(A free translation of the original in Portuguese)
B2W - Companhia Digital
Quarterly Information (ITR) at June 30, 2020
and report on review of quarterly information
DPT:RIO DE JANEIROB2WB2WCIADIGITALJUE20.ITR
(A free translation of the original in Portuguese)
Report on review of quarterly information
To the Board of Directors and Stockholders
B2W - Companhia Digital
Introduction
We have reviewed the accompanying parent company and consolidated interim accounting information of B2W - Companhia Digital ("Company"), included in the Quarterly Information Form (ITR) for the quarter ended June 30, 2020, comprising the balance sheet at that date and the statements of income and comprehensive income for the quarter and six-month period then ended, and the statements of changes in equity and cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of the parent company and consolidated interim accounting information in accordance with the accounting standard CPC 21 - Interim Financial Reporting of the Brazilian Accounting Pronouncements Committee (CPC) and International Accounting Standard 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 Commission (CVM), applicable to the preparation of the Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim accounting information based on our review.
Scope of review
We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion on the interim information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company and consolidated interim accounting information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the CVM.
2
PricewaterhouseCoopers, Rua do Russel 804, 6º e 7º, Edifício Manchete, Rio de Janeiro, RJ, Brasil, 22210-907, T: +55 (21) 3232 6112, www.pwc.com.br
DPT:RIO DE JANEIROB2WB2WCIADIGITALJUE20.ITR
B2W - Companhia Digital
Other matters
Statements of value added
The quarterly information referred to above includes the parent company and consolidated statements of value added for the six-month period ended June 30, 2020. These statements are the responsibility of the Company's management and are presented as supplementary information under IAS 34. These statements have been subjected to review procedures performed together with the review of the interim accounting information for the purpose of concluding whether they are reconciled with the interim accounting information and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in the accounting standard CPC 09 - "Statement of Value Added". Based on our review, nothing has come to our attention that causes us to believe that these statements of value added have not been properly prepared, in all material respects, in accordance with the criteria established in this accounting standard, and consistent with the parent company and consolidated interim accounting information taken as a whole.
Review of previous year's figures
The Quarterly Information (ITR) referred to in the first paragraph includes accounting information corresponding to income and comprehensive income for the three and six-month period ended June 30, 2019, changes in equity, cash flows and value added for the six-month period ended June 30, 2019, obtained from the quarterly information (ITR) for that quarter. The review of the Quarterly Information (ITR) for the quarter ended in June 30, 2019, was conducted under the responsibility of other independent auditors, who issued an unmodified review report dated July 30, 2019.
Rio de Janeiro, August 5, 2020
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5
Claudia Eliza Medeiros de Miranda
Contadora CRC 1RJ087128/O-0
3
DPT:RIO DE JANEIROB2WB2WCIADIGITALJUE20.ITR
B2W Companhia Digital
Balance Sheet
In thousands of reais
Parent Company | Consolidated | |||||||
ASSETS | Note | 6/30/2020 | 12/31/2019 | 6/30/2020 | 12/31/2019 | |||
CURRENT | ||||||||
Cash and cash equivalents | 6 | 3,901,934 | 3,533,847 | 3,903,989 | 3,535,807 | |||
Marketable securities | 7 | 2,554,198 | 2,719,116 | 2,699,227 | 2,947,491 | |||
Accounts receivables | 8 | 548,504 | 751,168 | 566,412 | 762,147 | |||
Inventories | 9 | 1,189,595 | 888,168 | 1,295,375 | 951,382 | |||
Recoverable taxes | 10 | 716,836 | 658,600 | 748,606 | 684,136 | |||
Prepaid expenses | 27,840 | 22,777 | 37,233 | 35,422 | ||||
Other current assets | 440,645 | 510,295 | 447,209 | 515,344 |
Total current assets | 9,379,552 | 9,083,971 | 9,698,051 | 9,431,729 | ||||
NON CURRENT | ||||||||
Marketable securities | 7 | 97,377 | 224,775 | 97,377 | 224,775 | |||
Recoverable taxes | 10 | 1,255,455 | 1,197,168 | 1,255,455 | 1,197,168 | |||
Deferred income tax and social contribution | 11 | 1,339,252 | 1,264,561 | 1,409,009 | 1,326,769 | |||
Judicial deposits | 22 | 104,644 | 90,350 | 106,720 | 90,543 | |||
Account Receivable - Related parties | 12 | 88,175 | 89,729 | 16,077 | - | |||
Other non current assets | 62,875 | 62,875 | 69,014 | 69,014 |
Investments | 13 | 721,481 | 682,608 | 66,294 | 65,693 | |||
Fixed assets | 14 | 362,470 | 384,131 | 388,576 | 407,866 | |||
Intangible assets | 15 | 2,553,199 | 2,486,896 | 3,086,311 | 2,990,855 | |||
Rights-of-use assets | 16 | 224,438 | 210,796 | 252,374 | 252,158 | |||
Total non current assets | 6,809,366 | 6,693,889 | 6,747,207 | 6,624,841 | ||||
TOTAL ASSETS | 16,188,918 | 15,777,860 | 16,445,258 | 16,056,570 |
1
B2W Companhia Digital
Balance Sheet
In thousands of reais
Parent Company | Consolidated | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | Note | 6/30/2020 | 12/31/2019 | 6/30/2020 | 12/31/2019 | |||
CURRENT | ||||||||
Suppliers | 17 | 2,929,492 | 2,665,242 | 2,996,447 | 2,758,582 | |||
Borrowings and financing | 18 | 899,161 | 1,300,545 | 899,242 | 1,320,955 | |||
Debentures | 19 | 4,614 | 214 | 4,614 | 214 | |||
Salaries, provisions and social contributions | 68,958 | 38,361 | 99,094 | 60,303 | ||||
Accounts payable - Business combination | 20 | 1,182 | - | 8,569 | 8,092 | |||
Taxes payable | 21 | 70,479 | 85,224 | 98,340 | 106,930 | |||
Income tax and social contribution | - | - | 3,393 | 2,960 | ||||
Advances received from clients | 73,849 | 136,432 | 73,996 | 136,461 | ||||
Lease liability | 16 | 64,577 | 62,062 | 77,336 | 79,648 | |||
Other current liabilities | 214,041 | 203,142 | 347,946 | 353,398 | ||||
Total current liabilities | 4,326,353 | 4,491,222 | 4,608,977 | 4,827,543 | ||||
NON CURRENT | ||||||||
Borrowings and financing | 18 | 5,623,684 | 4,866,478 | 5,689,538 | 4,912,171 | |||
Debentures | 19 | 200,000 | 200,000 | 200,000 | 200,000 | |||
Provisions | 22 | 58,389 | 56,055 | 151,210 | 148,698 | |||
Accounts payable - Related parties | 12 | 205,149 | 248,805 | - | 20,367 | |||
Accounts payable - Business combination | 20 | 12,653 | - | 12,653 | - | |||
Lease liability | 16 | 190,587 | 177,845 | 210,160 | 209,747 | |||
Other non current liabilities | 1,825 | 3,023 | 2,442 | 3,612 | ||||
Total non current liabilities | 6,292,287 | 5,552,206 | 6,266,003 | 5,494,595 | ||||
SHAREHOLDERS' EQUITY | ||||||||
Capital | 23 | 8,325,578 | 8,289,558 | 8,325,578 | 8,289,558 | |||
Capital reserve | 20,904 | 38,513 | 20,904 | 38,513 | ||||
Accumulated losses | (2,776,204) | (2,593,639) | (2,776,204) | (2,593,639) | ||||
5,570,278 | 5,734,432 | 5,570,278 | 5,734,432 | |||||
Total shareholders' equity | 5,570,278 | 5,734,432 | 5,570,278 | 5,734,432 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 16,188,918 | 15,777,860 | 16,445,258 | 16,056,570 |
B2W Companhia Digital
Statement of Operations
In thousands of reais
Parent Company | Consolidated | |||||||
Note | 6/30/2020 | 6/30/2019 | 6/30/2020 | 6/30/2019 | ||||
Net revenue | 25 | 4,024,660 | 2,669,235 | 4,129,904 | 2,760,389 | |||
Cost of goods and services sold | (2,824,008) | (1,884,464) | (2,995,427) | (2,014,971) | ||||
Gross profit | 1,200,652 | 784,771 | 1,134,477 | 745,418 | ||||
Operating income (expenses) | ||||||||
Selling expenses | 26 | (839,094) | (565,083) | (712,621) | (469,901) | |||
General and administrative expenses | 26 | (352,421) | (297,546) | (406,371) | (336,638) | |||
Other operating income (expenses) | 26 | (32,429) | (26,705) | (36,089) | (24,247) | |||
OPERATING INCOME (LOSSES) BEFORE FINANCIAL RESULT | (23,292) | (104,563) | (20,604) | (85,368) | ||||
Financial revenue | 181,717 | 235,479 | 184,877 | 241,796 | ||||
Financial expenses | (401,652) | (544,377) | (409,223) | (556,312) | ||||
FINANCIAL RESULT | 27 | (219,935) | (308,898) | (224,346) | (314,516) | |||
Equity accounting | (14,029) | 13,070 | (16,629) | - | ||||
Loss before income tax and social contribution | (257,256) | (400,391) | (261,579) | (399,884) | ||||
Income tax and social contribution | ||||||||
Current | 11 | - | - | (3,226) | (4,219) | |||
Deferred | 11 | 74,691 | 133,581 | 82,240 | 137,293 | |||
Loss for the period | (182,565) | (266,810) | (182,565) | (266,810) | ||||
Attributable to Company's shareholers | (182,565) | (266,810) | (182,565) | (266,810) | ||||
Attributable to Non controlling shareholers | - | - | - | - | ||||
Basic net loss per share | 28 | (0.3487) | (0.5835) | (0.3487) | (0.5835) | |||
Diluted net loss per share | 28 | (0.3451) | (0.5741) | (0.3451) | (0.5741) |
B2W Companhia Digital
Comprehensive Income Statement
In thousands of reais
Parent Company | Consolidated | ||||||
06/30/2020 | 06/30/2019 | 06/30/2020 | 06/30/2019 | ||||
Loss for the period | (182,565) | (266,810) | (182,565) | (266,810) | |||
Total comprehensive result | (182,565) | (266,810) | (182,565) | (266,810) | |||
Atributed to controlling shareholers | (182,565) | (266,810) | (182,565) | (266,810) | |||
Atributed to non controlling shareholers | - | - | - | - |
B2W Companhia Digital
Statement of Changes in Shareholders' Equity
Parent Company and Consolidated
In thousands of reais
Parent Company | Consolidated | ||||||||
Accumulated | |||||||||
Capital Stock | Capital reserve | losses | Total | Total | |||||
Balance on January 1, 2020 | 8,289,558 | 38,513 | (2,593,639) | 5,734,432 | 5,734,432 | ||||
- | |||||||||
Loss for the period | - | - | (182,565) | (182,565) | (182,565) | ||||
Capital increase | 9,705 | 9,705 | 9,705 | ||||||
Capital increase with issuance of stock option plan | 26,315 | (26,315) | - | - | |||||
Stock option plan | - | 8,706 | - | 8,706 | 8,706 | ||||
Balance on June 30, 2020 | 8,325,578 | 20,904 | (2,776,204) | 5,570,278 | 5,570,278 | ||||
Controladora | Consolidado | ||||||||
Prejuízos | |||||||||
Capital Social | Reserva de capital | acumulados | Total | Total | |||||
Balance on January 1, 2019 | 5,742,330 | 46,773 | (2,251,988) | 3,537,115 | 3,537,115 | ||||
- | |||||||||
Initial adoption IFRS 16 | - | - | (23,413) | (23,413) | (23,413) | ||||
Loss for the period | - | - | (266,810) | (266,810) | (266,810) | ||||
Stock option plan | - | 10,924 | - | 10,924 | 10,924 | ||||
Balance on June 30, 2019 | 5,742,330 | 57,697 | (2,542,211) | 3,257,816 | 3,257,816 |
B2W Companhia Digital
Cash Flow Statement
In thousands of reais
Parent Company | Consolidated | |||||||
Note | 06/30/2020 | 06/30/2019 | 06/30/2020 | 06/30/2019 | ||||
Cash flows from operating activities | ||||||||
Loss for the period | (182,565) | (266,810) | (182,565) | (266,810) | ||||
Adjustments to net loss: | ||||||||
Depreciation and amortization | 14/15/16 | 285,707 | 245,055 | 298,719 | 256,056 | |||
Deferred income tax and social contribution | (74,691) | (133,581) | (82,240) | (137,293) | ||||
Interest and indexation and exchange variances | 137,580 | 298,900 | 139,253 | 302,774 | ||||
Equity accounting | 14,029 | (13,070) | 16,629 | - | ||||
Others | (23,261) | (35,184) | (20,366) | (35,029) | ||||
Adjusted net loss | 156,799 | 95,310 | 169,430 | 119,698 | ||||
Decrease (increase) in operational assets: | ||||||||
Accounts receivable | 307,754 | (225,197) | 295,439 | (212,946) | ||||
Inventories | (308,137) | 12,529 | (350,703) | 29,251 | ||||
Recoverable taxes | (116,523) | (61,202) | (122,757) | (49,816) | ||||
Prepaid expenses | (5,063) | 4,609 | (1,810) | 6,451 | ||||
Judicial deposits | (14,294) | (14,948) | (16,177) | (15,015) | ||||
Other accounts receivable (current and non-current) | 69,650 | 75,542 | 68,606 | 71,919 | ||||
(66,613) | (208,667) | (127,402) | (170,156) | |||||
Decrease (increase) in operational liabilities: | ||||||||
Suppliers | 194,692 | (57,192) | 166,567 | (113,480) | ||||
Payroll and related charges | 30,597 | 2,142 | 38,361 | 4,467 | ||||
Taxes and contributions (current and non current) | (14,745) | (1,377) | (8,905) | (11,200) | ||||
Other accounts payable (current and non current) | (44,210) | 9,913 | (57,633) | (29,222) | ||||
Accounts payble/ receivable affiliate companies | (42,102) | (48,291) | (46,281) | 56,650 | ||||
124,232 | (94,805) | 92,109 | (92,785) | |||||
Interest paid on loans and debentures | (165,147) | (213,208) | (166,866) | (215,304) | ||||
Interest paid on leases | (11,041) | (8,725) | (12,323) | (10,724) | ||||
Paid Income Tax and Social Contribution | - | - | (5,420) | (5,153) | ||||
Net cash provided by (used in) operational activities | 38,230 | (430,095) | (50,472) | (374,424) | ||||
Cash flow from investing activities: | ||||||||
Marketable securities | 292,316 | (285,379) | 375,753 | (325,969) | ||||
Fixed assets acquisition | 14 | (10,659) | (3,668) | (16,401) | (5,634) | |||
Intangible assets acquisition | 15 | (267,036) | (221,292) | (267,944) | (221,331) | |||
Capital increase in associates | 13 | (39,067) | - | (17,227) | - | |||
Value paid for the acquisition of subsidiaries | (1,182) | - | (2,691) | (1,107) | ||||
Net cash provided by (used in) investment activities | (25,628) | (510,339) | 71,490 | (554,041) | ||||
Cash flow from financing activities: | ||||||||
Borrowings and financing | 18 (b) | 1,103,285 | 1,720,000 | 1,103,307 | 1,766,421 | |||
Loans and Financing Settlements | 18 (b) | (718,255) | (563,660) | (718,124) | (612,570) | |||
Payments of lease liabilities | (39,250) | (25,982) | (47,724) | (32,125) | ||||
Capital increase | 9,705 | - | 9,705 | - | ||||
Net cash provided by financing activities | 355,485 | 1,130,358 | 347,164 | 1,121,726 | ||||
Increase in cash and cash equivalents | 368,087 | 189,924 | 368,182 | 193,261 | ||||
Opening balance of cash and cash equivalents | 6 | 3,533,847 | 3,113,727 | 3,535,807 | 3,119,948 | |||
Closing balance of cash and cash equivalents | 6 | 3,901,934 | 3,303,651 | 3,903,989 | 3,313,209 | |||
Increase in cash and cash equivalents | 368,087 | 189,924 | 368,182 | 193,261 |
B2W Companhia Digital
Statement of Value Added
In thousands of reais
Parent Company | Consolidated | ||||||
06/30/2020 | 06/30/2019 | 06/30/2020 | 06/30/2019 | ||||
Revenues | |||||||
Sales of goods and services | 4,973,233 | 3,322,468 | 5,125,709 | 3,451,932 | |||
Other revenues/ expenses | (856) | 3 | 2,347 | 34 | |||
Reversal (allowance) for doubtful accounts | (19,173) | (8,114) | (25,334) | (9,651) | |||
4,953,204 | 3,314,357 | 5,102,722 | 3,442,315 | ||||
Goods acquired from third parties | |||||||
Costs of goods and services sold | (3,409,203) | (2,342,363) | (3,631,088) | (2,512,457) | |||
Materials, energy, third party services and others | (834,636) | (509,933) | (666,906) | (362,589) | |||
(4,243,839) | (2,852,296) | (4,297,994) | (2,875,046) | ||||
Gross value added | 709,365 | 462,061 | 804,728 | 567,269 | |||
Depreciation and amortization | (285,707) | (245,055) | (298,719) | (256,056) | |||
Net value added generated | 423,658 | 217,006 | 506,009 | 311,213 | |||
Value added received in transfer | |||||||
Equity accounting | (14,029) | 13,070 | (16,629) | - | |||
Financial income | 181,717 | 235,479 | 184,877 | 241,796 | |||
Total value added to distribute | 591,346 | 465,555 | 674,257 | 553,009 | |||
Distribution of value added | |||||||
Employees | |||||||
Direct compensation | 117,550 | 107,445 | 180,025 | 161,781 | |||
Benefits | 27,068 | 28,981 | 34,206 | 35,209 | |||
Guarantee fund for years of service | 8,851 | 10,488 | 15,413 | 17,283 | |||
153,469 | 146,914 | 229,644 | 214,273 | ||||
Taxes and contributions | |||||||
Federal | (70,995) | (134,582) | (82,783) | (138,292) | |||
State | 281,488 | 158,295 | 284,431 | 163,158 | |||
Municipal | 5,576 | 3,848 | 12,052 | 7,961 | |||
216,069 | 27,561 | 213,700 | 32,827 | ||||
Compensation of third party capital | |||||||
Interest | 401,652 | 544,377 | 409,223 | 556,312 | |||
Rentals | 2,060 | 12,900 | 3,594 | 15,794 | |||
Others | 661 | 613 | 661 | 613 | |||
404,373 | 557,890 | 413,478 | 572,719 | ||||
Remuneration of own capital | |||||||
Loss for the period | (182,565) | (266,810) | (182,565) | (266,810) | |||
(182,565) | (266,810) | (182,565) | (266,810) | ||||
Distribution of value added | 591,346 | 465,555 | 674,257 | 553,009 |
B2W DIGITAL ANNOUNCES GMV GROWTH OF 72.2% AND CASH GENERATION OF R$ 72.4 MM IN 2Q20
The result demonstrates the strength of the hybrid business model, with accelerated growth on the 1P (+62%) and 3P (+79%) platforms.
