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Lojas Americanas S.A. Consolidated interim financial statements – ITR at March 31, 2019 and independent auditors’ report
Lojas Americanas S.A. Financial statements – ITR at
March 31, 2019 and independente auditors’ report on quarterly information
KPMG Auditores Independentes
Rua do Passeio, 38 - Setor 2 - 17º andar - Centro
20021-290 - Rio de Janeiro/RJ - Brasil
Caixa Postal 2888 - CEP 20001-970 - Rio de Janeiro/RJ - Brasil
Telefone +55 (21) 2207-9400, Fax +55 (21) 2207-9000
www.kpmg.com.br
Independent auditor´s report on review of condensed consolidated interim financial statements
To Management and Stockholders of Lojas Americanas S.A. Rio de Janeiro - RJ Introduction
We have reviewed the accompanying condensed parent companyi and consolidated interim
financial statements of Lojas Americanas S.A. (“Company”), identified as parent company and
consolidated, respectively, included in the interim financial statements form - ITR for the period
ended March 31, 2019, which comprises the condensed statement of financial position as at
March 31, 2019, the condensed statements of profit or loss and other comprehensive income
(loss), condensed changes in equity and condensed cash flows for the three-month period then
ended, including explanatory notes.
The Company’s Management is responsible for the preparation of these condensed interim financial statements in accordance with the Accounting Pronouncement CPC 21(R1) and the IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of interim information - ITR. Our responsibility is to express our conclusion on this interim financial statements based on our review.
Scope of the review
We conducted our review in accordance with Brazilian and International Interim Information
Review Standards (NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo
Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information Performed by the
Independent Auditor of the Entity, respectively). A review of interim financial statements consists
of making inquiries primarily of the management responsible for financial and accounting
matters and applying analytical procedures and other review procedures. The scope of a review
is significantly less than an audit conducted in accordance with auditing standards and,
accordingly, it did not enable us to obtain assurance that we were aware of all the significant
matters that could have been identified in an audit. Therefore, we do not express an audit
opinion.
Conclusion on the parent company interim condensed financial statements Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company interim condensed financial statements is not prepared, in all material respects in accordance with the Accounting Pronouncement CPC 21(R1) applicable to
Lojas Americanas S.A. Financial statements – ITR at
March 31, 2019 and independente auditors’ report on quarterly information
3
the preparation of the interim financial statements - ITR and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.
Conclusion on the consolidated interim accounting information Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements is not prepared, in all material respects, in accordance with the Accounting Pronouncement CPC 21(R1) and IAS 34 - Interim Financial Reporting, issued by the IASB, and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission. Other matters
Statements of value added We also reviewed the individual and consolidated Statements of value added (DVA) for the three-month period ended March 31, 2019, prepared under the responsibility of Company’s Management, for which presentation is required in the interim information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of interim financial statements - ITR, and considered as supplementary information by IFRS, which does not require the presentation of the statements of value added. These statements were submitted to the same review procedures described previously and, based on our review, we are not aware of any fact that might lead us to believe that they were not prepared, in all material respects, in accordance with the individual and consolidated interim accounting information, taken as a whole.
Rio de Janeiro, May 02, 2019 KPMG Auditores Independentes CRC SP-014428/O-6 F-RJ Carla Bellangero
Accountant CRC 1SP196751/O-4
Lojas Americanas S.A. Balance Sheet Year ended March 31, 2019 and 2018 In thousands of reais, except net earnings per share
4
Parent Company Consolidated Parent Company Consolidated
03/31/2019 12/31/2018 03/31/2019 12/31/2018 03/31/2019 12/31/2018 03/31/2019 12/31/2018
ASSETS LIABILITIES
CURRENT CURRENT
Cash and cash equivalents 3,980,514 3,693,154 7,725,360 6,813,846 Suppliers 2,861,356 2,967,313 4,698,474 4,973,577
Marketable securities and other financial assets 1,347,342 1,227,258 4,616,139 3,295,849 Leasing to pay 280,138 - 350,671 -
