross value added 417, , , ,853 Depreciation, amortization and exhaustion (78,444) (66,819) (72,641) (55,767) Net value added generated by the company 339, , , ,086 Value added received in transfer Equity result 18,437 10, Financial revenues 176, , , , , , , ,796 Total value added to distribute 534, , , ,882 Distribution of value added Employees Direct compensation 84,767 51,029 99,381 62,983 Benefits 21,806 14, ,851 Guarantee fund for years of service 7,374 4,155 8,757 5, ,947 69, ,810 83,974 Taxes and contributions Federal (40,017) 18,558 (20,369) 40,025 State 25,010 33,880 43,078 47,442 Municipal 1, ,928 2,736 (13,948) 53,223 26,638 90,203 Compensation of third party capital Interest 501, , , ,660 Rentals 32,814 29,648 33,770 30,387 Others , , , ,118 Pay Equity Dividends - 5,383-5,383 Retained earnings / losses of the exercise (99,996) 17,289 (89,168) 28,204 (99,996) 22,672 (89,168) 33, , , , ,882 The accompanying notes are an integral part of these financial statements. 7 of 84

12 Cash flow statements at December 31 (A free translation of the original in Portuguese) Parent Company 12/31/ /31/ /31/ /31/2010 Cash provided by operating activities Net Income of the exercise (99,996) 22,672 (89,168) 33,587 Adjustments to net income: Depreciation and Amortization 78,444 66,819 72,641 55,767 Equity result in subsidiaries (18,437) (10,802) - - Deferred income tax and social contribution (61,166) 5,911 (62,442) 3,843 Interest and changes over financing and other debts 205, , , ,047 Others 12,832 27,436 26,718 53,089 Adjusted net income 116, , , ,333 Decrease (increase) in operational assets: Accounts receivable 124,024 (160,343) 140,399 (203,387) Inventories 40,558 (89,491) 37,850 (113,883) Recoverable taxes(57,163) 5,424 (61,735) 8,070 Prepaid expenses (current and non-current) 1,969 (247) 993 (246) Escrow deposits (6,362) (1,344) (5,955) (1,558) Accounts receivable related parties (5,917) 180 (238) 14,383 Other accounts receivable (current and non-current) (14,149) (10,288) (16,485) (14,506) 82,960 (256,109) 94,829 (311,127) Increase (decrease) in operation liabilities: Suppliers (77,076) 206,200 (89,940) 219,125 Payroll and related charges 5,060 2,951 5,409 3,280 Taxes and contributions (current and non current) 2,900 (8,280) 1,655 (10,074) Other accoutns payable (current and non current) (5,895) (9,790) (9,228) (4,682) (75,011) 191,081 (92,104) 207,649 Net Cash from Investment Activities 124, , , ,855 Cash Flow from Investment Activities Marketable securities (122,139) (211,956) (131,929) (216,705) Investments in subsidiaries (4) Fixed assets (89,626) (44,048) (100,251) (51,588) Intangible (262,014) (214,462) (276,504) (223,304) Net cash generated (applied) in investment activities (473,783) (470,466) (508,684) (491,597) Net Cash from Financing Activities Loans and financing (current and non current): Funding 121, , , ,721 Liquidation (257,563) (538,391) (404,968) (572,408) (136,275) 208, , ,313 Debentures (current and non current) (453,710) 261,010 (453,710) 261,010 Discounted receivables securitization (Including FIDIC) (57,953) (324,877) (468,154) (306,106) Capital increase 1,000,000-1,000,000 - Dividends paid (6,186) (11,308) (6,186) (11,308) Shares buy-back - 4,069-4,069 Net cash generated (applied) in financing activities 345, , , ,978 Increase (Reduction) in Cash and Cash Equivalents (3,018) (49,686) 14 (46,764) Opening balance of cash and cash equivalents 7,288 56,974 15,283 62,047 Closing balance of cash and cash equivalents 4,270 7,288 15,297 15,283 Increase (Reduction) in Cash and Cash Equivalents (3,018) (49,686) 14 (46,764) The accompanying notes are an integral part of these financial statements. 8 of 84

13 Management report 2011 In compliance with legal provisions and pursuant to current Brazilian corporate law, B2W - Companhia Global do Varejo presents this Management Report with financial and operating statements for the fiscal year ended December 31, B2W - Companhia Global do Varejo is the leading online retail Company in Brazil and was formed in December, 2006, from the merger of Americanas.com and Submarino. This report contains information regarding the brands administered by the Company - Americanas.com, Submarino, Shoptime, BLOCKBUSTER Online, MesaExpress.com.br and SouBarato.com.br, as well as the Company's subsidiaries: B2W Viagens, Ingresso.com and Submarino Finance, with the latter Company a joint venture with Cetelem, BNP Paraibas Group's finance Company. The Company's shares are listed on the São Paulo Stock, Commodities and Futures Exchange (BM&FBOVESPA) under ticker symbol BTOW3 and figure on the Novo Mercado listing segment, which is the highest level accorded for corporate governance in Brazil. Lojas Americanas S/A is B2W's controlling shareholder, with approximately 59% of the Company's shares. The Company's free float corresponds about 41% of the Company's total capital. The following chart summarizes B2W's share structure: 59% 57% 43% 41% 50% 100% 100% 9 of 84