Rio de Janeiro, August 13, 2020: B2W Digital (B3: BTOW3), the largest and most beloved digital Company in Latin America, today announces its results for the second quarter of 2020.
KEY INDICATORS | 2Q20 | 2Q19 | Delta | 1H20 | 1H19 | Delta | |
Total GMV (R$ MM) | 6,715 | 3,899 | +72.2% | 11,273 | 7,479 | +50.7% | |
Marketplace (R$ MM) | 4,107 | 2,289 | +79.4% | 6,835 | 4,480 | +52.6% | |
Marketplace (% of Total GMV) | 61.2% | 58.7% | +2.5 p.p. | 60.6% | 59.9% | +0.7 p.p. | |
Assortment (Items/MM) | 39.8 | 12.1 | +27.7 | 39.8 | 12.1 | +27.7 | |
# Sellers (New/Thou) | 14.4 | 5.5 | +8.9 | 22.9 | 9.1 | +13.8 | |
# Sellers (Base/Thou) | 69.8 | 31.0 | +38.8 | 69.8 | 31.0 | +38.8 | |
B2W Entrega (# Sellers/Thou) | 67.6 | 28.4 | +39.2 | 67.6 | 28.4 | +39.2 | |
B2W Entrega (% of Seller base) | 96.8% | 91.6% | +5.2 p.p. | 96.8% | 91.6% | +5.2 p.p. | |
Mobile (% of Traffic) | 81.5% | 74.6% | +6.9 p.p. | 81.5% | 73.3% | +8.2 p.p. | |
MESSAGE FROM MANAGEMENT
In 2020, we started the 3 year strategic plan (2020-2022), with the aim of driving accelerated growth and continued cash generation. In the first six months of the year, we faced a challenging scenario due to the COVID-19 pandemic, which brought enormous learning and motivated us to be even more agile, seeking innovative and creative solutions to generate value for the Customer and society as a whole.
With a complete digital platform integrated with the Americanas Universe, we practice to instill our commitment to be increasingly relevant in the daily lives of the customer, always with a focus on better serving them, offering: Everything. Anytime. Anywhere.
The Americanas Universe continues to reinforce its social role and conduct actions to combat COVID-19 in Brazil, including more than R$ 62 million in donations for the transport of PPE, logistics services to São Paulo, construction of a field hospital in Rio de Janeiro, among others.
Throughout 2Q20, we challenged ourselves to implement, in record time, a series of actions aimed at revolutionizing the online shopping experience, at a time when the customer most needed convenience and security to meet their consumption needs.
We accelerated O2O (Online to Offline), which offers the best combination of the physical and digital worlds and has already established an important offering to serve customers. In 2Q20, the GMV from O2O reached R$ 920 MM (+127% vs 2Q19).
We completed the integration of Supermercado Now and launched Americanas Mercado, allowing customers to buy their complete grocery basket, including fresh items, with a customized experience and same-day deliveries. In 2Q20, the category was the Company's largest in terms of units sold and represented a growth in sales of 7x vs. 2Q19. Thus, we started to expand the Supermarket operation, including the partnership with the Grupo Big, which will enable the service to be offered to customers in several states.
We created the Local Marketplace, which uses the neighborhood concept to deliver an increasingly complete assortment, connecting more than 4,000 physical stores (Americanas and Sellers), which, through the ship from store model, delivers products to the customer within two hours. Throughout the quarter, we entered into several partnerships to connect more and more merchants on the platform, including Ale Combustíveis, Ancar Invanhoe, BR Malls, BR Mania, Delivery Center, Multiplan, among others, which together have 20,000 physical stores.
The creation of the Local Marketplace also allowed us to accelerate our entry into new segments that have a high purchase frequency, such as the launch of the Restaurants category, which has already connected important fast food chains, such as McDonald's (+1,000 stores) and Bob's (+1,000 stores).
In order to operate all these initiatives and offer better delivery times to customers, we continue to invest in Ame Flash, our crowdshipping platform, which already has more than 20 thousand registered independent couriers and operates in more than 700 cities. Ame Flash, in conjunction with our proprietary logistics network and O2O initiatives, has allowed us to change the level of delivery times in Brazil. In 2Q20, we have already delivered more than 30% of orders on the same day, and our goal is to achieve more than 50% of same-day deliveries by 2022.
We remain committed to the objective of offering the best Brazilian online experience, through the differentiation of our platform, regardless of the strong growth in sales volume. Thus, while the market showed a strong deterioration in customer satisfaction indicators, our brands had a significant evolution in NPS, being the only representatives of eCommerce (large operations) with the RA 1000 seal, the highest level of reputation in Reclame Aqui.
Ame Digital, the fintech and mobile business platform of the Americanas Universe, surpassed the mark of 10 million downloads and continues to gain strong traction in Americanas and B2W (on-us) and other retailers in the physical and digital worlds (off-us). At the end of 2Q20, Ame had already connected more than 1.7 MM merchants, including the partnership with BR Distribuidora, which has been showing strong results with more than R$ 100 MM in TPV and 1 MM transactions in just 45 days of operation. In July/20 the off-us already represented 60% of new accounts created.
As a result of these actions, in 2Q20, we achieved the highest level of sales in our history, exceeding the results attained in 4Q19, a period that includes major sales events such as Black Friday and Christmas. This result was driven by the increase in purchase frequency and the strong performance of new categories, which generated 95% growth in the number of orders and 171% in units sold (vs. 2Q19). In comparison with 2Q19, we added ~ R$ 3 billion in sales in the quarter, with growth of 72% in Total GMV.
Our active customer base reached 19.3 MM at the end of June/20, totaling more than 5 MM new customers in the last 12 months. From January/20 to June/20, our apps were the most downloaded in the shopping category in Brazil, totaling 30.6 MM downloads and a monthly active user (MAU) base of 37.6 MM customers in June/20.
Even with the gradual reopening of physical retail, sales in July/20 and the beginning of August/20 continue at an accelerated pace, with no signs of deceleration, which demonstrates that 2Q20, which was more than an exceptional quarter, was an important inflection point in our growth trajectory.
The results achieved and the countless opportunities that present us, leave us extremely motivated to attain the strategic plan (2020-2022) and start a new journey of exponential growth, with the realization of monetization and expansion of our digital platform.
In this new journey, we will develop and expand our reach through scale and speed in new categories, generating growth, profitability and network effect in our e-commerce ecosystem and in the Americanas Universe.
Accordingly, we announced a private capital increase of R$ 4 billion that will allow for the execution of our aggressive growth plan, including organic expansion, partnerships, and possible strategic acquisitions.
This movement does not change our commitment to continue generating cash, but it will allow us to have an even faster speed of execution to continue our e-commerce revolution in Brazil.
We remain firm in our purpose of CONNECTING PEOPLE, BUSINESS, PRODUCTS AND SERVICES and in fulfilling our important social role, especially in this moment of uncertainty.
We thank our team for their engagement and enthusiasm to better serve the Customer. We also thank our suppliers for the partnership, the Marketplace sellers for choosing our platform, the shareholders for their trust and, above all, the Customers for their preference.
Marcio Cruz
CEO, B2W Digital
- B2W Digital announced a capital increase of R$ 4.0 Bn, which will allow for the execution of our aggressive growth plan, including organic expansion, strategic partnerships, and possible strategic acquisitions.
- B2W Digital announces 95% growth in the number of orders in 2Q20. This result was driven by the increase in the purchase frequency and new customers activated in the quarter.
- B2W Digital announces growth of 171% in units sold in 2Q20, totaling more than 31 MM, with emphasis on the growth in the Supermarket category, B2W's largest in terms of units sold.
- B2W Digital reached 19.3 MM active customers in 2Q20, driven by the addition of 5.1 MM new active customers in the last 12 months.
- B2W Marketplace registered 45.6 thousand Sellers in 2Q20, setting a new record. Of this total, 14.4 thousand Sellers are already connected and selling on the platform, totaling a base of 69.8 thousand Sellers in June/20 (vs. 46.8 thousand in December/19).
- B2W Digital totaled 39.8 MM offers exiting 2Q20, providing the products that customers need most during the period of social distancing, with a differentiated service level and fast delivery. The total number of offers available increased by 226% over 2Q19, driven by Marketplace sellers.
- O2O (Online to Offline) initiatives totaled R$ 920 MM in GMV in 2Q20, an increase of 127% vs. 2Q19. In the quarter, we registered 3.3 MM orders through these initiatives.
- B2W launched the Local Marketplace platform, which, using the neighborhood concept, allows the customer to select the stores closest to their location and receive orders within two hours powered by deliveries from the store. The Local Marketplace has already connected more than 4,000 stores, including Americanas and other Sellers with physical stores in various categories such as, supermarket, pharmacy, pet supplies, and toys.
- B2W Digital launched the Restaurant category, which has high purchase frequency and already includes the connection of important fast food chains such as McDonald's and Bob's.
- B2W Digital launched Americanas ao Vivo, the first Live Commerce platform in Brazil. The initiative offers a differentiated shopping experience, improving the exposure of items in fast-growingcategories and driving conversion. Live Commerce was also expanded to Shoptime, which recruited more than 100 influencers to form its Live Creators team.
- LET'S delivered 30% of orders in the same day in 2Q20. Throughout 2Q20, same-daydeliveries made by the LET'S platform (1P and 3P operations, including the Local Marketplace), totaled 30% of total deliveries. Our goal is to reach more than 50% of same-daydeliveries by 2022.
- Initiatives of IF - Innovation and Future
- Ame Digital, the fintech and mobile business platform of the Americanas Universe, surpassed the mark of 10 MM of downloads and continues to gain strong traction in Americanas and B2W (on-us).
- Ame connected more than 1.7 MM merchants from the physical and digital worlds (off-us).In July/20, off-usalready represented 60% of the new accounts created.
- Ame accelerated the partnership with BR Distribuidora, which has already registered more than R$ 100 MM in TPV and 1 million transactions via QR Code in the first 45 days of operation.
- Ame officially launched its prepaid card, expanding its acceptance to the entire Mastercard accredited network, in addition to withdrawals from thousands of ATMs.
- Ame expanded its financial solutions offering, with the creation of the Credit Marketplace which includes personalized loans offered by partners, such as BCredi, Creditas, Jeitto, and Rebel.
- Ame Flash, crowdshipping platform that connects independent couriers, ended 2Q20 with more than 20,000 couriers registered and with presence in more than 700 cities.
STRATEGIC INITIATIVES
- Commercial and Marketing
- Assortment: The number of items offered on the sites totaled 39.8 MM at the end of 2Q20, an increase of 226% vs. 2Q19, driven by Marketplace.
- Traffic: The number of visits to our sites and Apps surpassed the 1 billion mark in 2Q20, representing an increase of 102% vs. 2Q19.
- Marketing and SEO: With the exponential growth in the number of items offered (SKUs) came the necessity of improving the visibility of the assortment across our websites, and demonstrating to our customers the wide product offering and vast selection that can be found across our brands (one-stop-shop).
- Organic Traffic: In 2Q20 the organic traffic increased 115%.
- SEO: We were designated in the study "Os domínios mais presentes no top 10 Brasil", which was conducted by SEO specialist company, Convertion, as being awarded the first position for the Americanas brand and in the Top 5 with Submarino and Shoptime.
- Local SEO: Integrated approach of the Americanas Universe (assortment of each store) bringing greater relevance to O2O modalities for customer navigation within search engines.
- Search Engine: Intensive use of technology to design a new solution for page titles and descriptions, making information more clear for customers thus, allowing them to have a better experience in search engines.
- Americanas Empresas: A brand dedicated exclusively for the sale of products to corporate clients (legal entity with CNPJ), which aims to bring more facilities to companies, with a wide assortment, competitiveness and the benefits of the Americanas Universe. The Americanas Corporate clients can choose to purchase for the company's own use and consumption or purchase items for resale.
- In 2Q20, the most sought after departments were PCs, Health, and telephony, with emphasis on the sale of essential items for companies in the midst of the pandemic.
- In May/20, we started selling e-Gifts at Americanas Empresas, developing an option to purchase in bulk.
- Evolution of the Marketplace
- Assortment: The B2W Marketplace assortment grew by 232%, going from a base of 11.8 million items in 2Q19 to 39.4 million items at the end of 2Q20.
- Americanas Mundo: The Cross Border operation that enables customers to purchase products from all over the world (including the US and China), creating a new growth avenue for the B2W Marketplace. Launched in March/19, the operation continues to develop rapidly.
- In 2Q20, the Cross Border operation was expanded to Sou Barato, another growth front for the sale of international products.
- B2W Marketplace University: In 2Q20, more than 2 thousand Sellers received online training on the use of technology platforms. The training offered was highlighted in major media outlets, which reinforced the importance of training in the pandemic period.
- Uni360º: To further integrate the Seller's experience within the platform, the B2W Marketplace University implemented the Uni360º on the Partner Portal, a series of videos that assist the seller when registering items, encouraging an increase in assortment.
- Mobile Platform
- Traffic: Throughout 2Q20, mobile traffic represented 81.5% of total visits, an increase of 6.9 p.p. compared with 2Q19.
- Apps: 92.6 million downloads of the brands' apps since inception. In the first six months of 2020, our apps totaled 30.6 million downloads. The Americanas app was the most downloaded in the shopping category in Brazil in 2Q20 and 1H20.
- MAU: Exiting 2Q20, the brand apps totaled 37.6 million active users (Monthly Active Users -
Source: App Annie).
- MAU: Exiting 2Q20, the brand apps totaled 37.6 million active users (Monthly Active Users -
- UX (Customer Experience):
o Local Marketplace: The same convenience structure developed for Americanas physical stores, is now available on the Marketplace. In this way, Sellers of different categories can make their sales for delivery or pick up on the same day.
- Special Showcase: Allows for the availability of selected promotions with prominent display and the option of a banner for the promotion of campaigns aimed at seasonal events.
- Regional Offer: Allows for the browsing of assortment in a regionalized way, with a highlight on the product page for the buy and receive today modality.