Clients accounts receivable 1,271,170 1,713,390 1,695,657 1,870,081 Loans and financing 626,030 1,080,543 2,302,472 1,807,611
Inventories 2,954,159 2,626,906 3,795,014 3,506,678 Debentures 577,677 483,243 577,677 483,243
Recoverable taxes 349,442 404,919 808,076 906,836 Payroll and related charges 89,477 93,896 145,691 152,235
Dividends receivable 343 343 - - Taxes payable 109,970 123,108 156,312 181,304
Prepaid expenses 45,900 21,743 79,648 59,036 Income tax and currents social contribution - 127,063 5,137 144,643
Other accounts receivable 506,424 616,979 919,390 1,061,295 Dividends and participations proposed 126,215 126,215 126,215 126,215
Provisions for contingencies 29,776 33,650 29,776 33,650
Accounts payable - business combination - - 1,229 1,534
Other current liabilities 164,830 157,077 480,708 498,736
Total current assets 10,455,294 10,304,692 19,639,284 17,513,621
4,865,469 5,192,108 8,874,362 8,402,748
NON-CURRENT ASSETS
Long-term assets: NON-CURRENT
Marketable securities and other financial assets 52,980 - 41,417 -
Loans and advances to subsidiaries companies 14,538 20,971 - - Long term liabilities:
Receivables from stockholders - Stock Option Plan 51,464 51,008 51,464 51,008 Accounts payables to subsidiaries companies 27,016 60,399 - -
Deferred income tax and social contribution 113,927 26,369 1,361,352 1,197,780 Leasing to pay 1,551,369 - 1,744,769 -
Escrow deposits 321,965 320,490 414,163 404,679 Loans and financing 3,185,284 3,235,525 10,601,467 9,156,453
Recoverable taxes 433,063 400,231 1,762,338 1,655,755 Debentures 5,230,815 4,233,530 5,230,815 4,233,530
Other non-current - - 70,872 70,872 Taxes payable - - 251 251
Provisions for contingencies 55,182 59,723 203,988 211,677
Provisions for loss on investiments 12,396 11,590 - -
Accounts payable - business combination - - 7,909 7,788
Other non-current liabilities - - 5,113 6,084
10,062,062 7,600,767 17,794,312 13,615,783
SHAREHOLDER'S EQUITY
Social capital 3,957,961 3,957,961 3,957,961 3,957,961
Capital reserves 147,354 134,856 147,354 134,856
Goodwill on capital transactions (20,127) (20,127) (20,127) (20,127)
Investments 2,868,235 2,959,712 - - Profit reserves 643,964 865,667 643,964 865,667
Property, plant and equipment 3,288,562 3,211,642 3,712,475 3,647,720 Treasury shares (44,545) (44,545) (44,545) (44,545)
Intangible assets 433,845 422,357 3,795,926 3,763,221 Adjustment of equity valuation 31,442 30,785 31,442 30,785
Right to use real state 1,556,223 - 1,782,968 - Profit/loss for the period (53,484) - (53,484) -
4,662,565 4,924,597 4,662,565 4,924,597
Minority interest - - 1,301,020 1,361,528
Total non-current assets 9,134,802 7,412,780 12,992,975 10,791,035 Total shareholders' equity 4,662,565 4,924,597 5,963,585 6,286,125
TOTAL ASSETS 19,590,096 17,717,472 32,632,259 28,304,656 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 19,590,096 17,717,472 32,632,259 28,304,656
Lojas Americanas S.A. Income Statement Year ended March 31, 2019 and 2018 In thousands of reais, except net earnings per share
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03/31/2019 03/31/2018 03/31/2019 03/31/2018
NET REVENUE 2,300,879 2,574,743 3,552,302 4,021,686
Cost of goods and services rendered (1,413,602) (1,587,091) (2,325,143) (2,684,022)
GROSS PROFIT 887,277 987,652 1,227,159 1,337,664
OPERATING REVENUE (EXPENSES)
Selling expenses (381,385) (504,613) (591,652) (751,145)
General and administrative expenses (215,052) (132,451) (387,870) (274,493)
Other operating income (expenses) (9,387) (8,366) (20,737) (19,573)
(605,824) (645,430) (1,000,259) (1,045,211)
OPERATING INCOME BEFORE NET FINACIAL RESULT 281,453 342,222 226,900 292,453
Financial income 95,582 90,524 216,139 215,134
Financial expenses (328,678) (294,660) (601,247) (535,328)
Net Financial Result (233,096) (204,136) (385,108) (320,194)
Equity results of subsidiaries (82,608) (68,533) - -
Income (loss) for the exercise before income and
social contribution taxes (34,251) 69,553 (158,208) (27,741)
Income and social contribution taxes
. Current - (35,442) (4,443) (41,217)
. Deferred (19,233) (14,096) 55,569 45,094
Net income for the exercise (53,484) 20,015 (107,082) (23,864)
Net income attributable to:
Company's shareholders (53,484) 20,015 (53,484) 20,015
Interest of non-controlling shareholders - - (53,598) (43,879)
(53,484) 20,015 (107,082) (23,864)
Parent Company Consolidated
Lojas Americanas S.A. Comprehensive Income statement Year ended March 31, 2019 and 2018 In thousands of reais, except net earnings per share
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Parent Company Consolidated
03/31/2019 03/31/2018 03/31/2019 03/31/2018
Net income for the exercise (53,484) 20,015 (107,082) (23,864)
Items to be subsequently reclassified to the result