14 Management report Company Overview B2W is Brazil's leading e-commerce Company and currently sells goods and services through multiple channels, including the Internet, telephone sales, television, catalogues and kiosks. B2W owns Americanas.com, Submarino, Shoptime, MesaExpress.com.br, SouBarato.com.br and BLOCKBUSTER Online, a brand whose operating license B2W purchased in 2007 for online operations in Brazil. The Company also has three subsidiaries: B2W Viagens, Ingresso.com and Submarino Finance. Americanas.com With 12 years of e-commerce operations completed in 2011, Americanas.com ( is the largest and most comprehensive Brazilian internet shop. In 2011, the brand won for the fifth time the Top of Mind award of the e-commerce category in accordance with Datafolha Institute. Americanas.com offers more than 500,000 different items distributed in 37 product categories, including computer and technology products, electronics, cell phones, toys, furniture, household appliances, books and other. In addition to the online channel, the sale operation is done through Internet, telephone sales and more than 600 Internet-connected kiosks located at Lojas Americanas stores. In the begining of 2011, the brand launched the "Caixa Expresso" tool, the most agile and easiest way to buy. The client needs to provide his or her delivery address and credit card information just once; and after identification, buyers can complete their purchases in a single step. In the second half, Americanas.com modernized the visual branding, with new logo and new layout on the site. In the same period, lanched the smartphones application, with product search by barcode and tool for location of the closest Lojas Americanas. Americanas.com also provides travel services through Americanas Viagens (viagens.americanas.com.br), B2B (business-to-business) services, digital services like photo developing, wedding registries and adding prepaid cell phone credit. Submarino With 12 years of industry operations, completed in 2011, Submarino ( is renowned for its leadership in technological innovation. In addition, the Submarino has been consolidating in other services such as the Submarino Viagens ( services of B2B (business-to-business), and credit services and loyalty with the Submarino card. 10 of 84

15 Management report 2011 Submarino offers 29 product categories through its different sales channels: Internet, telephone sales and catalogues, with heavy emphasis on sales of books, CDs, DVDs, electronics, computer and technology products, telephone products, games and online services. In 2011, Submarino increased its participation in the sponsorship of events, being presented in several actions of relevance to national and global levels, as Campus Party Brasil, Book Biennial Rio and Rock in Rio. Submarino launched the Submarino Digital Club, a social network for books that allows you to purchase e-books and social interaction and content between your users. Submarino's clients receive four special editions of catalogues whose printed editions number in the hundreds of thousands, presenting an assortment of product and special-offer. In addition, in order to offer an option of offline media directed to the premium client, the Submarino went on to serve also a magazine for a more segmented base, with a focus on high-end items. Following its path of innovation, Submarino implemented throughout 2011 new tools as the Submarino Store, that allows the customization of a Submarino store in Facebook. In addition, the "Entrega Atômica" resumed execution in 2011 in the city of São Paulo, allowing customers of certain ranges of CEP, with purchases made until 2:00 pm, receive their products in the same day. The brand also incorporated the QR Codes in its communication, not only on all items of newspaper ads, as well as virtual storefronts. The mobile application of the Submarino was updated with QR Code Reader, so the user does not need to download a generic reader to access the advertised brand products this way. Shoptime Shoptime ( that celebrated its 16th birthday in 2011, is Brazil's first home shopping (television sales) and operates through internet, telesales and catalogues. The TV channel reaches more than 28 million Brazilian households, comprised of more than 12 million homes with pay- TV subscriptions (Sky 19 and Net 31 channels) and more than 16 million homes connected to satellite television (Vertical 5B), with interactive transmission including more than 11 hours of live programming seven days a week. Since 1995, the television channel broadcasts 24 hours a day, ensuring speed and improved interaction for clients' shopping experiences. The catalogue is distributed five times a year throughout Brazil with a printing run of 400,000 copies each. Shoptime currently offers 23 product categories to more than 4.3 million clients. Shoptime's assortment focus is on articles marketed under the Shoptime brand, with an emphasis on portable appliances (Fun Kitchen), bed, bath and dining products (Casa & Conforto), house wares (La Cuisine) and sports and leisure products (Life Zone). The computer and technology department also plays an important role in the brand's product mix. Furthermore, Shoptime operates a travel agency through Shoptime Viagens (viagens.shoptime.com.br). B2W Viagens B2W Viagens operates under the following brands: Americanas Viagens, Submarino Viagens and Shoptime Viagens, and offers tour packages, plane tickets, online hotel reservations, cruises, travel insurance, car rentals and tourist attractions packages in Brazil and abroad. The Company markets its services through the Internet, telephone sales, television and kiosks and had been working to expand product assortment. B2W Viagens's objective is to build a platform that allows each brand's clients to quickly and easily plan and purchase their travel packages, driving the Company to a leadership position in Brazil's online travel market on account of the Company's innovation, excellent customer service, outstanding content and competitive prices. 11 of 84