- Store share: We launched the option to share a store within the Buy and Receive Today modality. This action is aimed both at users who browse our sites and applications, as well as at the establishment's operation to disseminate information, offers and news for your region.
- Americanas Mercado: We integrated the online Supermarket shopping platform, Supermercado Now, as a mini app, creating Americanas Mercado, to offer greater convenience to customers.
- Freight menu: In June/20, we started to display a range of dates on the site instead of showing a delivery deadline in business days, thus increasing conversion rates.
- Submarino
- New menu in the App: We updated the Submarino App menu layout, increasing the agility of navigation between product categories and facilitating the exposure of all available content and assortment. The new menu has the categories, highlights, and services presented in "cards" to make navigation more intuitive and accessible.
- Furniture assembly: Customers who purchase products from the furniture department can also choose to hire the assembly service, with specialized service and a 3-month warranty.
- Shoptime
- Floating Button: We have included a floating "buy" button on the Shoptime product pages that allows the customer to be directed to their cart from anywhere on the page, increasing conversion rates. In this new area, we display the items best price, payment terms, and cashback.
- Video on the product page: In order to highlight the video content on the Shoptime mobile product page, we created a display button. After the improvement, we experienced a 49% increase in conversion rates among customers who watched the videos.
- B2WADS:
o With a specialized team of more than 50 people divided across the Business and Technology fronts, B2WADS is a complete advertising platform focused on leveraging the sale of business partners, including Sellers and suppliers. The platform offers advertising solutions with an integrated O2O approach, allowing for customer impact at various points in the purchase journey.
- In 2Q20, B2WADS posted a 283% growth in revenue versus 2Q19, in addition to a significant increase in profitability.
- In the quarter, several features were developed with a focus on the Marketplace Seller, with the automation of the Seller's experience when investing in advertising and a more integrated exposure with the sales algorithm of B2W websites.
- Throughout 2Q20, there was a 300% increase in investments from players in the Consumer Goods industry, who have been exploring options for display media, performance, and other special formats. Customers such as Nestlé, Nespresso, L'Oréal, and Unilever have utilized the B2WADS O2O focused advertising solutions.
- Financial Services
- Credit Promotion: Throughout 1H20, B2W and Cetelem's joint venture (Submarino Finance and Digital Finance) recorded volume of R$ 1.8 billion in approved transactions. In the same period, the receivables portfolio for these operations was R$ 1.5 billion.
- In June/20, the Credit Promoter reported 3.4 MM cards issued (2.0 MM on Submarino Finance and 1.4 MM on Digital Finance, which includes the brands Americanas.com, Shoptime and Sou Barato).
- Credit Seller: Marketplace Sellers can access loans quickly, securely, simply, and 100% online. The contracts can be made for payment in installments (installment credit) or in full payment (single installment credit) and, aiming to meet the requests of the Sellers, we implemented innovations in the functionalities and methods of contracting these products:
- Credit in installments now have a longer payment term, and can reach up to 24 months.
- We implemented Credit Seller as a payment method in B2WADS, allowing for greater media investments by Sellers.
- Partnership with the Americanas Empresas brand, with the possibility of purchasing negotiations to replenish inventory as if they were in cash, however, with the flexibility in the terms of the payment method, through the Credit Seller.
- At the end of 1Q20, we implemented a new type of credit, Flex Credit, which allows the Seller to define a fixed percentage to be committed to its sales. In this new product, the Seller has a completely flexible operation that adapts to the seasonality of its sales on the platform.
- As a measure to support the impacts of the COVID-19 pandemic, we expanded the base of Sellers eligible for credit, opened up the possibility of renegotiating contracts, offering longer terms, reducing the value of the installment and treating, on a case- by-case basis, the best conditions so that our Sellers are impacted as little as possible in that period.
- In August/20, the FIDC proposal of B2W (Sellers) and Ame Digital (Merchants), in partnership with Integral Investimentos, dedicated to granting credit to MPMEs, was prioritized by BNDES (moving on to the next phase of analysis and diligence) to integrate a set of initiatives of the bank to face the impact caused by COVID-19. BNDESPAR will invest up to R$ 4 Billion in the credit funds and may invest up to R$ 500 Million per fund.
- Customer Service
- B2W Digital's main brands are regarded as industry benchmarks in customer service, being the only representatives of eCommerce (large operations) with the RA 1000 seal, the high level reputation by Reclame Aqui.
- The average score on Reclame Aqui website for B2W's brands is 8.6, while the main competitors have an average score of 7.0.
- 81.5% of customers who registered complaints on Reclame Aqui website indicated their intent to buy again from B2W's brands, while only 60.9% of customers indicated that they intended to buy again on the main competitors' websites.
- The average solution rate of B2W's brands on Reclame Aqui website is 93.2% while the average solution rate of competitors' brands is 79.9%.
- In the 1H20, the average complaint solution time was reduced by 23.4% in the 1P and by 14.1% on 3P, significantly improving the service experience compared to 1H19.
- WhatsApp: A customer service channel via WhatsApp, promoting innovative and friendly communication throughout the main stages of purchase. To develop the new service channel, we adopted artificial intelligence in the creation of a virtual assistant, capable of talking to customers and recognizing their needs. The project was developed in partnership with Google, using Dialogflow of the Google Cloud, which allows for the creation of a more natural conversation experiences.
- Currently, 61% of orders are being tracked with WhatsApp.
- Millions of messages are sent monthly with the tracking request, and the client base that opted to receive communication by the app reached 9 million.
- O2O (Online to Offline)
Using the concept of "Everything. Anytime. Anywhere." the O2O initiatives of Americanas and B2W have been enhancing customers' shopping experience and growing at a rapid pace. In 2Q20, these combined initiatives recorded GMV of R$ 920 million, an increase of 127% vs 2Q19.
- LASA Seller: In 2Q20, the initiative maintained the accelerated pace of growth, recording sales that are 5x higher than the same period last year. Due to the COVID-19 scenario, commercial actions focused on basic necessities items were reinforced, resulting in a 60% increase in the number of SKUs sold.
- Click and Collect Now: Available in all 1,702 Americanas, allowing the customer to purchase the store's inventory online and pick up the product within 1 hour without shipping costs. The modality continues its rapid development, reaching the mark of more than 300 thousand orders in 2Q20.
- Ship from Store: Purchase products online from the nearest store and receive them within 2 hours at the desired address. The service, available at the 1,702 Americanas, has been expanded to B2W Marketplace Sellers stores, allowing same-day deliveries from 4,000 stores.
- Click and Collect: Buy online and withdraw at the physical store. In 2019, we became the largest network of pick-up points in Brazil, and in 2Q20 reached 9,075 connected points (Americanas, Sellers stores, and partner points) in more than 5 thousand municipalities, offering 99% of the Brazilian population access to the service.
- Infinite Shelf: Assisted sales operation at Americanas for products offered on the digital platform (1P and 3P). In 2Q20, the operation had an average ticket approximately 15x higher than in physical stores and 25% growth in sales in relation to 2Q19, even with the closing of approximately 30% of stores due to COVID-19.
- LET'S - Logistics and Distribution
The shared management platform for the logistics and distribution assets of LASA and B2W, which aims to optimize the operations of the Companies through a flexible Fulfillment model.
-
Delivery Time: In 2Q20, deliveries made by LET'S (1P and 3P operations, including the Local
Marketplace) conducted 30% of total deliveries on the Same Day. Two day delivery represented 58% of total deliveries.
- Fulfillment Centers: LET's operates 17 FCs in 8 states (MG, PA, PE, PR, RJ, RS, SC, and SP). By the end of 2020, we will open an additional 3 Fulfillment centers in three different states.
- B2W Entrega: Reached more than 67.6 thousand Sellers at the end of 2Q20, representing 96.8% of the total Seller base and participating in more than 80% of orders placed on the Marketplace.
- Integrated Platform: The integrated logistics services platform increases cross- selling, allowing Sellers to connect complementary logistics services, such as B2W Fulfillment, Click & Collect and Ship from Store.
- B2W Fulfillment: Reached a total of 908 Sellers connected, with their inventory operated by the platform, ensuring shorter lead times and more competitive freight costs. Through B2W Fulfillment, the customer gets the best shopping experience, where the entire logistics process (inventory, transportation and fulfillment) is operated by B2W.
- IF - Innovation and Future
Faced with the context of accelerated transformation of the physical and digital worlds, and in order to capture the opportunities generated by this new business environment, in 2018, IF - Innovation and Future was created, outside Americanas and B2W operations. IF was conceived with the mission of creating disruptive business and leveraging various initiatives of the Companies. IF's main verticals include: incubating new business, accelerating existing initiatives, investing in startups (venture capital), leading the O2O fronts, and prospecting new opportunities, including M&A operations.
- Ame: Fintech and mobile business platform, and among the first initiatives of IF, continues to accelerate and deliver impressive metrics.
- Ame Digital reached 10.1 million downloads and continues to gain strong traction at Americanas and B2W, optimizing the offer of discounts to customers through cashback, generating greater purchase frequency and increasing Customer spending.
- Ame connected more than 1.7 MM merchants from the physical and digital worlds (off- us). In July/ 20, off-us already represented 60% of the new accounts created.
- The campaign #AmeFazerSuaParte("AmeDoingYourPart") intermediated a total of R$ 4.5 million in donations, with a strong presence on social media. Using mini-app technology, Ame leveraged its donation platform by supporting more than 70 NGOs.
- Ame officially launched its prepaid card, expanding its acceptance to the entire Mastercard accredited network. The card allows the user to use the balance of the wallet for payments in physical stores and online, in addition to allowing withdrawals from thousands of ATMs throughout Brazil.
- Ame announced the expansion of its financial solutions offering, with the creation of a Credit Marketplace. Through the platform, customers can contract personalized loans quickly and simply through a 100% digital process. Currently, it is possible to contract various formats of personal loans offered by partners such as BCredi, Creditas, Jeitto, and Rebel.
- Ame accelerated the partnership with BR Distribuidora, which has already registered more than R$ 100 MM in TPV and 1 million transactions via QR Code in the first 45 days of operation, making it possible to pay quickly and securely with Ame.
- Ame has integrated with new technology platforms to expand acceptance in the online world. Throughout 2Q20, Ame Plus was connected to the Magento, WooComerce and Payhow.
- In June, the Ame Scan&Go pilot was launched, which allows customers to scan the barcode of products in the store and pay with the app, without having to go to the cashier.
- Ame Digital already has more than 45 features, with the aim of simplifying the lives of customers.
- Ame Flash: In order to accelerate O2O initiatives, Ame Flash connects independent couriers (motorcycle, bicycle, and other modes), enabling for the delivery of products to customers within 2 hours, from the 1,700 physical stores of Americanas and the physical stores of B2W Marketplace Sellers. The app already has 20 thousand couriers and has surpassed the mark of 700 cities served.
- Digital Team
- Summer Job Program: The program selects students from the best universities to work on the Company's projects. In June/ 20, we received 9 students from international schools who, in addition to carrying out the development of the project, are participating in meetings with managers, as well as technical and behavioral training with the Human Resources team.
- Meetups: In 2Q20, B2W Digital continued the rounds of meetups, holding more than 10 meetings in an online format. The meetings are moments of exchange of information and experiences on a specific topic, involving professionals from the technology communities and other topics, with the B2W team. During this period, we had meetings with the communities of "Recursos Humanos", "Mentoria", "CyberSecurityGirls BR", "Perifacode", and "Node.js Rio", among others.
- Giro 360º: For the purpose of promoting knowledge and interaction between the areas of the Company. In 2Q20, 14 presentations were made involving business and technology areas of the Americanas Universe, providing global business knowledge and vision about the reality and performance of the Company.
- On LET´S: In 2Q20 we launched On LET´S, an online workshop for the leadership of our Fulfillment Centers, which addresses topics chosen by the managers themselves. Since May/20, we have held 14 Talks, with themes such as "Culture of Engagement", "CNV - Non-Violent Communication" and "Leader Communicator".
- Online Learning: We promoted changes in our training that began to be conducted 100% online. In 2Q20, more than 50 training sessions were held on various topics, such as Adobe, Machine Learning, Power BI, Python, Salesforce, Scrum, Treinamento de Entrevistas, DRE, Canvas, Oratória, PDCA, PDI, Excel, Process Management, Financial Management, Indicators, among others.
- Corporate Governance and Sustainability
In line with the Global Compact principles and the Agenda 2030 Sustainable Development Objectives (SDO), a United Nations initiative, in 2Q20 we continued advancing our sustainability strategies.
- COVID-19Donations: The The Americanas Universe continues to reinforce its social role and conduct actions to combat COVID-19 in Brazil, including more than R$ 62 million in donations for the transport of PPE, logistics services to São Paulo, construction of a field hospital in Rio de Janeiro, among others.
- ISE: For the sixth consecutive year, B2W was selected for the ISE portfolio, B3's Corporate Sustainability Index, which assesses companies' commitments to sustainable development and recognizes those that promote best practices.
- Pacts, commitments and ethics: B2W is a signatory to the Business Pact for Integrity and Anti- Corruption, an initiative developed by the Ethos Institute, which aims to unite companies and promote a more honest and ethical market, eradicating bribery and corruption. It is also part of the UN Principles of Women's Empowerment, as well as the "Business Coalition for Racial and Gender Equity" and the "Business Charter for Human Rights and the Promotion of Decent Work", both from the Ethos Institute.
- Diversity and Inclusion: We enable the sites to be accessible to people with hearing, visual and motor disabilities through Hand Talk and Essential Accessibility, enabling the site to be read in sign language (for the hearing impaired), out loud (for the visually impaired), and only with eye movement (for the disabled).
- Social Impact: The Jirau da Amazônia project, carried out in partnership with the Amazonas Sustainable Foundation, promotes the sale of products by local indigenous and riverside artisans on the Americanas digital platform throughout Brazil, with the proceeds reverted to the development of the project. In light of the social distancing and the prohibition of tourist activity in the communities, Jirau da Amazônia is the only means of selling products by artisans.
- Operation Carbon Neutral: As a way to contribute to SDG 13, Action Against Global Climate Change, we offset greenhouse gas (GHG) emissions, becoming a Carbon Neutral operations Company. Altogether, the compensation of B2W and the parent company Americanas contributed
to avoid 1.4 million tCO2eq of emissions per year, in addition to supporting the conservation of 1.1 million hectares of the Amazon Forest.
- Annual Report 2019: In line with our commitment to sustainable development and improvement to communicate the Company's performance, for the sixth consecutive year, the guidelines outlined by the Global Report Initiative (GRI) were adopted in the global indicator model for reporting sustainability. The report also shows actions in line with the Universal Principles of the Global Compact and with the Sustainable Development Goals (SDGs).
FINANCIAL HIGHLIGHTS
The financial information serving as the basis for the comments below refer to 2Q20, and are in compliance with international financial reporting standards (IFRS), the standards issued by the Securities and Exchange Commission of Brazil (CVM), as well as the listing regulations of the Novo Mercado and in Brazilian reais (R$). Definitions for adjusted financial metrics can be found in Annex III and Annex V.
- Total GMV: In 2Q20, Total GMV of R$ 6,714.7 million, an increase of 72.2% compared to the R$ 3,899.2 million registered in 2Q19. For the 1H20, Total GMV increased by 50.7%, from R$ 7,478.5 million in the 1H19 to R$ 11,272.7 million in 1H20.
- Gross Revenue: In 2Q20, gross revenue totaled R$ 3,020.3 million, an increase of 63.8% in comparison to the R$ 1,843.6 million registered in 2Q19. For the 1H20, gross revenue of R$ 5,125.7 million represents an increase of 48.5% when compared to the R$ 3,451.9 million in 1H19.
- Net Revenue: In 2Q20, net revenue totaled R$ 2,433.7 million, an increase of 64.7% in comparison to the R$ 1,477.8 million registered in 2Q19. For the 1H20, net revenue increased 49.6%, from R$ 2,760.4 million in 1H19 to R$ 4,129.9 million in 1H20.
- Adjusted Gross Profit: In 2Q20, adjusted gross profit totaled R$ 761.1 million, an increase of 67.3% vs. the R$ 454.9 million registered in 2Q19. Adjusted gross margin reached 31.3% in 2Q20 vs. 30.8% in 2Q19. For 1H20, gross profit totaled R$ 1,287.9 million, representing an increase of 49.3% in relation to the R$ 862.8 million in 1H19, with margin going from 31.3% in 1H19 to 31.2% in 1H20.