Currency variation in overseas investee 657 508 657 508
Total comprehensive result (52,827) 20,523 (106,425) (23,356)
Lojas Americanas S.A. Statement of changes in equity Parent company In thousands of reais
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Social capital
Subscription
of shares
plan reserve
Goodwill in
capital
transactions
Adjustment
of equity
valuation Legal
To new
ventures
Treasure
shares
Accumulated
profit Total
Balance as of 31 December, 2018 3,957,961 134,856 (20,127) 30,785 54,001 811,666 (44,545) - 4,924,597
Comprehensive income 657 657
Net income of the quarter (53,484) (53,484)
Stock option plan 12,498 12,498
IFRS 16 adjustment - leasing of real state (221,703) (221,703)
Balance as of March 31, 2019 3,957,961 147,354 (20,127) 31,442 54,001 589,963 (44,545) (53,484) 4,662,565
Capital reserve Profit reserve
Lojas Americanas S.A. Statement of changes in equity Consolidated In thousands of reais
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Social capital
Subscriptio
n of shares
plan
reserve
Goodwill in
capital
transactions
Adjustment
of equity
valuation Legal
To new
ventures Treasure shares
Accumulated
profit
Total before the
participation of
non controllers
Participation of
non controllers
shareholders Total
Balance as of December 31, 2018 3,957,961 134,856 (20,127) 30,785 54,001 811,666 (44,545) - 4,924,597 1,361,528 6,286,125
Comprehensive income 657 657 657
Net income of the quarter (53,484) (53,484) (53,598) (107,082)
Share purchase option plan 12,498 12,498 2,102 14,600
IFRS 16 adjustment - leasing of real state - (221,703) (221,703) (9,012) (230,715)
Balance as of March 31, 2019 3,957,961 147,354 (20,127) 31,442 54,001 589,963 (44,545) (53,484) 4,662,565 1,301,020 5,963,586
Capital reserve Profit reserve
Lojas Americanas S.A. Statement of Cash Flows – Indirect Method Year ended March 31, 2019 and 2018 In thousands of reais
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PARENT COMPANY CONSOLIDATED
03/31/2019 03/31/2018 03/31/2019 03/31/2018
Net income (loss) for the semester: (53,484) 20,015 (107,082) (23,864)
Adjustments to the net income:
Depreciation and amortization 114,041 105,385 223,723 211,961
Depreciation right to use real state 72,704 - 90,200 -
Residual and deferred value of fixed assets write-off 5,241 4,991 5,277 5,015
Equity accounting 82,608 68,533 - -
Income tax and social contribution current - 35,442 4,443 41,217
Income tax and social contribution diferred 19,233 14,096 (55,569) (45,094)
Interest on credits and debits 1,689 1,409 1,721 2,064
Interest and variations financing 206,390 159,450 343,117 290,962
Adjustment in provision for contingencies - - 3,208 1,661
Reversal of provision for contingencies (3,113) (2,647) (9,501) (3,497)
Stock option plan 9,138 9,138 14,600 11,707
Provision for doubtfull accounts - credit cards 56 49 2,568 609
Provision for losses in inventories (12,851) (15,564) (19,503) (15,808)
Others 26,222 382 15,084 14,000
Adjusted net income 467,874 400,679 512,286 490,933
Decrease (increase) in operating assets:
Clients accounts receivable 449,103 476,915 174,048 560,611
Inventories (265,311) 184,399 (289,907) 335,478
Recoverable taxes 22,645 83,383 3,736 (6,040)
Prepaid expenses (34,177) (32,596) (19,760) (27,817)
Escrow deposits (1,475) (14,572) (9,484) (21,753)
Other accounts receivable 109,848 98,965 141,905 45,585
280,633 796,494 538 886,064
Increase (decrease) in operating liabilities:
Suppliers (175,447) (647,646) (269,245) (1,094,699)
Payroll and related charges (4,419) 7,998 (6,544) 8,201
Taxes payable (16,189) (26,903) (28,213) (40,533)
Current income tax and social contribution (127,063) (125,191) (144,643) (131,654)
Contingencies payments (7,204) (6,568) (7,204) (6,568)
Operations with related parties (26,950) (95,625) - -
Interest settlement on loans and debentures (90,927) (132,578) (220,337) (227,007)
Interest over leasing right to use real state (33,949) - (39,472) -
Other accounts payable 7,753 (25,822) (18,541) (42,863)
(474,395) (1,052,335) (734,199) (1,535,123)
Net cash used by operating activities 274,112 144,838 (221,375) (158,126)
Cash Flow from Investing Activities
Marketable securities (189,794) 880,107 (1,375,773) 1,348,372
Plant, property and equipment (173,384) (188,366) (176,121) (190,523)
Intangible (34,306) (16,894) (142,100) (81,905)
Dividends received - 4,013 - -
Net cash provided (used) by investment activities (397,484) 678,860 (1,693,994) 1,075,944
Cash Flow from Financing Activities
Loans e financing (current and non-current):
Borrowings 4,578 - 2,738,426 1,000,000
Liquidations (482,397) (194,915) (784,312) (201,841)
(477,819) (194,915) 1,954,114 798,159
Debentures (current and non-current):
Borrowings 1,000,000 - 1,000,000 -
Liquidations - (500,000) - (500,000)
1,000,000 (500,000) 1,000,000 (500,000)
Leasing right to use real state (111,515) - (127,297) -