16 Management report 2011 As part of its strategy for continuous innovation, in 2010 B2W Viagens launched Milevo ( a social travel network. The new site allows users to add comments concerning their travel experiences, which enables B2W Viagens to gain access to a qualified traveling public with guaranteed travel knowledge and experience. It added that the Milevo complements the positioning strategy of B2W Viagens, because it interacts with the customer travel planning phases and sharing experiences. Another B2W Viagens' business unit is the H2W, that acts as a hotel broker and is responsible for the direct negotiation of hotel units through commercial "merchant" model. Today, H2W has more than 500 hotels with direct contract and good national and international inventory availability. In a partnership with Banco Bradesco, B2W Viagens launched the first online platform of points redemption of loyalty programs, allowing the client to use the benefit on any airline or hotel. In 2011, B2W Viagens prepared itself internally to begin its international expansion by adapting their platform to be "multilanguage and multicurrency" and allocating a dedicated team for this initiative. In December, 2011, was launched officially the travel operation in Argentina through the brand Submarino Viajes ( Ingresso.com Ingresso.com provides technology and services to purchase tickets online for movies, theater productions, concerts, soccer games and cultural events. With more than 3.6 million registered clients, Ingresso.com is the biggest online ticket seller in Brazil. The Company also allows clients to make seat assignments online, which enables the client to comfortably choose his or her preferred movie or theater seat. In addition, the Company has invested heavily in ticket sales for concerts, had realized with exclusivity in 2011 the ticket sales for Paul McCartney's concerts and Rock in Rio in Brazil. In addition to the main site ( which includes an exclusive version for mobile devices and iphone and Android application, Ingresso.com is also available on the Americanas.com, Submarino and Shoptime websites. Another area in which Ingresso.com operates involves marketing its ticketing software in Brazil. The Company is currently responsible for computerizing various movie theaters, playhouses, sports stadiums and concert venues. Furthermore, Ingresso.com is present in Latin America and currently operates in Mexico, Argentina and Chile through movie ticket sales in a partnership with Cinemark. This initiative has allowed B2W to explore and study new markets with low entry costs. Submarino Finance As part of its joint venture with Cetelem, Submarino Finance offers the Submarino credit card, which provides financing in up to 24 installments for purchases on Submarino's site as well as an exclusive rewards and special-offers program, such as product discounts and points for the Submarino's loyalty program (Léguas Submarinas). For B2W, the own card represents an opportunity to leverage sales, especially high-cost items, to reduce the costs associated with credit-card administrative fees, to increase discounts for accounts receivable, and to improve business revenue resulting from consumer financing. During the year, the Company issued more than 700 thousand cards, and cards were used in 37% of the sales on the Submarino site. 12 of 84

17 Management report 2011 Blockbuster Online B2W acquired the right to use the BLOCKBUSTER trademark online in Brazil and started offering in 2008 online DVD and Blu-ray Disk rentals on BLOCKBUSTER Online is a rental store that allows online clients to choose the movies they want to watch, to create their wish list, and to receive and return movie rentals from the comfort of their homes. It offers monthly plans that allow clients to always have movies at home without worrying about return dates and late-return fines. BLOCKBUSTER Online currently includes the largest online selection of movies in Brazil, with more than 20,000 titles, and it provides services to the states of São Paulo, Rio de Janeiro, Minas Gerais, Paraná, Santa Catarina, Rio Grande do Sul and the Federal District, with Sunday and same-day delivery services available in the cities of São Paulo and Rio de Janeiro. It also has the largest Blu-ray disk collection available for rent in Latin America, with more than 2,000 titles. It offers the service of rental of videogame games, being the unique rental store offering DVD, Blu-ray and games in Brasil. 2. Message from the Management The last five years for B2W have been a period of strong growth, intense transformation, intense learning and major changes to the Brazilian retail market. During this period, through its three e-commerce websites - Americanas.com, Submarino and Shoptime - and its subsidiaries, B2W - Companhia Global do Varejo more than doubled the size of its unique multichannel, multibrand and multibusiness model, confronting the challenges of a market that each day is larger and more diversified, but also more competitive and more complex. We must recognize that many of these challenges were successfully met while others took longer for the desired effects to take place. In the last quarter of 2010, we had logistical and service instabilities, which kept us from reaching our major goal in 2011: to offer our clients the best selection of products at competitive prices, with better quality customer service and assistance. In 2011, the Company reported from the consolidated operating point of view gross revenues of R$ 4.7 billion and an EBITDA of R$ million, reaching an EBITDA margin of 9.8% on net revenues. During the course of the year, conservative measures for deliveries designed to improve our customer service limited our growth. At the same time, a more aggressive price and shipping policy hurt our profitability. From this point of view, 2011 was a period of transition during which many problems were addressed and corrected, but results were far from what we had expected. On the other hand, the R$ 1 billion capital increase carried out during the first half of 2011 made it possible to intensify investments in our logistical system, the chain of distribution, the technological platform and new features, seeking to offer our clients a better level of service and a distinctive purchase experience. We invested in automation, we opened new distribution centers and we entered into strategic alliances with the main freight transportation companies throughout the country, enabling us to deliver millions of products, often in advance of the stipulated deadline. This set of initiatives already has generated important effects and we have registered significant improvements in our operating indicators. This trend was confirmed by the sharp decline in the number of complaints received by the consumer defense agencies. We have emerged from this period having learned a lot and also with the certainty that having the client as the center of our concerns is of fundamental importance for the success of our businesses. 13 of 84