- Adjusted Selling, General and Administrative (SG&A) Expenses: In 2Q20, adjusted expenses totaled R$ 576.4 million vs. the R$ 344.7 million registered in 2Q19. The SG&A as a percentage of GMV decreased by 0.2 p.p., to 8.6% in 2Q20 vs. 8.8% in 2Q19. For the 1H20, expenses of R$ 975.7 million compared to R$ 669.4 million in 1H19, which represents a reduction of 0.3 p.p. as a percentage of GMV, from 9.0% to 8.7%.
- Adjusted EBITDA: In 2Q20, adjusted EBITDA reached R$ 184.7 million, an increase of 67.6% compared with the R$ 110.2 million in 2Q19. Adjusted EBITDA margin went from 7.5% in 2Q19 to 7.6% in 2Q20, an increase of 0.1 p.p. For the 1H20, adjusted EBITDA reached R$ 312.3 million, representing an increase of 61.5% in relation to the R$ 193.4 million in 1H19, with EBITDA margin going from 7.0% in 1H19 to 7.6% in 1H20.
- Other operating income (expenses): In 2Q20, the other operating income (expenses) reached R$ 21.3 million vs. the R$ 12.5 million registered in 2Q19. For the 1H20, other operating income (expenses) totaled R$ 36.1 million compared with the R$ 24.2 million in 2H19.
The growth in other operating income (expenses) line is related to non-recurring expenses due to COVID-19, including employee testing, distribution of PPE, donations, among others. - Net Financial Result: In 2Q20, the net financial result reached R$ -114.3 million vs. R$ -158.4 million in 2Q19, which represents an improvement of 27.8%. For the 1H20, the net financial result reached R$ -224.3 million, representing an improvement of 28.7% in relation to the R$ -314.5 million in 1H19.
- Net Result: In 2Q20, the net result reached R$ -74.6 million vs. R$ -127.6 million in 2Q19, an improvement of 41.5%. The net margin showed an evolution of 5.5 p.p., from -8.6% in 2Q19 to -3.1% in 2Q20. For the 1H20, the net result was R$ -182.6 million, representing an improvement of 31.6% in relation to the R$ -266.8 million in 1H19, with net margin going from -9.7% in 1H19 to -4.4% in 1H20, an evolution of 5.3 p.p..
- Cash Management:
- Cash Generation: In 2Q20, cash generation reached R$ 72.4 MM. Cash generation in the quarter is associated with the continued acceleration of the Marketplace and the constant gain in efficiency of the 1P operation, with a focus on curating the assortment to maximize results.
As a way of capturing all the effects, cash generation or consumption is measured by the variation in net debt in relation to the previous quarter, always disregarding any resources from capital increase operations.
-
Working Capital: -15 days in June/20 (improvement of 19 days vs. 2Q19). This result reflects the 1P assortment curation and assortment review process, the optimization of the merchandise planning, as well as the increased 3P (Marketplace) share of total sales.
It is important to remember that Marketplace (whose credit card transactions are approved on the B2W platform and make up the gross balance of receivables) does not demand Working Capital (B2W is an intermediary and receives a commission on realized sales).
- CAPEX: B2W uses its cash generation by prioritizing investments that present optimal returns to shareholders. Accordingly, in 2Q20, CAPEX totaled R$ 171.5 MM, representing 2.6% of Total GMV.
- Capital Raise
-
On July 21, 2020, a meeting of the Board of Directors was held with the purpose of approving the
Company's capital increase in the amount of R$ 4,000,000,035.00 (four billion and thirty five reais), through private subscription of 34,782,609 new common shares, nominative and without par value, at the issue price of R$ 115.00 per share.
- The capital increase is intended to allow the acceleration of the strategic growth plan, including any strategic acquisitions, while maintaining the cash generation commitment.
- On July 27, 2020, the period for the subscription of preemptive rights began, which should be exercised until August 25, 2020.
- Lojas Americanas S.A. the controlling shareholder of the Company, committed to exercise the preemptive right to subscribe the shares, in proportion to its participation in the capital of the Company, as well as to subscribe up to the totality of the eventual balance of shares not subscribed in the scope of the capital increase.
- Rating
- On July 25, 2020, the risk rating agency Fitch Ratings, Inc. gave the Company a corporate rating of AAA(bra) on the National Scale of Brazil, with a stable outlook.
ANNEX I: ABOUT B2W DIGITAL
B2W Digital is the leader in e-commerce in Latin America and its purpose is to CONNECT PEOPLE, BUSINESS, PRODUCTS AND SERVICES IN A DIGITAL PLATFORM.
The Company has the largest and most beloved Internet brands (Americanas.com, Submarino, Shoptime and Sou Barato) and a fast growing Marketplace operation. The platform built over the years allows B2W to also offer technology, logistics, distribution, customer service and payments.
DIGITAL PLATFORM AND B2W VIRTUOUS CYCLE:
ANNEX II: FINANCIAL STATEMENTS
EXCLUDING THE EFFECTS OF THE CONSOLIDATION OF B2W DIGITAL'S TRANSPORTATION SUBSIDIARIES
Effects of the consolidation of B2W Digital's transportation subsidiaries.
NON-EXCLUDING THE CONSOLIDATION OF B2W DIGITAL'S TRANSPORTATION SUBSIDIARIES
BALANCE SHEET
CASH FLOW STATEMENT
ANNEX III: NOTE REGARDING FINANCIAL STATEMENT
Effects in the consolidation of B2W Digital's transportation subsidiaries
BFF Logistics and Distribution, a subsidiary of B2W Digital, provides merchandise distribution services to the Company, generating an elimination effect in consolidated gross revenue and selling, general and administrative expenses (distribution expenses), according to the present accounting rules.
Consolidated gross profit is reduced in proportion to the positive effect observed on selling, general and administrative expenses, but no effect on Adjusted EBITDA and Adjusted EBITDA Margin.
Adjusted EBITDA
On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12, regarding the voluntary disclosure of non-accounting information such as EBITDA. The Instruction aims to standardize the disclosure, in order to improve the understanding of this information and make it comparable among publicly listed companies.
In order the maintain consistency and comparability between previous periods, we present the reconciliation of EBITDA.
In 2Q20, Adjusted EBITDA was R$ 184.7 million. Including other operating income and expenses and the equity income, EBITDA, according to CVM Instruction 527/12, would be R$ 157.8 million in 2Q20 (6.5% of NR) vs. R$ 97.7 MM in 2Q19 (6.6% of NR).
ANNEX IV: INDEBTEDNESS
Accounts receivable are mainly composed of credit card receivables, net of the discounted value, which have immediate liquidity and can be considered as cash.
In December/18, the Board of Directors approved the structuring of the FIDC (Credit Card Receivables Advance Fund) with shareholders' equity of R$ 1.1 billion. The FIDC is a unique tool in the market, representing an important source of fundraising.
The composition of accounts receivable from B2W is shown in the following table:
ANNEX V: DEFINITIONS
- Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting.
- Adjusted Gross Profit: Gross profit excluding the effects of the consolidation of B2W Digital's transportation subsidiaries.
- Adjusted Selling, General, and Administrative (SG&A): SG&A excluding the effects of the consolidation of B2W Digital's transportation subsidiaries.
- GMV (Gross Merchandise Volume): Sales of own merchandise, sales realized on the Marketplace, and other revenues (excluding commissions from Marketplace sales), after returns and including taxes.
- Marketplace Participation: Marketplace sales as a percentage of total consolidated GMV.
- Market Share: Total sales on B2W sites, including those made on the Marketplace, divided by total
market sales (source: e-Bit). - Net Debt (Cash): Calculated as the sum of short-term and long-term indebtedness, less the sum of cash & equivalents and credit card accounts receivables (net of the discounted balance).
- New Customers: Increase in active customer base during the trailing 12 months.
- Working Capital: Calculated as the sum of days of trade accounts receivable (using GMV as a basis) and inventory days, minus vendor days, considering GMV and CMV in the last 12 months.
INFORMATION ABOUT THE WEBCAST AND CONFERENCE CALL
Notes to the individual and consolidated financial statements
On June 30, 2020
(In thousands of Reais, unless otherwise stated)
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. - eCommerce (Americanas.com) and Submarino S.A., with shares traded on the Novo Mercado B3 S.A. - Brasil, Bolsa, Balcão under the ticker BTOW3. B2W is controlled by Lojas Americanas SA ("LASA" or "Parent Company"), a publicly traded company with shares traded on B3 S.A. - Brasil, Bolsa, Balcão under the ticker LAME3 - ON and LAME4 - PN.
The Company and its subsidiaries (collectively, "the Group") operate on the following fronts: e-commerce, through its brands, Americanas.com, Submarino, Shoptime, Sou Barato, and Supermercado Now; credit card administration and promotion; technology platform; logistics platform, distribution and customer service platform, Marketplace, and digital payment account through Ame.
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 of storage, distribution and customer services to its partners through its B2W Fulfillment (BFF) platform. Finally, consumer credit services are another important part 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.
Corona Vírus Pandemic - COVID 19
B2W sent a notice to the market on April 6, 2020 and its parent company, Lojas Americanas, sent a notice to the market on April 6 and 14, 2020, informing that they created the "Crisis Committee - Americanas Universe" to:
- Monitor the daily evolution and imact of the COVID 19 pandemic;
- Prioritize actions that preserve the health of our associates and customers;
- Addressing the necessary responses to the crisis;
- Ensuring that the Americanas Universe continues to fulfill its social role, providing products and services necessary to the population through physical and digital platforms and adjusting our assortment to better face the current challenges;
- Establish collaborative initiatives in order to offer relevant contributions to society in this difficult time that we are experiencing; and
- Ensuring consistent and fluid communication with key stakeholders, as well as establishing social impact partnerships with public and private entities.
The Americanas Universe consists of a physical platform (Americanas) and a digital platform (B2W Digital) that complement each other and allow to meet the needs of customers in different ways.
The Brazilian government has been taking actions to contain the spread of the virus since the second half of March 2020. The recommended social distancing, the compulsory closing of stores, and the consequent reduction in consumption in physical stores, took place more broadly from April 2020. On the other hand, the growing social distancing contributed to lift sales of B2W and the number of users of the O2O services (online to offline).
Throughout the quarter, B2W was 100% available to serve the population across the country and performed very well. To increase the supply of items and support local commerce, new sellers were connected to the B2W marketplace, further increasing the number of items offered.
Even considering the scenario of uncertainties regarding the eradication of the pandemic outbreak for the normal resumption of activities and its negative impact on the country's economy, management assessed the effects subsequent to the June 30 quarterly information, including in its projections of results and cash generation, applying its best estimate, and concluded that there is no need to record provisions for losses on non-financial assets, and there are no material adverse effects on its operations that put its operational continuity in doubt. The Companie
will continue to monitor the situation of the pandemic in order to keep their projections of generation of results up to date and corresponding analysis of any effects on their financial statements.
2 Main accounting policies
The main accounting policies applied in the preparation of these quarterly information are defined below. These policies were consistently applied in the semesters presented, unless otherwise stated.
2.1 Basis of preparation
The individual interim financial information was prepared in accordance with technical pronouncement CPC 21 (R1)
- Interim Statement and the consolidated interim financial information in accordance with the rules of CPC 21 (R1) and IAS 34- Interim Financial Reporting issued by IASB - International Accounting Standards Board and presented in a manner consistent with the rules issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of the Quarterly Information - ITR.
In accordance with CPC 21 (R1) - Interim Statement and in Management's assessment of the relevant impacts of the information to be disclosed, the explanatory notes described below are not being presented. The others are being presented in order to allow a perfect understanding of this quarterly information if read in conjunction with the explanatory notes disclosed in the financial statements of December 31, 2019.
Explanatory notes not shown:
- Accounting practices and policies;
- Critical accounting estimates and judgments;
- Credit quality of financial assets;
- Anticipated revenue; and
- Insurance coverage.
The issuance of these quarterly information was authorized by the board of directors on August 5, 2020.
2.2 Accounting practices and policies
Accounting policies are being presented in a manner consistent with the accounting practices adopted in the individual and consolidated financial statements for the year ended December 31, 2019. Therefore, this quarterly information should be read in conjunction with the information disclosed in the financial statements for the year ended December 31, 2019.
2.3 Presentation of segment information
The activities of the Group 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 Group (e-commerce, consumer finance service platforms; technology platform; logistics, distribution and customer services platform; Marketplace; and the digital payment account), 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 Group also operates in the area of financial products through the subsidiary Submarino Finance Promotora de Crédito Ltda. and Digital 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 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 3.48% per annum
(p.a.) on June 30, 2020 (5.86% p.a. at December 31, 2019), funding base for the base dates. The constitution of the present value adjustment of purchases is recorded under "Suppliers" (note 17) against the "Inventories" account (note 9) and the counterpart entries are shown under the heading "Financial Expenses" (note 27), 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 4.37% p.a. at June 30, 2020 (6.31% p.a. as of December 31, 2019), 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 "Accounts receivable from clients" (note 8) against the "Sales Revenue" (note 25) account and its realization is recorded under "Financial revenues" (note 27) through the maturity date.
3 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 semester ended June 30, 2020, there were no changes in accounting assumptions and estimates in relation to those disclosed in the financial statements of December 31, 2019.
4 Management of financial risk
4.1 Financial risk factors
In the normal course of business, the Group is 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 Group uses 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 Group does not have options, swaptions, repentance swaps, flexible options, derivatives embedded in other products, structured derivative transactions and "exotic derivatives". The Group does not operate derivative financial instruments for speculative purposes, thus reaffirming its commitment to the conservative cash management policy, whether in relation to its financial liabilities or its cash position.
- Market risk
-
Exchange rate risk
The Group uses traditional swaps to offset exchange losses arising from sharp devaluations of the Real (R$) against these foreign currency deposits.
- Traditional swaps (registered in the borrowings and financing account):
The counterparts to these traditional swaps are the financial institutions that provide loans in foreign currency (US dollars and Euro). These CDI-referenced swaps aim to cancel exchange risk, transforming the cost of the debt (note 18) to local currency and interest rates, varying at 121.95% to 122.60% of the CDI. These contracts, at June 30, 2020, amounted to a reference value of R$ 500,000 for the Parent Company and in the Consolidated (R$ 800,000 on December 31, 2019, for the Parent Company and in the Consolidated). These operations are matched in terms of amount, terms, and interest rates. The Group intends to settle such contracts simultaneously with the respective loans. In this type of operation there are no contractual terms of margin call. The are no contractual clauses for margin calls in this type of transaction.
At June 30, 2020 and December 31, 2019, the position of these derivative financial instruments was as follows:
Hedge object
Liability of the swap (% CDI)
Swap accounting balance (note 18(a))
Amortized cost | |
Object of the | |
hedge (debt) | Fair value |
Swaps | |
Active position | Amortized cost |
(Dollar/Euro + | Fair value |
Pré) | |
Passive position | Amortized cost |
(% CDI) | |
Fair value |
Parent Company
June 30, 2020 December 31, 2019
701,228804,465
(506,803)(818,256)
194,425(13,791)
Parent Company
June 30, 2020 December 31, 2019
671,168790,496
701,208802,770
30,04012,274
(671,168)(790,496)
(701,228)(804,465)
(30,060)(13,969)
(506,783)(816,561)
(506,803)(818,256)
201,695
30,04012,274
Consolidated
June 30, 2020 December 31, 2019
701,228804.465
(506,803)(818,256)
194,425(13,791)
Consolidated | ||
June 30, 2020 | December 31, 2019 | |
671,168 | 790,496 | |
701,208 | 802,770 | |
30,040 | 12,274 | |
(671,168) | (790,496) | |
(701,228) | (804,465) | |
(30,060) | (13,969) | |
(506,783) | (816,561) | |
(506,803) | (818,256) |
201,695
30,04012,274
Considering that the Group'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 and Euro compared to the real due to the current market conditions does not produce any significant impacts on the Group's financial information.
-
Interest rate risk
The Group uses resources produced by operational activities to manage its operations, as well as to guarantee investments and growth. In order to complement its cash requirements for growth, as well as to support cash investments, when necessary, the Group obtains loans and financing from the main financial institutions in the country, which are substantially (around 82% 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.
- 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 83% of the Group's sales are conducted through credit cards administered by the main credit card operators, which have excellent levels of risk classification. The Group maintains a provisions for estimated credit losses by management, that is considered sufficient to cover possible losses on its receivables.
-
Liquidity risk
Management continuously monitors forecasts for the liquidity requirements of the Group in order to ensure that it has sufficient cash to satisfy its operating needs. This forecast takes into consideration plans for financing the Groups'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 table below 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.