Accounts Receivables from stock option plan 66 72 66 72
Net cash provided by financing activities 410,732 (694,843) 2,826,883 298,231
Net increase in cash and cash equivalents 287,360 128,855 911,514 1,216,049
Cash and cash equivalents at the begining of the exercise 3,693,154 2,029,213 6,813,846 3,567,545
Cash and cash equivalents at the end of the exercise 3,980,514 2,158,068 7,725,360 4,783,594
Net increase in cash and cash equivalents 287,360 128,855 911,514 1,216,049
Lojas Americanas S.A. Statement of Added Value Year ended March 31, 2019 and 2018 In thousands of reais
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PARENT COMPANY CONSOLIDATED
03/31/2019 03/31/2018 03/31/2019 03/31/2018
REVENUES
Sales of goods and services 2,671,525 2,964,582 4,246,588 4,744,854
Other revenues 32,200 1,364 32,194 1,369
Reversal (provision) for doubtful accounts (12,057) (13,881) (19,255) (18,817)
2,691,668 2,952,065 4,259,527 4,727,406
INPUTS ACQUIRED FROM THIRD PARTIES
Costs of goods sold (include ICMS, PIS and COFINS) (1,600,850) (1,833,612) (2,733,662) (3,168,202)
Materials, energy, third party services and others (193,915) (179,370) (354,171) (354,593)
Others (13) (492) (103) (683)
(1,794,778) (2,013,474) (3,087,936) (3,523,478)
GROSS VALUE ADDED 896,890 938,591 1,171,591 1,203,928
DEPRECIATION AND AMORTIZATION (186,745) (105,385) (313,923) (211,961)
NET VALUE ADDED GENERATED BY THE COMPANY 710,145 833,206 857,667 991,967
ADDED VALUE RECEIVED AS TRANSFER
Equity in net income of subsidiaries (82,608) (68,533) - -
Financial income 95,582 90,524 216,139 215,134
Others 1,600 4,313 1,600 4,694
14,574 26,304 217,739 219,828
TOTAL ADDED VALUE PAYABLE 724,719 859,510 1,075,406 1,211,795
DISTRIBUTION OF ADDED VALUE
Personnel
- Direct remuneration (154,445) (148,680) (235,306) (221,886)
- Benefits (34,919) (31,481) (52,968) (49,062)
- FGTS (9,351) (8,372) (18,039) (15,290)
(198,715) (188,533) (306,312) (286,238)
Taxes, rates and contributions
- Federal (37,898) (38,481) 36,206 14,848
- State (166,288) (158,480) (252,604) (240,955)
- Municipal (11,621) (12,863) (15,211) (15,937)
(215,807) (209,824) (231,610) (242,044)
Compensation of third party capital
- Interest (328,678) (294,660) (601,247) (535,328)
- Rents (35,003) (146,478) (43,320) (172,049)
(363,681) (441,138) (644,567) (707,377)
Remuneration of own capital
- Distributed earnings (retained) 53,484 (20,015) 53,484 (20,015)
53,484 (20,015) 53,484 (20,015)
Interest of non-controlling shareholders - - 53,598 43,879
(724,719) (859,510) (1,075,406) (1,211,795)
Lojas Americanas S.A. Press Release 1Q19
____________________________________________________________________________
PARENT COMPANY´S GROSS REVENUE OF R$ 2.7 BILLION IN 1Q19 PARENT COMPANY´S EBITDA OF R$ 477.6 MILLION IN 1Q19
Rio de Janeiro, May 9th of 2019 – Lojas Americanas S.A. [B3: LAME3 (common) and LAME4 (preferred)], a company that operates in the environment of physical stores (traditional, express and convenience - Local) and digital platform (B2W Digital with the brands Americanas.com, Submarino, Shoptime and Sou Barato) announces today its results for the 1st quarter of 2019 (1Q19).The accounting information that serves as the basis for the comments that follow are presented in accordance with the international financial reporting standards (IFRS), and the rules issued by the Brazilian Securities Exchange Commission (CVM) and in Reais (R$). The comparisons refer to the 1st quarter of 2018 (1Q18) adjusted by the CPC 06 (R2)/IFRS 16 effects.
The table includes the CPC 06 (R2)/IFRS 16, as indicated in page 3 (accounting changes).
Easter Effect
In 2019, the Easter event occurred on April 21, therefore the sales related to the event remained concentrated in the second quarter, significantly influencing the comparisons of the 1Q19 in relation to the results and balance sheet in the 1Q18.
“Same Stores” Gross Revenue
The growth in “same stores” gross revenue was of 5.8% in 4M19.
Expansion: “85 anos em 5 – Somos Mais Brasil”
Opening of 15 stores in the 1Q19 (vs. 14 stores in 1Q18), finishing the quarter with 1,501 stores in 603 cities. In 2019, we will finish the plan with 800 new stores oppenings between 2015 and 2019.
+AQUI
Launch of a new channel for gift card acquisition and trade-in operation of old cellphones.
Convenience store: Local In the quarter we inaugurated 4 Local stores (vs. 2 stores in 1Q18).
O2O Initiatives (Online to Offline) The initiatives have been enhancing our customers' shopping experience, with increasingly surprising results. The physical and online experience enables us to lead the market by offering the best of both worlds. Over the past twelve months, more than 1.5 million customers have made purchases through these initiatives (Lojas Americanas in Marketplace, Pegue na Loja, Pegue na Loja Hoje and LASA Entrega).