18 Management report 2011 We are working hard and very enthusiastically at transforming our processes, investing in the infrastructure that is necessary for B2W to boost its competitive advantages and capture the innumerous growth opportunities that will emerge in the e-commerce industry in the forthcoming years. We are prepared for the year of 2012, one that will be replete with opportunities during which we intend to achieve new and higher levels of efficiency, always seeking new occasions in all of our operations to better serve our customers. We would like to thank the dedication of our Associates and, as well the support and trust of our customers, suppliers and shareholders. The management 3. Economic Landscape According to the Brazilian Geography and Statistics Institute (IBGE), 2011 inflation as measured by the Extended Consumer Price Index (IPCA) came to 6.50%, up from 5.91% in In 2011, the General Market Price Index (IGP-M), as measured by the Getúlio Vargas Foundation (FGV) registered an annual inflation rate of 5.10%, compared to 11.32% deflation the preceding year. In 2011, there was a 12.6% valuation of the US dollar against the Brazil real. The Central Bank's Overnight Lending Rate (SELIC) was 11.00% per year at the close of 2011, up from 10.75% reported at the close of Retail commerce sales volume in 2011 grew 6.7% (IBGE). B2W firmly believes in the country's economic development and in the growth opportunities of the retail sector. The Company will continue to focus on expanding its businesses as well as its product and service assortment, driven primarily by growth expectations from an increase in the number of e-commerce adherents and greater overall retail penetration in Brazil. 4. Strategy and Investment B2W's strategy is to consolidate its competitive positions in the Brazilian retail market. The following, lists the main elements that compose this strategy: Grow sales and generate operating cash flow through continued improvement of our operation. Capture operating synergies and competitive advantages by integrating the Americanas.com, Submarino and Shoptime channels. Increase the sales volume of our subsidiaries Ingresso.com, B2W Viagens and Submarino Finance. Develop and expand the Blockbuster brand online; Continuously update technology and innovation in all business units; Seek greater levels of operational and logistical efficiency; Train our Associates to face the challenges that the Company faces as it grows and expands; Expand our active client base; Increase client purchase frequency; Innovate; Pursue new internet businesses. 14 of 84

19 Management report 2011 Investment We have adopted an investment plan that the main objective is to enable growth and improvements in our operations. In 2011, B2W invested a total of R$ million, mainly concentrated on operations/logistics and technology fronts. Logistic B2W has been constantly investing to optimize its logistical systems and distribution chain. During the year, new equipment was installed and a number of construction projects at the Company's Distribution Centers were concluded, expanding the level of automation and thereby reducing the time needed to deliver merchandise and human error. Likewise, systems were installed to better satisfy new tax and legal requirements. Another important investment front has been the development of a new customer service system, which will allow B2W to operate more efficiently and assertively. In addition, we have established strategic alliances with the leading transporters of the country, ensuring the joint commitment to offer the best level of service to our customers. In November 2011, we have begun to operate a new distribution center located in Recife, Pernambuco state. On February 10, 2012 we signed the contract to install another in Uberlândia, Minas Gerais, during a ceremony in the presence of Misters Governor Antonio Anastasia and the Mayor Odelmo Leão. The new Distribution Center will ensure greater agility in delivery of products purchased on the sites of the Company and a better customer service of Minas Gerais and Midwest and North regions. This initiative is in line with the Company's strategy of always seek the best service to our customers in all regions of the country. Tecnology Technology investments were aimed at unifying back office systems, sales layers and accessory systems, such as payment and management-information systems. This has enabled the Company to benefit from productivity gains and to prepare for supporting the future growth of its operations. Also bear in mind other important advances, such as the increased browsing speed of our Internet sites, greater sales speed and notable advances in information-management systems. Investments in operations and logistics, television, customer service and telephone sales seek to improve the quality and efficiency of our operations, with the goal of giving our client an even better purchasing experience. Following its path of innovation, B2W has proceeded to invest in new features, designed mainly to improve the purchase experience, increase the conversion rate and strengthen the positioning of its brands. During the year, 80 projects were implemented, ranging from improvements in the technological platform through to new features. We are highlighting the following recently introduced projects: Launch of the "SouBarato.com" website. B2W launched the "SouBarato.com" website, creating an important channel for the sale of inventory outlet merchandise. Launch of the "Entrega Atômica" service. Submarino launched the "Entrega Atômica" service, which allows the same-day delivery to clients in the city of São Paulo, offering a differentiated service to consumers. Restructuring of the search engine on the 3 websites. B2W restructured the search engine of the Americanas.com, Submarino and Shoptime websites, making the service more assertive and focusing on the relevance and popularity of each item. 15 of 84

20 Management report 2011 Launch of the QR Code platform in Submarino. Submarino launched an innovative way for clients to access exclusive offers, the QR Code, that using the reading of a special bar code through cell phone cameras, allows clients to access to promotions on Submarino website. Implementation of the "1 Click Buy" tool in Shoptime. After implementing the fast purchase feature on the Internet within Americanas.com, Submarino and Ingresso.com, now it is the turn of Shoptime to offer the same convenience and speed of the "1 Click Buy" experience in its website. Launch of "Submarino on Demand" (VOD). Submarino launched the "Submarino on Demand" service in beta version. The feature allows the clients to watch movies and TV series uninterrupted over the Internet through streaming technology. Launch of the Submarino store on Facebook. Aware of the changes in the digital landscape Submarino expanded its presence in social networking through a new concept, the implementation of a virtual store inside of one of the biggest relationship websites of the world. Launch of Shoptime self-service. Shoptime launched a self-service feature through the website, offering clients the option of, in the website, cancelling purchases, access to shopping vouchers and exchange merchandise and much more; in a fastest, simplest and most convenient way that only B2W offers. Android application in Ingresso.com. Ingresso.com created an application that has made buying movie theater tickets even easier. With this service, a client can more conveniently check the schedules of the biggest movie theater chains, buy tickets and reserve seats directly from a smartphone or tablet computer running the Android operating system. Start of B2W Viagens mobile operation. B2W Viagens started the selling airline tickets and packages through the mobile platform for the three brands: Americanas.com Viagens, Submarino Viagens and Shoptime Viagens. Acquisition of the "Mesa Express" restaurant reservation site. B2W concluded the acquisition of the "MesaExpress.com.br" website, a restaurant reservation management system that lets clients guarantee dining places via the Internet. "Caixa Expresso" in Ingresso.com. The fastest way to buy on the Internet, now also available for ticket purchases. Ingresso.com launched the "Caixa Expresso" tool, making tickets for cinemas, theaters and major events just 1-Click away. New B2W Viagens' Technological Platform. Launch of the new technological platform of B2W Viagens that allows an improvement of the intelligence in the payment conditions. Product Recommendations by Submarino. Based on the client's historical site use and purchase history, Submarino recommends products of the client's interest each time the Submarino virtual store is accessed. With this tool it is possible to focus on the consumer experience, offering products according to each client's needs and desires. 16 of 84