Parent Company | |||||||
Less than one year | Between one and | Between two | More than five | ||||
two years | and five years | years | |||||
At June 30, 2020 | |||||||
Suppliers | 2,929,492 | ||||||
Borrowings, financing and debentures | 914,954 | 638,880 | 6,220,226 | 622,591 | |||
Leases liability | 79,596 | 72,789 | 125,212 | 18,681 | |||
At December 31, 2019 | |||||||
Suppliers | 2,665,242 | ||||||
Borrowings, financing and debentures | 1,322,361 | 461,152 | 5,663,804 | 646,166 | |||
Leases liability | 78,240 | 54,487 | 118,236 | 40,212 |
Consolidated | |||||||
Less than one year | Between one | Between two and | More than five | ||||
and two years | five years | years | |||||
At June 30, 2020 | |||||||
Suppliers | 2,996,447 | ||||||
Borrowings, financing and debentures | 914,954 | 688,050 | 6,242,710 | 622,591 | |||
Leases liability | 94,392 | 83,610 | 135,813 | 18,681 | |||
At December 31, 2019 | |||||||
Suppliers | 2,758,582 | ||||||
Borrowings, financing and debentures | 1,342,808 | 460,686 | 5,717,242 | 646,166 | |||
Leases liability | 98,988 | 71,239 | 136,698 | 40,212 |
- Analysis of additional sensitivity Sensitivity analysis of swap transactions
Swap operations recorded by the Group were contracted, simultaneously with foreign currency loans, including maturities, rates and equivalent amounts, exchanging foreign exchange exposure of the loans for exposure to CDI. The Group's gross debt in USD/EUR was represented as follows:
Parent Company | Consolidated | ||||||
June 30, | December 31, | June 30, | December 31, | ||||
2020 | 2019 | 2020 | 2019 | ||||
Foreign currency loans | |||||||
US$ | - | 296,368 | - | 296,368 | |||
€ | 671,168 | 494,128 | 671,168 | 494,128 | |||
US$ rate at closing date | - | 4.0307 | - | 4.0307 | |||
€ rate at closing date | 6.1539 | 4.5305 | 6.1539 | 4.5305 | |||
Estimated final US$ rate, released by Bacen | - | 4.0900 | - | 4.0900 | |||
Estimated final € rate, released by Bacen | 6.2149 | 4.6203 | 6.2149 | 4.6203 |
Scenarios I and II were estimated to deteriorate from 25% to 50% respectively, above the probable expectation, as shown in the table below:
Parent | ||||||||
Company | ||||||||
Scenario I - | Scenario II - | |||||||
Operation | Risk | Probable scenario | Deterioration | Deterioration | ||||
of 25% | of 50% | |||||||
Euro | ||||||||
Exchange rate at June 30, 2020 | 6.1539 | 6.1539 | 6.1539 | |||||
Estimated exchange rate at December 31, 2020 | 6.2149 | 7.7686 | 9.3223 | |||||
Foreign currency borrowings | (variation €) | 6,649 | 176,103 | 345,557 | ||||
Swaps (Foreign currency assets) | (variation €) | (6,649) | (176,103) | (345,557) | ||||
Net effect | null | null | null | |||||
Consolidated | ||||||||
Scenario I - | Scenario II - | |||||||
Operation | Risk | Probable scenario | Deterioration | Deterioration | ||||
of 25% | of 50% | |||||||
Euro | ||||||||
Exchange rate at March 31, 2020 | 6.1539 | 6.1539 | 6.1539 | |||||
Estimated exchange rate at December 31, 2020 | 6.2149 | 7.7686 | 9.3223 | |||||
Foreign currency borrowings | (variation €) | 6,649 | 176,103 | 345,557 | ||||
Swaps (Foreign currency assets) | (variation €) | (6,649) | (176,103) | (345,557) | ||||
Net effect | null | null | null |
- CDI rate sensitivity analysis
The Group maintains a large part of its debt, approximately 82%, and its cash and cash equivalents indexed to the CDI variation (considering the exchange of foreign currency denominated debt by CDI variation with traditional swaps). The net cash (debt) (a) was represented as follows:
Parent Company | Consolidated | ||||||
June 30, | December 31, | June 30, | December 31, | ||||
2020 | 2019 | 2020 | 2019 | ||||
Net cash (debt) (a): | |||||||
- Cash and cash equivalents | 3,901,934 | 3,533,847 | 3,903,989 | 3,535,807 | |||
- Marketable securities | 2,651,575 | 2,943,891 | 2,796,604 | 3,172,266 |
- Loans and financing | (6,522,845) | (6,167,023) | (6,588,780) | (6,233,126) | |||
- Debentures | (204,614) | (200,214) | (204,614) | (200,214) | |||
(173,950) | 110,501 | (92,801) | 274,733 | ||||
CDI rate on the closing date | |||||||
2.15% | 4.40% | 2.15% | 4.40% | ||||
Estimated final CDI rate, released by Bacen | 2.00% | 4.50% | 2.00% | 4.50% |
- Additionally, Management conducted sensitivity tests for adverse scenarios, deteriorating the CDI rate by 25% or
50% higher than the probable scenario (judged by Management), as shown in the table below:
Parent Company | ||||||
Scenario I - | Scenario II - | |||||
Operation | Probable scenario | Deterioration | Deterioration | |||
of 25% | of 50% | |||||
CDI effective annual interest rate June 30, 2020 | 2.15% | 2.15% | 2.15% | |||
Net debt | 173,950 | 173,950 | 173,950 | |||
CDI estimated annual interest rate in 2020 | 2.00% | 2.50% | 3.00% | |||
Annual effect on net debt | ||||||
Reduction | (261) | - | - | |||
Increase | - | 609 | 1,479 | |||
Consolidated | ||||||
Scenario I - | Scenario II - | |||||
Operation | Probable scenario | Deterioration | Deterioration | |||
of 25% | of 50% | |||||
CDI effective annual interest rate June 30, 2020 | 2.15% | 2.15% | 2.15% | |||
Net debt | 92,801 | 92,801 | 92,801 | |||
CDI estimated annual interest rate in 2020 | 2.00% | 2.50% | 3.00% | |||
Annual effect on net debt | ||||||
Reduction | (139) | - | - | |||
Increase | - | 325 | 789 |
4.2 Capital management
The goal of the Group 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 Group 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 uses a market approach to estimate the fair value of its 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:
- (Level 1) Quoted (unadjusted) prices in asset markets for identical assets and liabilities to which an entity may have access at the measurement date.
- (Level 2) 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 3) Insertions for assets or liabilities that are not based on data adopted by the market (that is, non- observable insertions).
The following table presents the Group's assets and liabilities measured by fair value through profit or loss as of June 30, 2020.
Consolidated | ||||||||
Level 1 | Level 2 | Level 3 | Total | |||||
Assets | ||||||||
Investment Fund - FIDC | - | 97,377 | - | 97,377 | ||||
Bank Deposit Certificates - CDB | - | 5,385,473 | - | 5,385,473 | ||||
Other marketable securities | - | 995,864 | - | 995,864 | ||||
Total assets | - | 6,478,714 | - | 6,478,714 | ||||
Liabilities | ||||||||
Borrowings and financing (Foreign currency) | - | 701,208 | - | 701,208 | ||||
Derivatives used for hedge -swap | - | (194,425) | - | (194,425) | ||||
Total liabilities | - | 506,783 | - | 506,783 | ||||
The following table presents the Group's assets and liabilities measured by fair value at December 31, 2019.
Consolidated | ||||||||
Level 1 | Level 2 | Level 3 | Total | |||||
Assets | ||||||||
Investment Fund - FIDC | - | 224,775 | - | 224,775 | ||||
Bank Deposit Certificates - CDB | - | 5,217,596 | - | 5,217,596 | ||||
Other marketable securities | - | 1,250,523 | - | 1,250,523 | ||||
Total assets | - | 6,692,894 | - | 6,692,894 | ||||
Liabilities | ||||||||
Borrowings and financing (Foreign currency) | - | 802,770 | - | 802,770 | ||||
Derivatives used for hedge -swap | - | 13,791 | - | 13,791 | ||||
Total liabilities | - | 816,561 | - | 816,561 | ||||
There are no relevant financial assets and liabilities subject to the netting agreement.
5 | Financial instruments by category | |||||
Consolidated | ||||||
Amortized Cost | Fair Value | Total | ||||
Through Results | ||||||
At June 30, 2020 | ||||||
Assets | ||||||
Marketable securities | - | 6,478,714 | 6,478,714 | |||
Accounts receivable from customers and other accounts | ||||||
receivable, excluding prepayments | 1,013,621 | - | 1,013,621 | |||
Cash and cash equivalents | 221,879 | - | 221,879 | |||
1,235,500 | 6,478,714 | 7,714,214 | ||||
Fair Value Through | Amortized Cost | Total | ||||
Results | ||||||
At June 30, 2020
Liabilities | ||||||
Borrowing | ||||||
National currency | - | 6,081,997 | 6,081,997 | |||
Foreign currency | 701,208 | - | 701,208 | |||
Derivatives financial instruments - swap | (194,425) | - | (194,425) | |||
Suppliers and other liabilities, excluding legal obligations | - | 3,729,549 | 3,729,549 | |||
Debentures | - | 204,614 | 204,614 | |||
506,783 | 10,016,160 | 10,522,943 | ||||
Consolidated | ||||||
Amortized Cost | Fair Value | Total | ||||
Through Results | ||||||
At December 31, 2019 | ||||||
Assets | ||||||
Marketable securities | - | 6,692,894 | 6,692,894 | |||
Accounts receivable from customers and other accounts | ||||||
receivable, excluding prepayments | 1,277,491 | - | 1,277,491 | |||
Cash and cash equivalents | 15,179 | - | 15,179 | |||
1,292,670 | 6,692,894 | 7,985,564 | ||||
Fair Value Through | Amortized Cost | Total | ||||
Results | ||||||
At December 31, 2019 | ||||||
Liabilities | ||||||
Borrowing | ||||||
National currency | - | 5,416,565 | 5,416,565 | |||
Foreign currency | 802,770 | - | 802,770 | |||
Derivatives financial instruments - swap | 13,791 | - | 13,791 | |||
Suppliers and other liabilities, excluding legal obligations | - | 3,569,907 | 3,569,907 | |||
Debentures | - | 200,214 | 200,214 | |||
816,561 | 9,186,686 | 10,003,247 | ||||
6 | Cash and cash equivalents | |||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Funds in cash and banks | 219,824 | 13,219 | 221,879 | 15,179 | ||||
Certificates of bank deposits - CDBs (i) | 3,682,110 | 3,504,490 | 3,682,110 | 3,504,490 | ||||
Leasing Letters (ii) | - | 16,138 | - | 16,138 | ||||
3,901,934 | 3,533,847 | 3,903,989 | 3,535,807 |
- Remunerated at a rate of up to 105.5 % of the CDI as of June 30, 2020 (up tp 105.5% of the CDI as of December 31, 2019). The CDB's are classified as cash equivalents have immediate liquidity without risk of change in value in case of early redemption.
- Remunerated at a rate of up to 103.0% of the CDI of the parent and consolidated on December 31, 2019. LAM's classified as cash equivalents and have immediate liquidity without risk of change in value in case of early redemption.
7 | Marketable Securities | |||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Certificates of Bank Deposits- CDB's (i) | 1,578,047 | 1,501,924 | 1,703,363 | 1,713,107 | ||||
Leasing Letters (ii) | - | 145,247 | - | 148,047 | ||||
Financial bills (iii) | 976,151 | 1,071,945 | 995,864 | 1,086,337 | ||||
Junior levels (Fênix-FIDC (a)) | 32,330 | 31,324 | 32,330 | 31,324 | ||||
Senior levels (Fenícia-FIDC (b)) | 55,726 | 192,951 | 55,726 | 192,951 | ||||
Mezzanine levels (Faísca-FIDC (c)) | 9,321 | 500 | 9,321 | 500 | ||||
2,651,575 | 2,943,891 | 2,796,604 | 3,172,266 | |||||
Current portion | 2,554,198 | 2,719,116 | 2,699,227 | 2,947,491 | ||||
Noncurrent portion | 97,377 | 224,775 | 97,377 | 224,775 |
- Bank Deposit Certificates, wholly from top-tier financial institutions, bear interest at a rate of up to 105.5% of the CDI at June 30, 2020 (up to 105.5% of the CDI of the parent and consolidated at December 31, 2019). There is no intention to sell these securities in a period longer than 1 year, which is why they are classified in current assets.
- Letters of Lease (LAM's), wholly from first-tier financial institutions, bear interest of up to 103.0% of the parent CDI and consolidated as of December 31, 2019. There is no intention to sell these securities in a period longer than 1 year, which is why they are classified in current assets.
- The Financial bills, wholly from first-tier financial institutions, bear interest at a rate of up to 107.0% of the CDI as of June 30, 2020 (up to 107.5% of the parent and consolidated CDI at December 31, 2019. There is no intention to dispose of these securities over a period of more than one year. by which they are classified in current assets.
- Investment Fund - Fênix FIDC do Varejo II
In October 2018, the Company's management approved the structuring of the Fênix Investment Fund in Retail Credit Rights II ("Fênix FIDC do Varejo II "), with a duration of 20 (twenty) years, whose objective defined in regulation is the acquisition of credit rights held by the Company, among others, originating through credit cards used in the purchase and sale of products and services, whose electronic transactions are captured and processed by the systems of accrediting merchants.
The " Fênix FIDC do Varejo II" initiated operations in February 2019, issued 1,100,000 shares with a unitary face value of R$ 1 (one thousand reais), of which 1,017,500 senior shares with target yield are corresponding to 106.50% of the DI variation and 82,500 subordinated shares, with 30,000 thousand shares subscribed by the Company and 52,500 subscribed by the Parent Company Lojas Americanas, totaling the senior shares and subordinated to a stockholders' equity of R$ 1,100,000 of the " Fênix FIDC do Varejo II ".
The total amount of the senior shares corresponding to the principal invested will be amortized / redeemed on a single date, on the business day corresponding to the end of the period of 5 (five) years from the date of issue. The value of the senior shares corresponding to the profitability plus the senior shares after their issue date will be amortized every six (6) months from the date of issue.
The structure of the Fênix FIDC do Varejo II, as well as the remuneration of the shares is represented as follows:
June 30, | December 31, | ||||||||
Shares | Quantity | % | 2020 | 2019 | Benchmark - DI | ||||
Senior | 1,017,500 | 92.2% | 1,030,661 | 1,039,107 | 106.50% |
Subordinate | 85,810 | 7.8% | 88,907 | 86,142 | - | ||
100.0% | 1,119,568 | 1,125,249 |
Balance Sheet on:
June 30, 2020 | December 31, 2019 | |||
Assets | ||||
Cash and cash equivalents | 1 | 4 | ||
Marketable securities | 78,692 | 299,967 | ||
Accounts receivable | ||||
Lojas Americanas | 639,684 | 364,181 | ||
B2W | 401,282 | 448,982 | ||
Others | 19 | 12,226 | ||
Total assets | 1,119,678 | 1,125,360 | ||
Liabilities | ||||
Accounts Payable (Current) | 110 | 111 | ||
Financing (Non Current) | 1,030,661 | 1,039,107 | ||
Shareholders equity | 88,907 | 86,142 | ||
Total liabilities & shareholders' equity | 1,119,678 | 1,125,360 |
Income statement for the semester ended:
June 30, 2020 | June 30, 2019 | |||
Financial income | 4,357 | 607 | ||
Financial expenses | (1,592) | (837) | ||
Income (loss) for the semester | ||||
2,765 | (230) | |||
- Fenícia Fundo De Investimento em Direitos Creditórios
The Company holds 57,552 shares of the Fenícia Fund (197,762 shares at December 31, 2019), whose purpose is to raise funds for the application mainly of Credit Rights, in accordance with the investment policy, composition and diversification of the Fund's portfolio.It is constituted in the form of a open condominium, so that its shares will only be redeemed according to the provisions of this Regulation.The Fund will have a term of indefinite duration, and may be settled by resolution of the General Meeting in accordance with the Regulations of the fund. - Spark Non-Standard Credit Rights Investment Fund
The Company holds 9,083 shares of the Faísca Fund (1,000 shares at December 31, 2019), which aims to provide Shareholders with the appreciation of their Quotas, through the application of the Fund's resources mainly in the acquisition of Credit Rights from third parties, and the others in Financial Assets. It is constituted in the form of a closed condominium, so that its Quotas will only be redeemed at the end of the term, in accordance with the provisions of the regulation or due to its liquidation.
The Fund will have an indefinite duration and may be liquidated by resolution of the General Meeting in accordance with the Fund's Regulations.