IF – Innovation and Future o Ame reached the mark of 2.1 million downloads in 11 months of operation; o Ame expanded the operation to 657 Lojas Americanas throughout Brazil; o Ame launched new features and products in May/19: cash-in via invoice, interactive map and shop keeper portal; o Also in May/19 launched the personal credit product: the Ame client can contract loans (personal credit) by app in a simple, fast and 100% digital way, with the amount being credited directly to the Ame account.
B2W Digital B2W Digital announces the growth of 15.3% of GMV and reduction of R$ 92 MM in cash consumption in the 1Q19. B2W’s marketplace continues to grow rapidly and reached GMV of R$ 2.2 billion (+52.2%) in the 1Q19, with a stake of 61.2% in the Total GMV.
Adjusted EBITDA - Operating profit before interest, taxes, depreciation and amortization, other operating income/expenses, equity accounting,
minority/statutory interest.
1Q19 1Q18 Var. (%) Financial Highlights (R$ MM) 1Q19 1Q18 Var. (%)
2,671.5 2,964.6 -9.9% Gross Revenue 4,246.6 4,744.9 -10.5%
2,300.9 2,574.7 -10.6% Net Revenue 3,552.3 4,021.7 -11.7%
887.3 987.7 -10.2% Gross Profit 1,227.2 1,337.7 -8.3%
38.6% 38.4% +0.2 p.p. Gross Margin (%NR) 34.5% 33.3% +1.2 p.p.
477.6 558.0 -14.4% Adjusted EBITDA 560.8 638.8 -12.2%
20.8% 21.7% -0.9 p.p. Adjusted EBITDA Margin (%NR) 15.8% 15.9% -0.1 p.p.
-53.5 23.8 - Net Income -53.5 23.8 -
-2.3% 0.9% -3.2 p.p. Net Margin (%NR) -1.5% 0.6% -2.1 p.p.
Parent Company Consolidated
Lojas Americanas S.A. Press Release 3Q18
12
ACCOUNTING CHANGES
Since January 1, 2019, the Company's income statements reflect the new accounting practices implemented by CPC 06 (R2) / IFRS 16 - Leasing of Mercatile Operations, which introduced a single model for the accounting of leases in the balance sheet of tenants. Thus, the Company now recognizes the rights-of-use assets that represent its rights to use the properties and lease liabilities that represent its obligation to pay the lease of such properties.
The Company used the modified retrospective approach in which the cumulative effect of the initial adoption is recognized as an adjustment to the opening balance of accumulated earnings on January 1, 2019. Therefore, the comparative information presented for 2018 has not been restated in the accounting statements and explanatory notes.
However, in order to facilitate the analysis of the data and to ensure the transparency of the information, the Company chose to present in this report part of the accounting statements ending on March 31, 2018 (1Q18) in comparable values, thus adjusted to the effects of CPC 06 (R2) / IFRS 16. The main impacted lines are described below. Income statements:
Operating expenses/revenues;
Depreciation;
Financial result.
As a result of these impacts, the lines EBITDA, IR/CSLL and Net Result are impacted. Balance Sheet:
Deferred income and social contribution taxes;
Investments;
Right to use real estate;
Leases payable;
Profit reserve.
The presentation of adjusted quarterly accounting statements for 2018 (Income Statement, Balance Sheet and Cash Flow Statement) and the conciliation of them will be available in the Company's IR website (http://ri.lasa.com.br/en).
COMMENTS ON OPERATIONAL PERFORMANCE
EASTER EFFECT
In 2019, the Easter event occurred on April 21, therefore the sales related to the event remained concentrated in the second quarter, significantly influencing the comparisons of the 1Q19 in relation to the results and balance sheet in the 1Q18. In order to facilitate the analysis of the data, we anticipate the variation of the main lines of results in the first four months of the year (4M19), according to the table below:
Lojas Americanas S.A. Press Release 3Q18
13
For the best comparison of the numbers, we recommend to analyse the growths of gross revenue, that were not affected by the end of “Lei do Bem”. * The information presented are estimates, and therefore subject to variations, in the controlling view, in Reais and in accordance with current corporate legislation. It should be noted that these are just some of the data for the period in question.
GROSS MERCHANDISE VOLUME (GMV)
The Gross Merchandise Volume (GMV) presents consolidated gross sales and service revenue plus sales made on B2W Digital’s Marketplace platforms.
In the 1Q19, the consolidated GMV reached R$ 6.2 billion, a growth of 3.0% compared to the 1Q18. This growth was due to the strong growth of B2W Digital's marketplace, which grew 52.2% in the period. GROSS REVENUE
In the 1Q19, the parent company’s gross revenue was of R$ 2.7 billion, a variation of -9.9% compared to the 1Q18. For the consolidated, the gross revenue reached R$ 4.2 billion, a variation of -10.5% compared to the same period of the previous year.
In the 4M19, gross revenue growth in the same stores concept was 5.8% in relation to 4M18. In order to exclude the mismatch of Easter, we present the same store revenue in the four months.