21 Management report 2011 Cross Sell Submarino. With this tool, upon accessing the shopping cart the client receives recommendations of products related to the selected item. This way, besides offering personalized customer service, the tool stimulates impulse purchases. People The expansion of B2W's operations directly reflects its Associates' professional development. The Company provides training and education programs to face the challenges that arise from the growth of our businesses. Career opportunities follow a merit-based system that rewards Associates' commitment to the Company's long-term vision. Training and development In 2011, we consolidated the training schedule drawn up the preceding year and logged 10,000 associate training hours. Our focus on providing ongoing training and development to our Associates is a reflection of our pursuit of ever more challenging goals. Recruiting talent B2W's policy is to develop talent from within by hiring Associates for our Internship, Trainee and New Talents programs and for jobs at our business facilities. Thus, we emphasize the recruitment of young university students from the country's top universities and we provide specific training that accounts for challenges particular to the retail sector and immerses the associate in the Company's organizational culture. Internship program The objective of the Internship Program is to recruit university students with an entrepreneurial spirit. Thus, we look for young people whose profile fits with a results-oriented team. During their participation in the program, interns are introduced to daily work routines in various departments at headquarters, distribution centers and other business facilities. Monthly training models are also offered during this period, and interns are given the opportunity to better understand the Company's vision, mission and values, its primary features and its respective departments, as well as the technical tools necessary to work in a specific field. The countrywide program has brought many young professionals into the Company. Trainee program The objective of the eighteen-month Trainee Program is to hire recent university graduates for Company management positions. During the program, trainees are given specific training and are introduced to all Company departments by the respective executive directors. Following such, once the new hires are settled into their new department, they are given the opportunity to pursue challenging projects right from the beginning of their careers. New talents program The New Talents Program is also focused to hire recent university graduates, objecting to develop faster young professionals being able to follow the growth of the group enterprises. The talents are settled into areas, since the beginning of the program, and have a three-month training where they have a vision of all Company areas. 17 of 84

22 Management report An Overview of the Company's Financial Results General Considerations The comparison of the information presented refers to B2W's results for the fiscal years ended on December 31, 2011 and 2010, except where otherwise noted. The accounting information that serves as the basis for the comments that follow are presented according to the international financial reporting standards (IFRS), to the rules issued by the Brazilian Securities Exchange Commission (CVM), and to the Novo Mercado listing rules, and in Reais (R$ ). B2W - Companhia Global do Varejo, formed from the merger between Americanas.com and Submarino in 2006, has a portfolio with the brands Americanas.com, Submarino, Shoptime, B2W Viagens, Ingresso.com, Submarino Finance, BLOCKBUSTER Online, MesaExpress.com.br and SouBarato.com, that offer more than 35 categories of products and services through the internet, telesales, catalogs, TV and kiosks distribution channels. Parent Company Var. (%) Financial Highlights (R$ million) Var. (%) 3, , % Net Revenue 4, , % % Gross Profit 1, , % 22.6% 26.1% -3.5 p.p. Gross Margin (%NR) 25.0% 27.9% -2.9 p.p % EBITDA % 8.4% 12.6% -4.2 p.p. EBITDA Margin (%NR) 9.8% 13.4% -3.6 p.p. (100.0) % Net Result (89.2) % -2.6% 0.6% -3.2 p.p. Net Margin (%NR) -2.1% 0.8% -2.9 p.p. Net Revenue In 2011, the consolidated net revenue reached R$ 4,232.1 million, a growth of 3.9% over the R$ 4,073.6 million obtained in The net revenue in the parent Company reached R$ 3,848.4 million in 2011, compared to R$ 3,803.9 million in 2010, representing a growth of 1.2%. +4% 4, % 4,074 3,848 3, Parent Company Gross Profit In 2011, the consolidated gross profit reached R$ 1,059.7 million, a reduction of 6.7% in relation to the R$ 1,136.0 million registered in In the parent Company, the gross profit of 2011 was R$ million. 18 of 84

23 Management report % 1,136 1, % Parent Company Selling, General and Administrative Expenses In 2011, the consolidated selling, general and administrative expenses totaled R$ million, representing 15.2% of net revenue. The selling, general and administrative expenses in the parent Company totaled R$ million in p.p. 14.5% 15.2% +0.8 p.p. 13.5% 14.3% Parent Company EBITDA In 2011, the consolidated EBITDA reached R$ million, comparing to R$ million registered in the same period of the preceding year. In 2011, the EBITDA in the parent Company reached R$ million. -24% -33% Parent Company Net Financial Result In 2011, the net financial expenses were negative in R$ million, a variation of +3.1% comparing to the negative financial expense of R$ million presented in of 84