8 | Accounts receivable | |||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Credit cards (i) | 102,125 | 261,017 | 102,125 | 261,017 | ||||
Digital Wallet (ii) (note 12) | 817 | - | 817 | - | ||||
Investment fund - FIDC (note 7(a)) | 401,282 | 448,982 | 401,282 | 448,982 | ||||
Other accounts receivable (iii) | 68,151 | 64,609 | 127,768 | 111,324 | ||||
572,375 | 774,608 | 631,992 | 821,323 | |||||
Present value adjustments (note 2.4) (iv) | (6,267) | (8,179) | (6,267) | (8,179) | ||||
Provision for estimated credit loss | (17,604) | (15,261) | (59,313) | (50,997) | ||||
548,504 | 751,168 | 566,412 | 762,147 | |||||
- The operations with credit cards can be paid in installments, generally, of up to twelve months. The Group's credit risks are minimized as the portfolio receivables are monitored by the credit card management companies.
- Open balance on the Ame Digital platform.
- Other accounts receivable mainly represent sales to companies through corporate transactions.
- Present value adjustment was calculated on accounts receivable, net of FIDC anticipations.
The aging list of accounts receivable from customers is composed as follows:
Parent Company | Consolidated | ||||||
June 30, | December, 31 | June 30, | December, 31 | ||||
2020 | 2019 | 2020 | 2019 | ||||
Falling due | 530,080 | 749,025 | 579,299 | 783,149 | |||
Overdue: | |||||||
Up to 30 days | 20,703 | 8,324 | 14,944 | 10,593 | |||
31 to 60 days | 11,060 | 5,795 | 18,304 | 6,422 | |||
61 to 90 days | 2,426 | 3,418 | 3,338 | 3,746 | |||
91 to 120 days | 1,830 | 1,163 | 1,945 | 1,687 | |||
121 to 180 days | 151 | 804 | 257 | 1,786 | |||
> 180 days | 6,125 | 6,079 | 13,905 | 13,940 | |||
572,375 | 774,608 | 631,992 | 821,323 | ||||
The amount of the provision for estimated credit loss is based on the Management's analysis of expected losses on the credits to mature and expire.
The changes in the provision for estimated credit losses are shown below:
Parent Company | Consolidated | ||
Balance at January 1, 2019 | (15,839) | (45,004) | |
Additions/ Reversals | 1,946 | 915 | |
Balance at June 30, 2019 | (13,893) | (44,089) | |
Additions/ Reversals | (1,368) | (6,908) | |
Balance at December 31, 2019 | (15,261) | (50,997) | |
Additions/ Reversals | (2,343) | (8,316) | |
Balance at June 30, 2020 | (17,604) | (59,313) |
9 | Inventories | |||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Goods for resale | 1,192,453 | 888,396 | 1,298,233 | 950,451 | ||||
Present value adjustments (note 2.4) | (5,251) | (2,836) | (5,251) | (2,836) | ||||
Supplies and packaging | 2,393 | 2,608 | 2,393 | 3,767 | ||||
1,189,595 | 888,168 | 1,295,375 | 951,382 | |||||
The balances above are presented the net values of provision for losses due to inventories, obsolescence and low turnover. The changes in the provision for losses are shown below:
Parent Company and Consolidated | |
Balance at January 1, 2019 | (71,344) |
Additions/ Reversals | 9,445 |
Balance at June 30, 2019 | (61,899) |
Additions/ Reversals | (3,950) |
Balance at December 31, 2019 | (65,849) |
Additions/ Reversals | 3,788 |
Balance at June 30, 2020 | (62,061) |
10 | Recoverable taxes | ||||||||
Parent Company | Consolidated | ||||||||
June 30, | December 31, | June 30, | December 31, | ||||||
2020 | 2019 | 2020 | 2019 | ||||||
Taxes on Goods and Services (ICMS) | 232,164 | 201,266 | 240,699 | 209,949 | |||||
Withholding Income Tax (IRRF) | 89,826 | 48,459 | 95,358 | 52,991 | |||||
Social Integration Program (PIS) and | |||||||||
Contribution to Social Security Financing | 1,437,348 | 1,357,455 | 1,444,592 | 1,360,972 | |||||
(COFINS) | |||||||||
Corporate Income Tax (IRPJ) and Social | 204,361 | 239,996 | 213,921 | 247,509 | |||||
Contribution on Net Income (CSLL) | |||||||||
Others | 8,592 | 8,592 | 9,491 | 9,883 | |||||
1,972,291 | 1,855,768 | 2,004,061 | 1,881,304 | ||||||
Current portion | 716,836 | 658,600 | 748,606 | 684,136 | |||||
Non-current portion | 1,255,455 | 1,197,168 | 1,255,455 | 1,197,168 |
Considering the taxation rules currently in effect, the following expectation of the main recoverable taxes is as follows:
Parent Company | |||
Yr | PIS and COFINS | IR and CSLL | ICMS |
2020 | 301,416 | 156,560 | 96,093 |
2021 | 496,154 | 24,220 | 136,071 |
2022 | 432,269 | 23,581 | - |
2023 | 207,509 | 89,826 | - |
1,437,348 | 294,187 | 232,164 |
- PIS and COFINS: The Company expects to recover R$ 301,416 in 2020 and R$ 1,135,932 in up to 3 years (2021 to 2023) through debits calculation and compensation with other federal taxes.
- IRPJ and CSLL: The Company expects to recover R$ 294,187 in up to 4 years (2020 to 2023), through a request for restitution and / or compensation with other federal taxes.
- ICMS: The Company expects to recover the ICMS credit with its own operations in the amount of R$ 96,093 in 2020 and R$ 136,071 in 2021.
The Company constantly evaluates the recovery of its tax credits and maintains the net balance of the recovery expectation in the balance sheet.
11 Income tax and social contribution
- Composition of deferred income tax and social contribution
Assets | ||||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Tax losses | 792,581 | 756,338 | 820,967 | 780,382 | ||||
Negative bases for social contribution | 285,329 | 272,281 | 295,556 | 280,940 | ||||
Temporary differences | ||||||||
Contingencies | 19,951 | 19,157 | 19,951 | 19,157 | ||||
Unsettled swaps | 12,905 | 14,471 | 15,847 | 17,417 | ||||
Present value adjustments receivables and payables | 41,758 | 40,843 | 41,758 | 40,843 | ||||
Provisions for losses on inventories, estimated credit | ||||||||
loss and other provisions | 219,835 | 196,894 | 237,409 | 216,165 | ||||
Lease operations | 10,447 | 9,898 | 11,942 | 12,661 | ||||
Others | 1,574 | 9,967 | 14,107 | 17,892 | ||||
1,384,380 | 1,319,849 | 1,457,537 | 1,385,457 | |||||
Liabilities | ||||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Capitalization of interest | 6,366 | 15,192 | 6,366 | 15,192 | ||||
Extemporaneous Tax Credits | 37,789 | 37,789 | 37,789 | 37,789 | ||||
Others | 973 | 2,307 | 4,373 | 5,707 | ||||
45,128 | 55,288 | 48,528 | 58,688 | |||||
Net balance | ||||||||
1,339,252 | 1,264,561 | 1,409,009 | 1,326,769 | |||||
- Expected realization of deferred tax and social contribution
Parent Company | Consolidated | ||
2022 | 17,249 | 18,148 | |
2023 | 81,662 | 85,916 | |
2024 | 155,291 | 163,380 | |
2025 | 264,373 | 278,143 | |
2026 | 371,299 | 390,639 | |
2027 | 449,378 | 472,783 | |
1,339,252 | 1,409,009 |
The realization of deferred taxes was determined based on the business plan approved by the Company's management and is reviewed at least every year.
The projections are made through operating cash flows started from the year 2020, in nominal terms, considering the inflation of the economy due to changes in market financial indexes using the maximum period of 10 years.
The Company's Management confirms its confidence in its Business Plan, which has made the operational structure of its business development platforms more robust, and will continue to monitor internal and external indicators as a way ratifying its estimates.
-
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 below:
Parent Company | Consolidated | |||||||
June 30, | June 30, | June 30, | June 30, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Losses for the semester before income tax and social | ||||||||
contribution | (257,256) | (400,391) | (261,579) | (399,884) | ||||
Nominal rate | 34% | 34% | 34% | 34% | ||||
87,467 | 136,133 | 88,937 | 135,961 | |||||
Effect of (additions) or deductions on accounting profit | ||||||||
Interest in subsidiaries and affiliates | (4,770) | 4,444 | (5,654) | - | ||||
Other permanent deductions (additions), net | (8,006) | (6,996) | (1,043) | (2,887) | ||||
Income tax and social contribution at effective rate | 74,691 | 133,581 | 82,240 | 133,074 | ||||
Current | - | - | (3,226) | (4,219) | ||||
Deferred | 74,691 | 133,581 | 82,240 | 137,293 | ||||
Income tax and social contribution | 74,691 | 133,581 | 79,014 | 133,074 | ||||
Effective rate | ||||||||
29% | 33% | 30% | 33% | |||||
12 | Related party transactions | |||||||
Receivable (payable) | Revenue (expenses) | |||||||
June 30, | December 31, | June 30, | June 30, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Operations with Parent Company | ||||||||
Lojas Americanas S.A. (i) | 15,405 | (20,367) | 61,011 | 33,051 | ||||
- Rental of headquarters, Distribution Center's, | ||||||||
and others | (4,338) | (6,227) | (6,829) | (10,816) | ||||
- Resale Goods - sale | 5,866 | 26,128 | 41 | 44 | ||||
- Resale Goods - purchase | (1,694) | (3,255) | (222) | 465 | ||||
- Platform of Digital Services and O2O operations | (70,618) | (133,974) | (1,885) | (9,321) | ||||
- Operations Lojas Americanas x QSM | 35,373 | 36,558 | 11,960 | 24,943 | ||||
- Operations Lojas Americanas x Direct | 28,220 | 35,213 | 35,259 | 16,552 | ||||
- Operation Lojas Americanas x BIT | 22,596 | 25,190 | 22,687 | 11,184 | ||||
Operations with subsidiaries and related (ii) | 83,286 | 61,546 | (104,325) | (36) | ||||
B2W Rental | 39,462 | 39,462 | - | - | ||||
Submarino Finance | 13 | 156 | - | - | ||||
BIT Services (antiga Ideais) | 41,506 | 43,320 | - | - | ||||
Direct | 417 | 887 | (2) | (36) | ||||
QSM | (6,046) | (28,955) | - | - | ||||
AME Digital (iii) | 817 | - | (104,323) | - | ||||
Other accounts receivable AME | 550 | - | - | - | ||||
Other accounts receivable | 6,659 | 6,837 | - | - | ||||
Other accounts payable | (92) | (161) | - | - | ||||
Other operations with subsidiaries and related | (128,537) | (103,294) | - | - | ||||
Transportation of merchandise | ||||||||
Direct | (128,644) | (103,248) | - | - | ||||
- Operations AME x Direct | 122 | - | - | - | ||||
Systems Development | ||||||||
BIT Services (formery Ideais) | (15) | (46) | - | - | ||||
Total receivable from related parties | 88,992 | 89,729 | ||||||
Reclassification to Accounts receivable - Ame | (817) | - | ||||||
digital wallet (iii) | ||||||||
Non-Current Assets | 88,175 | 89,729 | ||||||
Non-Current Liabilities | (205,149) | (248,805) | ||||||
Non-current assets (liabilities) - Consolidated | 16,077 | (20,367) | ||||||
Debentures (iv) | (204,614) | (200,214) | (4,400) | (7,724) | ||||
BWU | (204,614) | (200,214) | (4,400) | (7,724) |
- Refer to operations of purchase and sale of merchandise, reimbursement of expenses and provision of transport and technology services.
- Refers mainly to reimbursement of expenses and advances for future capital increase and digital wallet transactions.
- Receivables through the digital wallet - AME are presented in the item "Accounts receivable" (note 8).
- 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 S.A. a wholly owned subsidiary of Lojas Americanas S.A. The requirements and characteristics of emissions are listed in note 19.
43
13 Investments - Parent Company
- Changes in parent company's investments
BFF | Finance | ST | QSM | BIT | Digital | Rental | Mesa- | SuperNow | Ame Digital | Ame Pay | Total | ||||||||||||
Importações | Services (i) | Finance | express | (ii) | Brasil (iii) | Cayman (iii) | |||||||||||||||||
Balance at January 1,2019 | |||||||||||||||||||||||
181,402 | 87,102 | 76,461 | 28,576 | 228,861 | 10,573 | (23,228) | 3 | - | - | - | 589,750 | ||||||||||||
Equity accouting | 222 | 6,021 | 1,673 | 1,547 | 643 | 3,454 | (44) | - | - | - | - | 13,516 | |||||||||||
Added value write-off | - | - | - | - | (445) | - | - | - | - | - | - | (445) | |||||||||||
Initial adoption IFRS 16 | (1,483) | - | (78) | (1,108) | (1,076) | - | - | - | - | - | - | (3,745) | |||||||||||
Balance at June 30, 2019 | |||||||||||||||||||||||
180,141 | 93,123 | 78,056 | 29,015 | 227,983 | 14,027 | (23,272) | 3 | - | - | - | 599,076 | ||||||||||||
Equity accounting | 1,343 | 4,316 | 10,590 | 128 | 2,759 | (836) | (17) | - | - | (3,714) | - | 14,569 | |||||||||||
Advance for Future Capital increase | - | - | - | - | - | - | - | - | - | 27,567 | - | 27,567 | |||||||||||
Added value write-off | - | - | - | - | (444) | - | - | - | - | - | - | (444) | |||||||||||
Constitution with tangible and | - | - | - | - | - | - | - | - | - | 41,840 | - | 41,840 | |||||||||||
intangible | |||||||||||||||||||||||
Balance at December 31, 2019 | 181,484 | 97,439 | 88,646 | 29,143 | 230,298 | 13,191 | (23,289) | 3 | - | 65,693 | - | 682,608 | |||||||||||
Transfer of equity interest | - | - | - | - | - | - | - | - | - | (38,126) | 38,126 | - | |||||||||||
Equity accounting | 1,735 | 708 | 1,771 | 1,715 | 2,787 | (1,495) | (8) | - | (4,168) | - | (16,629) | (13,584) | |||||||||||
Investment acquisition | - | - | - | - | - | - | - | - | 15,015 | - | - | 15,015 | |||||||||||
Advance for Future Capital increase | - | - | - | - | - | - | - | - | - | 17,231 | - | 17,231 | |||||||||||
Capital Increase | - | - | - | - | - | - | - | - | 20,656 | - | - | 20,656 | |||||||||||
Added value write-off | - | - | - | - | (445) | - | - | - | - | - | - | (445) | |||||||||||
Balance at June 30, 2020 | 183,219 | 98,147 | 90,417 | 30,858 | 232,640 | 11,696 | (23,297) | 3 | 31,503 | 44,798 | 21,497 | 721,481 |
- Includes goodwill for future profitability in the acquisition of the subsidiary in the amount of R$ 43,794.
- The capital increase amounting to R$ 20,656 consists of R$15,594 corresponding to the portion of the transaction amount (note 13(c)) and R$ 5,062, of primary contribution
- A corporate restructuring was carried out at AME Brasil, with the formation of two new companies abroad as a holding company and a sub holding company, these being Ame Pay Cayman LTD, wholly owned by Ame Pay Delaware Holding LLC. As a result of this fact, the Company and its parent company Lojas Americanas remained with 1 (one) quota each, yielding to Ame Pay Cayman LTD its other its quotas of participation in AME Brasil, and will then have the indirect coalition and control respectively.