NET REVENUE
In the 1Q19, the parent company’s net revenue was of R$ 2.3 billion, a variation of -10.6% compared to the 1Q18. In the consolidated, the net revenue was R$ 4.2 billion, a variation of -11.7% compared to 1Q18.
Parent Company 4M19* Var.
Gross Revenue 8.0%
Same Store Sales (GR) 5.8%
Net Revenue 7.1%
Same Store Sales (NR) 4.9%
Adjusted EBITDA 7.3%
4,745
1Q18 1Q19
4,247
-10.5%
2,672
1Q18 1Q19
2,965
-9.9%
Consolidated Gross Revenue (R$ million)Parent Company Gross Revenue (R$ million)
This variation is due to the Easter mismatch, a very relevant event for the Company that in 2018 occurred in the first quarter of the year while in 2019 occurred in the second quarter.
Lojas Americanas S.A. Press Release 3Q18
14
In the 4M19, net revenue growth in the same stores concept was 4.9% in relation to 4M18. In order to exclude the mismatch of Easter, we present the same store revenue in the four months.
For the best comparison of the numbers, we recommend to analyse the growths of gross revenue, that were not affected by the end of “Lei do Bem”.
GROSS PROFIT AND GROSS MARGIN In the 1Q19, the parent company’s gross profit totaled R$ 887.3 million, a variation of -10.2%, with a margin of 38.6% of the net revenue (NR). This margin variation is due to the combination of the Easter mismatch, that would be positive to the margin, and the impact of the end of Lei do Bem on certain items of the assortment, that impacts negatively.
In the consolidated view, the gross profit was of R$ 1.2 billion, a variation of -8.3%, with a margin of 34.5% of NR, an expansion of 1.2 p.p. compared to the 1Q18. This increase was due to the growth of B2W Digital's marketplace operation, which has high margins.
SALES, GENERAL AND ADMINISTRATIVE EXPENSES
In the 1Q19, the parent company’s sales, general and administrative expenses totaled R$ 409.7 million, 17.8% of the NR (vs. 16.7% of NR in the 1Q18). The increase in the share of expenses in relation to revenue was due to the negative variation in revenue due to the Easter mismatch given the existence of fixed expenses.
For the consolidated, sales, general and administrative expenses for the 1Q19 totaled R$ 666.4 million, 18.8% of NR (vs. 17.4% of NR in the 1Q18).
4,022
1Q18 1Q19
3,552
-11.7%
1Q18 1Q19
2,5752,301
-10.6%
Consolidated Net Revenue (R$ million)Parent Company Net Revenue (R$ million)
33.3
1Q18
34.5
1Q19
1,338 1,227
-8.3%
988 887
1Q19
38.4
1Q18
38.6
-10.2%
Consolidated Gross Profit and Gross Margin
Parent Company Gross Profit and Gross Margin
Gross Profit (R$ MM) Gross Margin (%NR) Gross Profit (R$ MM) Gross Margin (%NR)
Lojas Americanas S.A. Press Release 3Q18
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ADJUSTED EBITDA AND EBITDA MARGIN
In the 1Q19, the parent company’s adjusted EBITDA reached R$ 477.6 million, a variation of -14.4%, reaching a margin of 20.8% of the NR, a reduction of 0.9 p.p.. In the consolidated view, the adjusted EBITDA reached R$ 560.8 million, a variation of -12.2%, reaching a margin of 15.8% of the NR, a reduction of 0.1 p.p..
Adjusted EBITDA - Operating profit before interest, taxes, depreciation and amortization, other operating income/expenses, equity accounting, minority/statutory interest.
EBITDA (CVM 527/12)
In the 1Q19, the parent company’s adjusted EBITDA reached R$ 477.6 million, representing 20.8% of the NR. According to CVM’s 527/12 Instruction, if we exclude other operational revenues and expenses, equity accounting and statutory participation, the EBITDA would be equal to R$ 385.7 million, representing 16.8% of NR.
In the consolidated view, the adjusted EBITDA totaled R$ 560.8 million, representing 15.8% of the NR. According to CVM’s 527/12 Instruction, the EBITDA would be equal to R$ 540.1 million, representing 15.2% of the NR.
1Q18
17.4
1Q19
18.8
+1.4 p.p.
17.816.7
1Q18 1Q19
+1.1 p.p.
Parent Company Sales, General and Administrative Expenses (%NR)
Consolidated Sales, General and Administrative Expenses (%NR)
639561
15.9
1Q18 1Q19
15.8
-12.2%
558478
1Q191Q18
21.7 20.8
-14.4%
Parent Company Adjusted EBITDAand EBITDA Margin
Consolidated Adjusted EBITDAand EBITDA Margin
Adj. EBITDA (R$ MM) Adj. EBITDA Margin (%NR) Adj. EBITDA (R$ MM) Adj. EBITDA Margin (%NR)
Lojas Americanas S.A. Press Release 3Q18
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WORKING CAPITAL VARIATION
In the 1Q19, the parent company’s net working capital was of 41 days, a variation of 2 days compared to the 1Q18. This variation is explained by the "Easter Effect", because in 2018 sales of the event occurred in the first quarter, while in 2019 Easter occurred in the second quarter, thus impacting purchase and inventory terms.