24 Management report 2011 Net Financial Result - R$ Million Δ% Net Financial Result (372.0) (360.9) 3.1% The Company continues to reaffirm its commitment to a conservative policy for investment of cash, manifested through the use of foreign denominated currency hedge instruments to mitigate the eventual exchange fluctuations, both for financial liabilities and its total cash position. These instruments offset the foreign exchange risk, transforming the cost of the debt for local currency and interest rates (as a percentage of the CDI*). Similarly, it should be remembered that the Company's cash is invested in the largest financial institutions in Brazil. *CDI - Certificado de Depósito Interbancário: average rate of borrowing in the interbank market. Net Result and Result per Share In 2011, the net result reached R$ million, compared to the R$ 33.6 million obtained in the preceding year. The result per share reached R$ in 2011, in relation to the R$ obtained in Reconciliation of the Net Result - R$ Million Δ% EBITDA % (+) Depreciation / Amortization (72.6) (55.8) 30.1% (+) Net Financial Result (372.0) (360.9) 3.1% (+) Other Operating Income (Expenses)* (106.1) (80.5) 31.8% (+) Income Tax and Social Contribution 46.1 (16.2) % (=) Net Result (89.2) % Result per Share (R$0.6575) R$ % Weighted average of outstanding shares (thousand) 135, ,234 * Previously recorded as "non operating income". Parent Company Indebtedness B2W's cash balance on 12/31/2011, which amounted R$ million, continues to be higher than the Company's short-term gross debt, which totaled R$ million. On 12/31/2011, the Company's net debt was R$ 74.2 million, or 0.2x accumulated EBITDA in the last 12 months, comparing to a net debt of R$ million, or 1.1x EBITDA in the last 12 months observed on 12/31/ of 84

25 Management report 2011 R$ million Parent Company Indebtedness 12/31/ /31/2010 Short Term Debt Long Term Debt 1, ,532.3 Total Debt (1) 1, ,923.5 Cash and Equivalents Credit Card Accounts Receivables Net of Discounts Total Cash (2) 1, ,390.9 Net Cash (Debt) (2) - (1) (74.2) (532.6) Net Cash (Debt) / EBITDA LTM Average Maturity of Debt 869 1,017 Accounts receivable consist of credit card receivables, net of the discounted value, which have immediate liquidity and can be considered as cash. The breakdown of B2W's accounts receivable, from the parent Company point of view, is demonstrated in the table below: Accounts Receivable Conciliation 12/31/ /31/2010 Gross Credit-Cards Receivable 1, ,565.7 Receivable Discounts (901.2) (959.1) Credit Card Accounts Receivables Net of Discounts Present Value Adjustment (16.2) (16.2) Allowance for Doubtful Accounts (30.4) (30.2) Other Accounts Receivable Net Accounts Receivable - Parent Company Because of the adoption of the new CPCs/IFRS, in particular the CPC 38 and its corresponding IAS 39, the Company began to write off (derecognize) receivables from credit card administrators the moment they were effectively discounted (as of the explanatory notes of the financial statements). However, to better demonstrate the volume of receivables discounted on the base-dates analyzed, in the chart above the Company presents the accounts receivable adjusted by the discounts made until the base-dates under analysis. No Foreing Currency Exposure On 12/31/2011, B2W's balance sheet recorded foreign currency denominated debt. Such debt, however, is FULLY PROTECTED against any foreign exchange fluctuations through derivative (swap) operations that replace the foreign exchange risk for the variation in the basic brazilian interest rate (CDI). Parent Company Sales by Means of Payment Sales by means of payment in 2011 and in 2010 can be seen in the following table: 21 of 84

26 Management report 2011 Means of Payment % Cash 29% 22% +7 p.p Credit Card 71% 78% -7 p.p Net Working Capital The cash conversion cycle of the parent Company on December 31, 2011 was 99 days, representing an improve of 4 days when compared to the 103 days presented on December 31, days /31/ /31/2011 (Net Working Capital = Days of Inventory + Days of Accounts Receivable - Days of Suppliers) B2W, confirming its commitment to maximizing shareholder value, continues to manage working capital variables. Opportunities of improvement in internal processes and relationship with suppliers continue being implemented and we are certain that better levels can be achieved. Equity Accounting The equity accounting includes, basically, the subsidiaries Ingresso.com, B2W Viagens, Submarino Finance and BLOCKBUSTER Online. In 2011, the equity accounting registered a net gain of R$ 18.4 million, a growth of 68.8% in relation to the R$ 10.9 million recorded in The results of subsidiaries are evolving gradually, which makes us optimistic about their growth prospects. 22 of 84