44
- Information on the investments in subsidiaries and related
June 30, 2020 | |||||
% | Capital | Shareholder | Adjusted net income | ||
Participation | Social | equity | (loss) | ||
Direct subsidiaries | |||||
BFF Logística e Distribuição Ltda. | 100.00 | 163,198 | 183,215 | 1,735 | |
ST Importações Ltda. | 100.00 | 4,050 | 90,417 | 1,771 | |
Mesa Express Serv. de Informação da Internet S.A. | 99.99 | 275 | - | - | |
Submarino Finance Promotora de Crédito Ltda. | 100.00 | 12,005 | 98,147 | 708 | |
QSM Distribuidora e Logística Ltda. | 100.00 | 5,000 | 30,864 | 1,715 | |
BIT Services Tecnologia e Inovação Ltda. | 100.00 | 170,013 | 194,062 | 2,342 | |
Digital Finance Promotora Ltda. | 100.00 | 500 | 11,696 | (1,495) | |
B2W Rental S.A. | 99.96 | 2 | (23,307) | (8) | |
SuperNow Portal e Serviços de Internet Ltda. | 100.00 | 21,008 | 1,234 | (4,168) | |
Indirect subsidiaries | |||||
Click - Rodo Entregas Ltda | 100.00 | 44,928 | 11,991 | (213) | |
Direct Express Logística Integrada S/A | 100.00 | 237,755 | 82,454 | 1,948 | |
Affiliates | |||||
Ame Digital Brasil Ltda | 43.08 | 201,114 | 153,890 | (38,602) | |
Ame Pay Cayman LTD. | 43.08 | 97,124 | 49,900 | (38,602) | |
December 31, 2019 | |||||
% | Capital | Shareholder | Adjusted net income | ||
Participation | social | equity | (loss) | ||
Direct subsidiaries | |||||
BFF Logística e Distribuição Ltda. | 100.00 | 163,198 | 181,480 | 1,565 | |
ST Importações Ltda. | 100.00 | 4,050 | 88,646 | 12,263 | |
Mesa Express Serv. de Informação da Internet S.A. | 99.99 | 275 | - | - | |
Submarino Finance Promotora de Crédito Ltda. | 100.00 | 12,005 | 97,439 | 10,337 | |
QSM Distribuidora e Logística Ltda. | 100.00 | 5,000 | 29,713 | 1,675 | |
BIT Services Tecnologia e Inovação Ltda. | 100.00 | 170,013 | 192,207 | 2,513 | |
Digital Finance Promotora Ltda. | 100.00 | 500 | 13,191 | 2,618 | |
B2W Rental S.A. | 99.96 | 2 | (23,298) | (61) | |
Indirect subsidiaries | |||||
Click - Rodo Entregas Ltda | 100.00 | 44,928 | 12,205 | (142) | |
Direct Express Logística Integrada S/A | 100.00 | 237,755 | 80,506 | (604) | |
Related | |||||
Ame Digital Brasil Ltda | 43.08 | 97,124 | 152,491 | (8,622) |
- Other information on subsidiaries
On January 13, 2020, the Company acquired the totality of the shares of SuperNow Portal e Serviços de Internet Ltda. ("Supermercado Now"), an innovative e-commerce platform focused on the Supermarket category in Brazil.
The value of the transaction is up to R$ 33,000, distributed as follows:
- R$ 15,015, due to the acquiree, with R$ 1,181 being paid in cash and most of the remaining amount being subject to the achievement goals by 2022. The updated balance on June 30, 2020 is R$ 13,835 (note 20) to be settled by 2024; and
45
- R$ 17,985 to settle Supermercado Now's obligations with third parties through the payment of capital, of which R$ 15,594 was paid at the time of the acquisition and R$ 2,391 to be paid in the next 4 years.
The goodwill totals R$ 30,269 and was calculated based on the expectation of future profitability, arising from the benefit generated to the company by expanding its operations in the food retail segment, offering a more complete assortment to the customer base. The goodwill, calculated based on the company's accrued unsecured liabilities, consists of:
Accrued Unsecured Liabilities of Acquiree (1) | (15,254) |
Consideration (2) | 15,015 |
Goodwill (2) - (1) | 30,269 |
The Company expects to complete the studies to determine the assets and liabilities at fair value and the consequent allocation of the purchase price by the end of fiscal year 2020.
46
14 | Fixed assets | ||||||||||||||||||||||
Parent Company | Consolidated | ||||||||||||||||||||||
June 30, 2020 | December 31,2019 | June 30, 2020 | December 31, 2019 | ||||||||||||||||||||
Accumulated | Accumulated | ||||||||||||||||||||||
Cost | depreciation | Net | Net | Cost | depreciation | Net | Net | ||||||||||||||||
Land | 5,704 | - | 5,704 | 5,704 | 5,704 | - | 5,704 | 5,704 | |||||||||||||||
Installations, furniture and fixtures | 115,485 | (69,725) | 45,760 | 46,271 | 127,293 | (75,702) | 51,591 | 51,482 | |||||||||||||||
Assets for rent | - | - | - | - | 27,383 | (27,383) | - | - | |||||||||||||||
Computer marchines and equipment | 558,596 | (292,079) | 266,517 | 288,707 | 604,730 | (326,427) | 278,303 | 299,734 | |||||||||||||||
Improvements in third-party properties | 83,518 | (47,815) | 35,703 | 43,001 | 86,312 | (54,470) | 31,842 | 34,438 | |||||||||||||||
Construction in progress | 8,745 | - | 8,745 | 402 | 19,584 | - | 19,584 | 15,417 | |||||||||||||||
Vehicles | 45 | (4) | 41 | 46 | 7,762 | (6,651) | 1,111 | 650 | |||||||||||||||
Others | 4 | (4) | - | - | 597 | (156) | 441 | 441 | |||||||||||||||
772,097 | (409,627) | 362,470 | 384,131 | 879,365 | (490,789) | 388,576 | 407,866 | ||||||||||||||||
Movement of fixed assets in the quarter: | |||||||||||||||||||||||
Parent | Consolidated | ||||||||||||||||||||||
Company | |||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net balances at the beginning of the quarter | 384,131 | 414,417 | 407,866 | 435,499 | |||||||||||||||||||
Additions | 10,659 | 3,668 | 16,401 | 5,634 | |||||||||||||||||||
Write-offs | (4,783) | (50) | (5,126) | (65) | |||||||||||||||||||
Depreciation | (27,537) | (27,312) | (30,565) | (29,780) | |||||||||||||||||||
Net balances at the end of the quarter | 362,470 | 390,723 | 388,576 | 411,288 | |||||||||||||||||||
In accordance with Technical Pronouncement CPC 01 (IAS 36), items of property, plant and equipment, which show signs that their recorded costs are higher than their recovery values, are reviewed annually to determine the need for a provision to reduce the balance book value at its realization value. Management did not identify changes in circumstances or signs of technological obsolescence, nor evidence that its assets used in its operations are not recoverable in view of its operational and financial performance and concluded that, as of June 30, 2020 and December 31, 2019, there was no need to record any provision for loss on property, plant and equipment.
47
15 | Intangible assets | |||||||||||||||
Parent Company | Consolidated | |||||||||||||||
June 30, 2020 | December 31, | June 30, 2020 | December 31, | |||||||||||||
2019 | 2019 | |||||||||||||||
Accumulated | Accumulated | |||||||||||||||
Cost | amortization | Net | Net | Cost | amortization | Net | Net | |||||||||
Goodwill on investment acquisitions (a) | 135,305 | (53,866) | 81,439 | 81,439 | 645,232 | (62,449) | 582,783 | 552,958 | ||||||||
Right to use software | 374,827 | (212,176) | 162,651 | 54,277 | 450,507 | (263,205) | 187,302 | 77,308 | ||||||||
Right to use mining (c) | 16,500 | (9,570) | 6,930 | 7,590 | 16,500 | (9,570) | 6,930 | 7,590 | ||||||||
Web sites and systems development (b) | 4,104,256 | (1,803,032) | 2,301,224 | 2,342,635 | 4,119,888 | (1,818,269) | 2,301,619 | 2,343,804 | ||||||||
BLOCKBUSTER Online brand license | 21,060 | (21,060) | - | - | 21,060 | (21,060) | - | - | ||||||||
Others | 955 | - | 955 | 955 | 12,812 | (5,135) | 7,677 | 9,195 | ||||||||
4,652,903 | (2,099,704) | 2,553,199 | 2,486,896 | 5,265,999 | (2,179,688) | 3,086,311 | 2,990,855 | |||||||||
Movement of intangible assets during the semester:
Parent company | Consolidated | ||||||
June 30, | June 30, | June 30, | June 30, | ||||
2020 | 2019 | 2020 | 2019 | ||||
Net balanced at beginning of the semester | 2,486,896 | 2,462,235 | 2,990,855 | 2,966,256 | |||
Additions | 267,036 | 221,292 | 267,944 | 221,331 | |||
Capitalization of interest (i) | 13,800 | 18,053 | 13,800 | 18,053 | |||
Write-offs | - | - | (63) | - | |||
Goodwill on acquisition of companies | - | - | 30,269 | - | |||
Amortization | (214,533) | (189,828) | (216,494) | (191,284) | |||
Net balanced at end of the semester | 2,553,199 | 2,511,752 | 3,086,311 | 3,014,356 | |||
(i) the weighted average CDI rate on loans taken out by the Company in the semester ended on June 30, 2020 and June 30, 2019 was 144.9% and 125.9%, respectively.
48
-
Goodwill on acquisition of investments
The Company annually evaluates impairment, with the latest assessment conducted upon the closing of the year ended December 31, 2019. This goodwill calculated from investments and mergers stemming from the expectation of future profitability, based on the projections of future period earnings for 10 years, using a pre-tax discount rate of 9.4% to discount future estimated cash flows, plus more or less of the assets and liabilities in a business combination.
The business model adopted by the Company corresponds to a vertical structure, as a result, the consolidated balances represent, in a more adequate way, the only cash generating unit (CGU), see note 2.3, which is considered for the impairment test, therefore, there is no impact on the possible negative results of the investees.
The goodwill balances determined on acquisition of equity interests are supported by technical appraisals based on expected future profitability. The company monitored the assumptions used and did not identify loss indicators nor the necessity of a new evaluation on June 30, 2020.
As of June 30, 2020 and December 31, 2019, the goodwill from the acquisition of investments was represented as follows:
Parent | Consolidated | |||||||||||||||
Company | ||||||||||||||||
December | December | |||||||||||||||
June 30, | 31, | June 30, | 31, | |||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Cost | Accumulated | Net | Net | Cost | Accumulated | Net | Net | |||||||||
Amortization | Amortization | |||||||||||||||
Goodwill in | ||||||||||||||||
investment | ||||||||||||||||
acquisition | ||||||||||||||||
TV Sky Shop | 135,305 | (53,866) | 81,439 | 81,439 | 135,305 | (53,866) | 81,439 | 81,439 | ||||||||
SuperNow | - | - | - | - | 30,269 | - | 30,269 | - | ||||||||
BIT Services | - | - | - | - | 264,881 | (8,276) | 256,605 | 257,049 | ||||||||
Mesaexpress | - | - | - | - | 310 | (307) | 3 | 3 | ||||||||
Click Rodo | - | - | - | - | 19,426 | - | 19,426 | 19,426 | ||||||||
Direct | - | - | - | - | 195,038 | - | 195,038 | 195,038 | ||||||||
BFF Logística | - | - | - | - | 3 | - | 3 | 3 | ||||||||
135,305 | (53,866) | 81,439 | 81,439 | 645,232 | (62,449) | 582,783 | 552,958 | |||||||||
- Development of websites and systems
Represents expenses with e-commerce platform (development of technological infrastructure, content, applications and graphic layout of sites), expenses with ERP system implementation and development of own systems, being amortized in a linear way considering the stipulated period of use and benefits earned.
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, as well as implementing new operating functions for the Company.
The Company used the same assumptions in item (a) above for the impairment test of intangible assets and did not identify the need for a provision for recoverability of assets. - Right of use mining
The Company reacquired from LASA the amount of R$ 16,500 related to the use of mining in telecommunication means (internet, teleshopping, among others), resulting from the finalization of the partnership between LASA and Itaú Unibanco Holding SA and recorded the said amount as an intangible asset.
49
16 Lease Assets and Liabilities
As of June 30, 2020, the Group has contracts classified as leases for their commercial, logistics and administrative units.
The measurement of the cost of the right to use real estate assets corresponds to the net value of the lease liability, calculated on the lease provided for in the contracts, discounted to present value at the projected rates and terms provided for in these lease agreements, this being the non-cancellable period and covered by the option to extend the lease, if the Group is reasonably certain to exercise this option. The monthly depreciation of the right to use real estate assets is calculated, on a straight-line basis, over the term provided for in the contract, regardless of the renewal clause in accordance with the Group's internal policies.
In order to calculate the cost of the right to use real estate assets and the value of the lease liability, the Group used the nominal incremental interest rate to discount the actual flow of payments to present value.
Below we present the assets to the right-of-use assets and the corresponding obligations:
- Right of use assets - Leasing Companies
Parent Company | Consolidated | ||||||||||||||
June 30, 2020 | December 31, | June 30, 2020 | December 31, | ||||||||||||
2019 | 2019 | ||||||||||||||
Accumulated | Accumulated | ||||||||||||||
Cost | Depreciation | Net | Net | Cost | Depreciation | Net | Net | ||||||||
Right of use assets 311,110 | (86,672) | 224,438 | 210,796 | 356,357 | (103,983) | 252,374 | 252,158 | ||||||||
311,110 | (86,672) | 224,438 | 210,796 | 356,357 | (103,983) | 252,374 | 252,158 | ||||||||
Movement of the right-of-use assets of the leases during the semester:
Parent Company | Consolidated | ||||||
June 30, | June 30, | June 30, | June 30, | ||||
2020 | 2019 | 2020 | 2019 | ||||
Net balance at of beginning of the semester | 210,796 | 197,783 | 252,158 | 244,241 | |||
Additions/ Write-offs | 57,279 | - | 51,876 | - | |||
Depreciation | (43,637) | (27,915) | (51,660) | (34,992) | |||
Net balances at the end of the semester | 224,438 | 169,868 | 252,374 | 209,249 | |||
(b) | Leases payable | |||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Leases payable | 296,278 | 291,175 | 332,496 | 347,137 | ||||
Interest on leasing | (41,114) | (51,268) | (45,000) | (57,742) | ||||
255,164 | 239,907 | 287,496 | 289,395 | |||||
Current portion | 64,577 | 62,062 | 77,336 | 79,648 | ||||
Noncurrent portion | 190,587 | 177,845 | 210,160 | 209,747 |
50
Movement on leases in the semester:
Net balance at beginning of semester Additions/ Write-offs
Payments (*)
Appropriate interest
Net balances at the end of the semester
Parent Company | Consolidated | |||||
June 30, | June 30, | June 30, | June 30, | |||
2020 | 2019 | 2020 | 2019 | |||
239,907 | 227,583 | 289,395 | 279,715 | |||
54,507 | - | 45,825 | - | |||
(50,291) | (34,707) | (60,047) | (42,849) | |||
11,041 | 8,725 | 12,323 | 10,724 | |||
255,164 | 201,601 | 287,496 | 247,590 |
- - The Company, in accordance with the Technical Pronouncements Review No. 16/2020, issued by the Accounting Pronouncements Committee, which exceptionally authorizes changes due to benefits obtained in lease agreements related to Covid -19, recognized in the income for the year the amount of R $ 1,064 in the parent company and in the consolidated, originating from the fixed installments of the contracts negotiated with the tenants.
- Commmitments assumed - Lease agreements
The Group maintains a Private Instrument of Rental Agreement for Commercial Property and Other Covenants for all their properties, with short and long term maturities, whose rent is updated annually based mainly on the IGP-M and IPC-A.
According to CPC 06 (R2) / IFRS 16, lease liabilities were recorded as lease liabilities under contracts with a validity of more than 12 months. The rent corresponding to short-term contracts continues to be recognized, by competence, as occupancy expense.
In the semester ended June 30, 2020, the Group incurred rental expenses on short-term contracts and other related to real estate in the amount of R$ 1,696. Future commitments related to these contracts total R$ 1,841.
17 Suppliers
Merchandise Suppliers of Goods and others
Commercial agreements
Adjustment to present value (note 2.4)
Parent Company | Consolidated | |||||
June 30, | December 31, | June 30, | December 31, | |||
2020 | 2019 | 2020 | 2019 | |||
3,235,780 | 2,985,104 | 3,302,735 | 3,078,444 | |||
(289,241) | (304,121) | (289,241) | (304,121) | |||
(17,047) | (15,741) | (17,047) | (15,741) | |||
2,929,492 | 2,665,242 | 2,996,447 | 2,758,582 | |||
Trade agreements are receivable, defined in partnership agreements signed with suppliers. In financial operations, when provided for in a commercial agreement, settlements are made upon the payment of invoices to suppliers at the net amount.