NET FINANCIAL RESULT
The parent company’s net financial expenses totaled R$ 233.1 million in the 1Q19, a reduction of 3.5% in relation to the R$ 241.5 million registered in the 1Q18. In the consolidated view, the net financial expenses were R$ 385.1 million in the 1Q19, an increase of 6.2% compared to the R$ 362.6 million registered in the 1Q18.
The evolution of the financial result in the parent company is due to the variation of the CDI* in the period and to the constant work of renegotiating the Company's debts, always seeking better costs and longer terms.
*CDI - Interbank Deposit Certificate: average rate of funding through the interbank market.
1Q19 1Q18 ∆ % 1Q19 1Q18 ∆ %3Q1
(=) Adjusted EBITDA 477.6 558.0 -14.4% 560.8 638.8 -12.2%
(+) Other operating income (expenses)* (9.3) (8.3) 12.0% (20.7) (19.5) 6.2%
(+) Equity accounting (82.6) (69.6) 18.7% - - -
(=) EBITDA (CVM 527/12) 385.7 480.1 -19.7% 540.1 619.3 -12.8%
*In the old accounting rules, considered as "non operating income".
Parent Company ConsolidatedEBITDA Reconciliation - R$ MM
In days
35 29 36
140124
157
-132 -114-152
41
1Q17
w/ Easter
1Q18
w/o Easter
1Q19
w/ Easter
4339
-2
Inventories Suplliers Accounts Receivable
Comparing 1Q19 with 1Q17, when the Easter also occurred in the second quarter, the parent company presented a 2-day evolution of net working capital, reflecting the continuous improvement in products receiving from suppliers, as well as the stores supplies.
Lojas Americanas S.A. Press Release 3Q18
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NO EXPOSURE TO FOREIGN EXCHANGE VARIATIONS
The Company continues to reaffirm its commitment to a conservative cash investment policy, demonstrated by the use of hedge instruments in foreign currencies, and derivatives (swaps). The financial liability and the total cash position of the Company are fully protected against any foreign exchange fluctuations through these financial instruments, which offset the foreign exchange risk transforming the cost of debt to local currency and interest rate (as a percentage of the CDI). In the same direction, it is worth remembering that the Company's cash is invested in the largest financial institutions in Brazil.
NET INCOME
In the 1Q19, the net income reached -R$ 53.5 million vs. R$ 23.8 in the 1Q18.
The following table shows the main variations from the Adjusted EBITDA to the net income:
Adjusted EBITDA - Operating profit before interest, taxes, depreciation and amortization, other operating income/expenses, equity accounting, minority/statutory interest.
INDEBTEDNESS
Lojas Americanas’ consolidated short and long-term loans and debentures at 03/31/2019 totaled R$ 18,712.5 milion. If we deduct the cash position of R$ 14,024.4 million (cash + financial investments + accounts receivable from credit and debit cards) from the total loans, we reach a net debt position of R$ 4,688.1 million.
Reconciliation of the Net Result - R$ MM 1Q19 1Q18 ∆ % 1Q19 1Q18 ∆ %
Adjusted EBITDA 477.6 558.0 -14.4% 560.8 638.8 -12.2%
(+) Depreciation / Amortization (186.8) (162.7) 14.8% (313.2) (279.8) 11.9%
(+) Net Financial Result (233.1) (241.5) -3.5% (385.1) (362.6) 6.2%
(+) Equity Accounting (82.6) (69.6) 18.7% - - -
(+) Other Operat. Income (Expenses)* (9.3) (8.3) 12.0% (20.7) (19.5) 6.2%
(+) Minority / Statutory Interest - - - 53.6 44.6 20.2%
(+) Income Tax and Social Contribution (19.3) (52.1) -63.0% 51.1 2.3 2121.7%
(=) Net Income (53.5) 23.8 - (53.5) 23.8 -
* In the old accounting rules, considered as "non-operating income", including expenditure on action plan.
ConsolidatedParent Company
R$ million
Indebtedness 03/31/2019 03/31/2018 03/31/2019 03/31/2018
Short Term Debt 626.0 802.2 2,302.5 3,010.0
Short Term Debentures 577.7 580.1 577.7 580.1
Receivables Fund (FIDC) - 506.2 - 594.8
Short Term Indebtedness 1,203.7 1,888.5 2,880.2 4,184.9
Long Term Debt 3,181.3 3,257.9 10,492.4 8,455.6
Long Term Debentures 5,230.8 3,356.8 5,230.8 3,356.8
Receivables Fund (FIDC) 4.0 - 109.1 -
Long Term Indebtedness 8,416.1 6,614.7 15,832.3 11,812.4
Total Debt (1) 9,619.8 8,503.2 18,712.5 15,997.3
Cash and banks 3,980.5 2,158.1 7,725.4 4,783.6
Money market investments 1,400.3 2,135.7 4,657.5 5,169.2
Money market investments (BWU)* 250.9 275.1 - -
1,278.8 1,096.9 1,641.5 1,338.8
Total Cash (2) 6,910.5 5,665.8 14,024.4 11,291.6
Net Cash (Debt) (2) - (1) (2,709.3) (2,837.4) (4,688.1) (4,705.7)
Net Debt / Adjusted EBITDA* 1.2 1.2 1.7 1.7
Average Maturity of Debt (in days) 1,316 906 1,236 795
*Considers financial applications of BWU [EN 13 (b)(i)]
Consolidated
Accounts receivable from credit / debit cards
Parent Company
Lojas Americanas S.A. Press Release 3Q18
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*The Adjusted EBITDA used in calculating the net debt / EBITDA ratio does not consider the effects of IFRS 16 in order to maintain the comparability of the indices.