27 Management report 2011 Income Statement B2W - Companhia Global do Varejo Income Statements Period ended on December 31 Period ended on December 31 (in million of Brazilian reais, except result per share) 4Q11 4Q10 Delta Delta Gross Sales and Services Revenue 1, , % 4, , % Taxes, returns and discounts on sales and services (143.3) (131.4) 9.1% (470.4) (454.0) 3.6% Net Sales and Services Revenue 1, , % 4, , % Cost of goods and services sold (903.0) (821.2) 10.0% (3,172.4) (2,937.6) 8.0% Gross Profit % 1, , % Gross Margin (% NR) 23.3% 28.7% -5.4 p.p. 25.0% 27.9% -2.9 p.p. Operating Revenue (Expenses) (187.9) (153.6) 22.3% (716.9) (644.8) 11.2% Selling expenses (146.5) (117.5) 24.7% (565.7) (512.4) 10.4% General and administrative expenses (25.4) (19.5) 30.3% (78.6) (76.6) 2.6% Depreciation and amortization (16.0) (16.6) -3.6% (72.6) (55.8) 30.1% Operating Result before Net Financial Result and Equity Accounting % % Net Financial Result (107.6) (142.9) -24.7% (372.0) (360.9) 3.1% Financial Revenues Financial Expenses (155.7) (154.5) (591.1) (489.7) Other operating income (expenses) (20.5) (56.4) -63.7% (106.1) (80.5) 31.8% Income tax and social contribution % 46.1 (16.2) % Net Result (28.8) (14.2) 102.8% (89.2) % Net Margin (% NR) -2.4% -1.2% -1.2 p.p. -2.1% 0.8% -2.9 p.p. EBITDA % % EBITDA Margin (% NR) 8.6% 16.8% -8.2 p.p. 9.8% 13.4% -3.6 p.p. Total shares (thousand) 159, , , ,563 Treasury shares (thousand) 3,280 3,280 3,280 3,280 Total outstanding shares (thousand) 156, , , ,283 Weighted average of outstanding shares (thousand) 135, , , ,234 Net Result per Outstanding Share (R$) * In the the former accounting rules, considered as "non-operating income". (0.2123) (0.1293) 64.3% (0.6575) % 23 of 84

28 Management report 2011 Parent Company Income Statement B2W - Companhia Global do Varejo Parent Company Parent Company Income Statements Period ended on December 31 Period ended on December 31 (in million of Brazilian reais, except result per share) 4Q11 4Q10 Delta Delta Gross Sales and Services Revenue 1, , % 4, , % Taxes, returns and discounts on sales and services (115.3) (103.3) 11.6% (386.7) (379.3) 2.0% Net Sales and Services Revenue 1, , % 3, , % Cost of goods and services sold (839.2) (783.6) 7.1% (2,977.2) (2,811.7) 5.9% Gross Profit % % Gross Margin (% NR) 20.5% 26.4% -5.9 p.p. 22.6% 26.1% -3.5 p.p. Operating Revenue (Expenses) (163.1) (143.1) 14.0% (627.8) (579.1) 8.4% Selling expenses (127.8) (110.9) 15.2% (491.5) (451.3) 8.9% General and administrative expenses (18.6) (13.3) 39.8% (57.9) (61.0) -5.1% Depreciation and amortization (16.7) (18.9) -11.6% (78.4) (66.8) 17.4% Operating Result before Net Financial Result and Equity Accounting % % Net Financial Result (93.1) (131.5) -29.2% (324.9) (331.3) -1.9% Financial Revenues Financial Expenses (124.7) (142.7) (501.8) (457.5) Equity accounting % % Other operating income (expenses) (20.0) (40.5) -50.6% (98.0) (64.0) 53.1% Income tax and social contribution % 61.1 (6.0) % Net Result (31.5) (17.0) 85.3% (100.0) % Net Margin (% NR) -3.0% -1.6% -1.4 p.p. -2.6% 0.6% -3.2 p.p. EBITDA % % EBITDA Margin (% NR) 6.7% 14.7% -8.0 p.p. 8.4% 12.6% -4.2 p.p. Total shares (thousand) 159, , , ,563 Treasury shares (thousand) 3,280 3,280 3,280 3,280 Total outstanding shares (thousand) 156, , , ,283 Weighted average of outstanding shares (thousand) 135, , , ,234 Net Result per Outstanding Share (R$) * In the the former accounting rules, considered as "non-operating income". (0.2324) (0.1547) 50.3% (0.7373) % 24 of 84

29 Management report Corporate Governance and Capital Markets B2W operates under the rules established by the Novo Mercado of the BM&FBOVESPA, which constitute the highest level of corporate governance in the country. Accordingly, the Company is committed to strict requirements for transparency, information access and equal treatment for shareholders. These include, among others, a shareholder base that consists exclusively of common shares and the election of independent members to the Board of Directors. B2W's Board of Directors is composed of seven members, four nominated by the controlling shareholder, Lojas Americanas, and three independent members. The Company offers its shareholders full tag along rights (100%) for their shares. This ensures that all shareholders of B2W are treated equally in the case of a sale of control of the Company, which guarantees them the right to sell their shares under the same conditions negotiated by controlling shareholders. The IPO and membership processes in the Novo Mercado were granted by the CVM and BOVESPA on July 25 and July 26, 2007, respectively. B2W shares are listed on the São Paulo Stock Exchange (BOVESPA) and began to be traded under the ticker symbol BTOW3 (common shares) on August 8, Below is a short description of the main events occurred during the year: On January 27, 2011 a meeting of the Board of Directors was held to approve the conditions for setting up a Fundo de Investimento em Direitos Creditórios ("FIDC" or credit rights investment fund) designed to acquire credit rights belonging to the Company and others, pursuant to the Regulations, originated through credit cards used in product purchase and sales operations carried out by the Company. On April 30, 2011 the Company's General and Extraordinary Shareholders Meetings were held, at which the following resolutions were approved: 1. To take recognizance of the accounts prepared by the managers and related financial statements for the fiscal year ended December 31, Allocation of the net income reported for the fiscal year ended December 31, Proposal for the adoption of the Capital Budget for the fiscal year of Installation of the Fiscal Council and the election of Mssrs. Carlos Alberto de Souza, Pedro Carvalho de Mello and Peter Edward Cortes Marsden Wilson as full members and Mssrs. Ricardo Scalzo, Márcio Luciano Mancini and Marcos Duarte Santos as alternate members. On June 14, 2011 a meeting of the Board of Directors was held to ratify the increase in the Company's capital stock in view of the of the fully subscribed and purchased issue of 46,253,470 of the Company's common shares. Thus, the value of the Company's capital stock rose by R$ 1,000,000,021.40, going to R$ 1,182,490,663.74, represented by 159,816,337 shares. On August 31, 2011, a Company's Extraordinary Shareholders Meetings was held, at which were conducted Ms. Miguel Gomes Pereira Sarmiento Gutierrez, Celso Alves Ferreira Louro, Jorge Felipe Lemann and Osmair Antônio Luminatti to the Board Member's position and Ms. Paulo Antunes Veras, Luiz Carlos Di Sessa Filippetti and Mauro Muratório Not to Independent Board Member's position. On September 20, 2011, a General Meeting of Debenture Holders of the Company was held to discuss the change to the Company's Private Deed Instrument for the First Issue of Simple Debentures, Not Convertible into Company Stock, Floating Guarantee Type, Single Series Issue for Public Distribution, to authorize an Optional Scheduled Amortization Program. 25 of 84