51
18 Borrowings and financing
- Composition
Parent Company | Consolidated | |||||||||||
June 30, | December 31, | June 30, | December 31, | |||||||||
Object | Annual Charges | Final Maturity | 2020 | 2019 | 2020 | 2019 | ||||||
In National currency | ||||||||||||
Working capital | 114.0% CDI to 124.0% CDI | 12.20.2027 | 4,168,882 | 4,340,300 | 4,235,721 | 4,407,439 | ||||||
Working capital | CDI + 3.7% to CDI +4.3% | 05.27.2022 | 958,017 | 958,017 | ||||||||
BNDES (i) | TJLP to TJLP + 2.9% p.a | 09.15.2022 | 7,263 | 8,816 | 7,263 | 8,816 | ||||||
BNDES (i) | TLP to TLP +2.5% p.a. | 06.15.2026 | 437,039 | 459,194 | 437,039 | 459,194 | ||||||
BNDES (i) | SELIC +2.5% p.a. to 2.9% p.a | 06.15.2026 | 44,575 | 48,333 | 44,575 | 48,333 | ||||||
BNDES (i) | PSI 6.0% p.a. | 09.15.2021 | 206 | 358 | 206 | 358 | ||||||
FINEP (iv) | 4.0% p.a. | 12.15.2020 | 28,352 | 56,732 | 28,352 | 56,732 | ||||||
FINEP (iv) | TJLP + 3.0% p.a. | 05.15.2024 | 50,502 | 57,003 | 50,502 | 57,003 | ||||||
Shares FIDC (v) | 106.5% of CDI | 02.14.2024 | 401,282 | 448,982 | 401,282 | 448,982 | ||||||
In foreign currency (iii) | ||||||||||||
Working capital (ii) | US$ + 5.879% p.a. | 08.27.2021 | - | 314,579 | - | 314,579 | ||||||
Swap operations (ii) | 118.9% CDI | 08.27.2021 | - | (8,949) | - | (8,949) | ||||||
Working capital (ii) | € + 2.1% to 2.3% a.a. | 01.18.2023 | 701,208 | 488,191 | 701,208 | 488,191 | ||||||
Swap operations (ii) | 121.9% CDI to 122.6% CDI | 01.18.2023 | (194,425) | 22,740 | (194,425) | 22,740 | ||||||
Cost funding (IOF and others) | (80,056) | (69,256) | (80,960) | (70,292) | ||||||||
6,522,845 | 6,167,023 | 6,588,780 | 6,233,126 | |||||||||
Current portion | 899,161 | 1,300,545 | 899,242 | 1,320,955 | ||||||||
Non-current portion | 5,623,684 | 4,866,478 | 5,689,538 | 4,912,171 | ||||||||
- BNDES financing related to the FINEM program (investments in information technology, implementing a distribution center, acquisition of machinery and equipment and investments in social projects), PEC (Working Capital), BNDES Automatic and "Connected Citizens - Computers for Everyone" programs.
- Foreign currency operations are protected against changes in exchange rates by the use of financial instruments known as swaps (note 4).
- Funding consistent with Resolution 4.131 of the Brazilian Central Bank (BACEN).
- Financing of FINEP with the objective of investing in projects of research and development of technological innovations.
- Represents the balance of the shares issued by the Fênix-FIDC (note 7 (a)).
52
- Movement
Parent Company | Consolidated | |
At December 31, 2019 | 6,167,023 | 6,233,126 |
Funding | 1,103,285 | 1,103,307 |
Principal amortization | (718,255) | (718,124) |
Interest amortization | (165,147) | (166,866) |
Financial charges | 135,939 | 137,337 |
At June 30, 2020 | 6,522,845 | 6,588,780 |
- Borrowing and long-term financing by maturity date
Parent Company | Consolidated | ||||||
June 30, | December 31, | June 30, | December 31, | ||||
2020 | 2019 | 2020 | 2019 | ||||
2021 | 38,245 | 419,680 | 38,245 | 419,680 | |||
2022 | 584,330 | 266,960 | 630,186 | 266,960 | |||
2023 | 1,400,637 | 578,361 | 1,420,635 | 624,054 | |||
2024 | 3,232,348 | 3,232,918 | 3,232,348 | 3,232,918 | |||
2025 | 88,413 | 89,127 | 88,413 | 89,127 | |||
2026 | 64,857 | 64,624 | 64,857 | 64,624 | |||
2027 | 214,854 | 214,808 | 214,854 | 214,808 | |||
5,623,684 | 4,866,478 | 5,689,538 | 4,912,171 | ||||
The Company is subject to certain debt restriction clauses (Debt Covenants and Cross Default) included in some loan and financing agreements. These clauses include, among others, the maintenance of certain financial ratios, calculated based on the consolidated financial statements disclosed by its parent company. As of June 30, 2020 and December 31, 2019, all indexes were met.
-
Guarantees
Borrowings and financing in the Parent Company and in the Consolidated are guaranteed by letters of credit of R$ 567,937 on June 30, 2020 (R$ 630,436 on December 31, 2019). - Available credit lines
As of June 30, 2020, the Group had credit lines with several institutions in order to use them at the times necessary to drive the Company's organic growth.
19 Debentures
- Composition (Parent Company and Consolidated)
Value at | Annual | |||||||
Maturity | Type of | Bonds | Issue | Financial | ||||
Issue Date | (i) | issue | outstanding | date | Charges | June | December | |
30, 2020 | 31, 2019 | |||||||
1st Private issue | 12.22.2010 | 12.22.2022 | Private | 200,000 | 1,000 | 125.0% CDI | 204,614 | 200,214 |
53
(b) | Movement | |
1st Private issue | ||
At January 1, 2019 | 200,246 | |
Financial charges | 7,724 | |
At June 30, 2019 | 207,970 | |
Interest amortization | (15,130) | |
Financial charges | 7,374 | |
At December 31, 2019 | 200,214 | |
Financial charges | 4,400 | |
At June 30, 2020 | 204,614 | |
- Information about issues of debentures
Below are the descriptions of the issued debentures which remain in effect as of June 30, 2020.
Nature
Date of issue Date of maturity Amount issued Unitary value
Annual financial charges Convertibility
Type and form
Amortization of principal value Payment of compensatory interest Guarantees
Renogiation
1st Private issue
12.22.2010
12.22.2022
200
R$ 1,000
125.0% CDI
simple, non convertible to shares nominative and book-entry
At date of payment
December 22 of each year (2011 to 2022) N/A
Allowed, if agrren between issuer and debenture holder
20 Accounts Payable - Combination of Businesses
In order to expand its business and in accordance with the strategic plan, the Company acquired companies with operations related to digital services. On January 13, 2020, the Company added SuperNow Portal e Serviços de Internet Ltda (note 13(c)). Between 2013 and 2015, 19 companies were acquired, operating in the areas of systems development, e-commerce operations and services, customer and product intelligence consulting, and two of the leading e-commerce specialized carriers in Brazil. As of June 30, 2020 the balance payable related to the acquisitions of these companies in the parent company and in the consolidated is R$ 13,835 and R$ 21,222, respectively.
Current | ||||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
BIT Services | - | - | 7,387 | 8,092 | ||||
SuperNow | 1,182 | - | 1,182 | - | ||||
1,182 | - | 8,569 | 8,092 | |||||
Non Current | ||||||||
Parent Company | Consolidated | |||||||
54
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
SuperNow | 12,653 | - | 12,653 | - | ||||
12,653 | - | 12,653 | - | |||||
21 | Taxes and contributions | |||||||
Parent Company | Consolidated | |||||||
June 30, | December 31, | June 30, | December 31, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Taxes on goods and services (ICMS) | 37,411 | 69,293 | 42,306 | 76,634 | ||||
Witholding Income Tax (IRRF) | 1,563 | 993 | 1,690 | 1,140 | ||||
Service tax (ISS) | 4,640 | 5,501 | 5,592 | 6,668 | ||||
Social integration program (PIS) and | ||||||||
Contribution for the social security fund | ||||||||
(COFINS) | 25,141 | 8,081 | 38,686 | 15,951 | ||||
Tax on industrialized products (IPI) | - | - | 8 | 1,033 | ||||
Others | 1,724 | 1,356 | 10,058 | 5,504 | ||||
70,479 | 85,224 | 98,340 | 106,930 | |||||
22 Provision for lawsuits and contingencies
- Provisions constituted
Parent Company | Consolidated | ||||||
June 30, | December 31, | June 30, | December 31, | ||||
2020 | 2019 | 2020 | 2019 | ||||
Tax | 3,569 | 3,515 | 32,410 | 32,355 | |||
Labor | 17,654 | 16,169 | 74,212 | 72,639 | |||
Civil | 37,166 | 36,371 | 44,588 | 43,704 | |||
58,389 | 56,055 | 151,210 | 148,698 |
Tax
Refer mainly to tax assessment notices issued for collection of supposed ICMS debt.
Labor
The Group are also parties to lawsuits involving labor. None of these lawsuits refers to individually significant amounts, and the lawsuits mainly involve claims for overtime, among others.
Cívil
The Company is a party, together with its subsidiaries, in lawsuits arising from the normal course of its operations and its subsidiaries, primarily related to consumers, accounting, on June 30, 2020, for the amount shown as contingent liability related to these issues. None of these lawsuits refers to individually significant amounts.
- Contingent liabilities not provided
55
On June 30, 2020, the Group had administrative and legal demands of a fiscal, civil and labor nature, classified as "possible loss" by the legal advisors, and, for this reason, no provision was made. The approximate amount of the lawsuits is R$ 786,933 (R$ 824,225 on December 31, 2019) in the parent company and R$ 1,120,124 (R$ 1,148,198 on December 31, 2019) in the consolidated.
The main variations that occurred in the semester are basically due to monetary updates and prospects for new and existing processes, which are in accordance with the criteria and with the information disclosed in the Financial Statements of December 31, 2019.
23 Shareholder's equity
-
Capital
On June 30, 2020, the share capital represented 524,654,065 common, registered shares with no par value (523,229,262 shares as of December 31, 2019).
The shareholding composition of the Company's capital as of June 30, 2020 and December 31, 2019 is as follows:
June 30, | December 31, | ||||||||
2020 | 2019 | ||||||||
Lojas Americanas S.A | 321,376,659 | 321,376,659 | |||||||
Macquarie Group Limited | 27,699,048 | 27,699,048 | |||||||
Management | 7,928,339 | 7,168,400 | |||||||
Other shareholders ("free floating") | 167,650,019 | 166,985,155 | |||||||
524,654,065 | 523,229,262 | ||||||||
Lojas Americanas S.A. | 61.25% | 61.42% | |||||||
Non-controlling | 38.75% | 38.58% | |||||||
(b) | Changed in capital | ||||||||
Number of shares, with no par value. | |||||||||
Common | Balance | ||||||||
nominal | (thousands of reais) | ||||||||
At December 31, 2019 | 523,229,262 | 8,289,558 | |||||||
Subscription of shares through an Stock Option Plan | 1,424,803 | 36,020 | |||||||
At June 30, 2020 | 524,654,065 | 8,325,578 |
At Board of Director meetings, held on May 21 and June 30, 2020, the capital increase was approved with the issue of 1,242,908 and 181,895 common shares, respectively, largely paid for by capitalization of reserves, granted under the terms of the Shares approved by the General Meeting of August 31, 2011.
24 Share-based payment
Remuneration costs arising from the Company's share-based payment plan for the period ended June 30, 2020 were R$ 8,706 (R$ 10,899 at June 30, 2019). The compensation costs are recorded in equity in capital reserve - reserve of recognized options granted, since the options, when exercised, are settled through the issuance of new shares or the use of shares held in treasury. The remuneration cost corresponds to the fair value of the B2W Plan, calculated on the grant date, recorded during the service provision period that begins on the grant date until the date on which the beneficiary acquires the right to exercise the option.
56
The compensation costs of the Plan to be recognized by the Company for the remaining period of service rendering to occur based on the assumptions used total approximately R$ 26,054 on June 30, 2020 (R$ 33,717 on December 31, 2019).
Based on the shareholding composition of the capital stock on June 30, 2020, the maximum percentage of share dilution to which the current shareholders of the Company will eventually be subjected in case of exercise of all options granted is less than 1%.
25 | Sales and Services Revenue | |||||||
Parent Company | Consolidated | |||||||
June 30, | June 30, | June 30, | June 30, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Gross sales revenue | 4,074,451 | 2,990,755 | 4,128,589 | 3,045,100 | ||||
Gross services revenue | 1,087,883 | 590,184 | 1,189,991 | 678,094 | ||||
Unconditional returns/discounts | (189,101) | (258,471) | (192,871) | (271,261) | ||||
(-) Sales/services tax | (948,573) | (653,233) | (995,805) | (691,544) | ||||
Net Revenue | 4,024,660 | 2,669,235 | 4,129,904 | 2,760,389 |
26 Expenses by nature
The Group opted to present its income statements for the semester ended on June 30, 2020 and June 30, 2019 by function and presents the breakdown by nature below:
Parent Company | Consolidated | |||||||
June 30, | June 30, | June 30, | June 30, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Selling | ||||||||
Staff | (126,646) | (124,908) | (134,562) | (134,709) | ||||
Occupation | (4,086) | (12,558) | (7,273) | (16,507) | ||||
Supplies | (12,466) | (9,095) | (13,669) | (10,375) | ||||
Fees and commissions | (165,853) | (102,864) | (166,684) | (102,864) | ||||
Distribution | (162,421) | (130,472) | (10,459) | (11,327) | ||||
Others (i) | (367,622) | (185,186) | (379,974) | (194,119) | ||||
Total Selling Expenses | (839,094) | (565,083) | (712,621) | (469,901) | ||||
General and administrative | ||||||||
Staff | (36,986) | (34,556) | (44,720) | (47,973) | ||||
Occupation | (1,120) | (1,354) | (4,027) | (3,358) | ||||
Management fees | (4,684) | (4,221) | (4,684) | (4,221) | ||||
Depreciation and amortization | (285,707) | (245,055) | (296,806) | (254,554) | ||||
Others (ii) | (23,924) | (12,360) | (56,134) | (26,532) | ||||
Total General and Administrative expenses | (352,421) | (297,546) | (406,371) | (336,638) | ||||
Other operating income (expenses) | (32,429) | (26,705) | (36,089) | (24,247) | ||||
- The increase refers mainly to investments in online and offlline media and outsourced customer service related to the Company's growth.
- Refers mainly to attorney's fees, advisory and consultancy services and legam indemnities.
27 | Financial result | |||||||
Parent Company | Consolidated | |||||||
June 30, | June 30, | June 30, | June 30, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Interest and monetary variation on securities | 99,821 | 138,944 | 102,857 | 143,598 | ||||
Financial discounts obtained | 1,064 | - | 1,164 | 1,365 | ||||
Adjustment to present value of account receivable | 80,787 | 96,403 | 80,787 | 96,403 | ||||
Other finance income | 45 | 132 | 69 | 430 |
57
Total financial income | 181,717 | 235,479 | 184,877 | 241,796 | ||||
Interest and monetary variation of financing and | ||||||||
prepayment of receivables | (303,495) | (455,866) | (305,726) | (459,090) | ||||
Adjustment to present value of suppliers | (69,558) | (69,745) | (69,558) | (69,745) | ||||
Other financial expenses | (17,558) | (10,041) | (21,616) | (16,753) | ||||
Total financial expense | (390,611) | (535,652) | (396,900) | (545,588) | ||||
Lease charges | (11,041) | (8,725) | (12,323) | (10,724) | ||||
Financial result | (219,935) | (308,898) | (224,346) | (314,516) |
28 Losses per share
The calculation of the basic loss per share was based on the net loss attributed to the holders of common shares and the weighted average number of common shares outstanding.
The calculation of the diluted loss per share was based on the net loss attributed to the holders of common shares and the weighted average number of common shares outstanding after the adjustments for all potential dilutive common shares.
Parent Company | ||||
June 30, | June 30, | |||
2020 | 2019 | |||
Numerator | ||||
Loss for the semester | (182,565) | (266,810) | ||
Denominator (in thousands of shares) basic | ||||
Weighted average number of common shares in circulation | 523,502 | 457,281 | ||
Basic losses per share | (0.3487) | (0.5835) | ||
Denominator (in thousands of shares) diluted | ||||
Weighted average number of common shares in circulation | 529,069 | 464,780 | ||
Diluted losses per share | (0.3451) | (0.5741) |
29 Employee and management remuneration
In the semester ended June 30, 2020 and June 30, 2019, the total compensation (salaries, bonuses and payment based on shares) of the directors, officers and main executives of the Company was R$ 15,278 and R$ 14,950, with remunerations falling within the limits approved in the corresponding Shareholders' Meetings.
30 Subsequent events
At a meeting of the Board of Directors, held on July 21, 2020, the capital increase of R$ 4 billion was approved, through the private issue of 34,782,609 common shares, nominative and without par value, at the issue price of R$
115.00 per share, to be fully allocated to the corporate capital. The payment of the subscribed shares will be made in local currency in the subscription Act.
The parent company, Lojas Americanas, in a meeting of the Board of Directors held on 07/21/2020, committed to exercise the right to subscribe the Company's shares, in proportion to its ownership participation, as well as to subscribe up to the totality of the eventual balance of shares not subscribed in the scope of the capital increase.
* * *
58
Attachments
- Original document
- Permalink
Disclaimer
B2W - Companhia Digital SA published this content on 13 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 August 2020 07:47:22 UTC