30 Management report 2011 On October 03, 2011 the Company's Board of Directors approved the celebration of the Contrato de Financiamento a Empreedimentos - FINEM, with the Banco Nacional de Desenvolvimento Econômico e Social - BNDES, in the total amount of R$ million. On December 31, 2011, Lojas Americanas' block of controlling stock was composed of 58.87% of the Company's shares, excluding treasury shares. The distribution of shares was as follows: Shareholders Number of shares (%) Lojas Americanas 92,157, Market and others 64,379, Subtotal 156,536, Treasury shares 3,279,982 Grand total 159,816,337 Dividend Policy The Company's Bylaws, pursuant to the provisions of current legislation, set the minimum value for dividends at 25% of net income for the fiscal year, adjusted according to current legislation. In 2011, B2W distributed a total of R$ 5.4 million in dividends to its shareholders for the results reported in the exercise of Stock The shares of B2W (BTOW3) are part of the Ibovespa, the most important indicator of average performance for the market price of Brazilian stocks. In addition, common and preferred shares of the Company are part of the Special Tag Along Stock Index (ITAG). This indicator is composed of shares of companies that offer the same conditions to minority shareholders as to majority shareholders in the case of a change in the control of the Company. The Company is also part of other important Brazilian indexes, such as the ICON, IGC and IVBX-2. Participation on the Board of Arbitration The Company, its shareholders and directors are obliged to resolve, through arbitration, any and all disputes or controversies that may arise between them, related to or originating specifically from the application, validity, efficacy, interpretation, violation and the attendant effects of matters contained in the Bylaws; in the provisions of Law 6404/76; in the regulations issued by the National Monetary Council, the Central Bank of Brazil, and the Brazilian Securities Exchange Commission (CVM); and in the other forms of regulation applicable to the participation on the stock market in general; in addition to those contained in the Novo Mercado Listing Rules, the Novo Mercado Participation Agreement, the Market Arbitration Board's Arbitration Rules and, especially, the Terms of Voting and Assumption of Obligations ("Terms of Vote") signed on December 13, 2006 and on file at the Company's headquarters, which will be conducted jointly with the Market Arbitration Board instituted by BM&FBOVESPA, in conformity with the regulations of the aforementioned Board, unless both parties, under the terms of Chapter 12 of the same regulations, choose by common agreement an alternative board or arbitration center to resolve their differences. Accordingly, the Company is subject to arbitration in the Market Arbitration Board, pursuant to its commitment clause in its Bylaws. 26 of 84

31 Management report 2011 Independent Auditors Pursuant to CVM Instruction 381, the Company reports that its independent auditors did not render any services unrelated to the auditing of the Company's financial statements during the fiscal year ending December 31, The Company's policy regarding the hiring of independent auditors for services not related to the outside audit assures that there is no conflict of interest or loss of independence or objectivity with regard to the independent auditors' work. 7. Socio-Environmental Aspects Social Aspects B2W promotes the Program for the Physically Challenged (PPD), a project that encourages hiring employees with special needs and fosters the social inclusion of these individuals by opening doors to the labor market. We believe that diversity contributes different worldviews and enriches the workplace, which improves service to all clients. The Young Apprentice Project is being developed together with the National Business Apprenticeship Service (Senac) or equivalent organizations in cities where B2W has business units. The Program is designed to prepare young students for the labor market. The contract is for a fixed period of time and, in counterpart, the candidate makes a commitment to enroll in, and regularly attend, elementary school. Environment The "Companhia Verde" concept was created in 2007 and through a multidisciplinary committee is engaged in the economic, social and environmental areas as well as relations with our stakeholders (shareholders, customers, suppliers, employees and society). Thus, the Committee works in all divisions of the Company with the objective of increasing employees' awareness of the importance of being concerned about the environment in their day-to-day activities and to develop a program of socio-environmental projects applicable to the realities of business and communities. We offer, in the Investor Relations website, a space to "Companhia Verde". In this space, are presented the Committee objectives, the Company's Environmental Policy, the Carbon Inventory and a contact e- mail. With this, it is possible that all interested people can be informed about the Company's position and clarify any questions that may arise. We formalized, in our Code of Conduct, the Company's commitment about: 1. Eradication of child labour; 2. Eradication of force or compulsory work; 3. Combating the practice of discrimination in all its forms; 4. Valuing diversity; 5. Prevention of harassment; 6. Respect to the free trade union association and right to collective bargaining; 7. Commitment for combating sexual exploitation of children and adolescents. In 2011, we have included environmental assignments in job description of all offices. 27 of 84