Adjusted EBITDA - Operating profit before interest, taxes, depreciation and amortization, other operating income/expenses, equity accounting, minority/statutory interest.
In the consolidated view, the net debt was 1.7x the accumulated EBITDA from the last 12 months. The average debt maturity was of 1,236 days in 03/31/2019 (41 months). In the parent company, the net debt was 1.2x the accumulated EBITDA from the last 12 months. The average debt maturity was 1,316 days in 03/31/2019 (43 months).
To face the uncertainties and the volatility of the financial market, Lojas Americanas has the orientation of preserving cash and prolonging the debt profile. Throughout the last few years, several measures have been taken to this end, which let us consolidate our plan of long-term growth for the Company.
The “accounts receivable” considers receivables from credit cards, net of the discounted value, that have immediate liquidity and can be considered as cash. The breakdown of the “accounts receivable” in Lojas Americanas’ point of view is shown as follows:
SALES BY MEANS OF PAYMENTS
The opening of sales by means of payments of the Parent Company in the 1Q19 and 1Q18 can be verified in the table below:
INVESTMENTS
In the 1Q19, the parent company invested a total of R$ 207.7 million. Investments were focused on the opening of new stores, reforms and improvements in stores, as well as technology updates, operations and others.
The investment in the expansion of the store network is a reflection of the acceleration of the “85 anos em 5 – Somos Mais Brasil” plan, with an increase in the number of inaugurations and stores under construction.
Investments R$ million %
Openings / Improvements 168.1 81%
Technology 39.1 19%
Operations and Others 0.5 0%
Total 207.7 100%
Means of Payment 1Q19 1Q18 Var.
Cash 56% 56% -
Credit Cards 44% 44% -
Parent Company
R$ million
Accounts Receivable Conciliation - R$ MM 03/31/2019 03/31/2018 03/31/2019 03/31/2018
Gross credit-cards receivable 1,249.6 1,007.1 5,658.9 4,326.1
Receivable discounts (4.0) (506.2) (4,156.4) (3,671.9)
Electronic debits and checks receivables 29.2 89.8 29.9 89.8
Receivables Fund (FIDC) 4.0 506.2 109.1 594.8
1,278.8 1,096.9 1,641.5 1,338.8
Present-value adjustment (12.8) (12.9) (19.5) (15.9)
Provision for doubtful accounts (1.0) (1.1) (48.5) (36.0)
Other accounts receivable 6.1 8.0 122.1 133.7
Consolidated Net Accounts Receivable 1,271.1 1,090.9 1,695.6 1,420.6
Consolidated
Accounts Receivable from credit / debit cards
Parent Company
Lojas Americanas S.A. Press Release 3Q18
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EXPANSION
2015 2019 Lojas Americanas reaffirms its commitment to maintain the pace of growth foreseen in the "85 anos em 5 - Somos Mais Brasil" Plan with the objective to open 800 new stores between 2015 and 2019. We believe that there is an opportunity for our bricks and mortar business to be present in a much more significant number of cities, especially considering Brazil has 5,570 cities.
In the 1Q19, we opened 15 new stores (vs. 14 stores in the 1Q18), reaching 1,501 stores in 03/31/2019, reaching presence in 603 cities. Beyond that, up to now, we have 145 signed contracts or in final stage of negotiation.
As in previous years, we will maintain our usual discipline in approving new points based on economic feasibility studies that consider several macroeconomic and operational assumptions, amongst them: population growth, per capita income, local economy evolution, economic situation, logistics capacity, rent and expected return. The following table details the types of stores opened in the 1Q19:
IF – INOVATION AND FUTURE
In face of 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 - Inovação e Futuro was created, outside Lojas Americanas and B2W operations. The IF was born with the mission of building disruptive businesses and leveraging various initiatives of the Companies. IF's main verticals are: incubating new business, accelerating
Region FormatNumber of
Stores
Sales Area
thousand m²
Average
thousand m²
1,490 1,126.2 0.8,
Traditional - - -
Express 5 1.7 0.3
Convenience 4 0.2 0.0
Traditional 2 1.7 0.9
Express 3 0.2 0.1
Traditional - - -
Express - - -
Traditional - - -
Express - - -
Traditional - - -
Express 1 0.4 0.4
Traditional 2 6.6 0.9
Express 9 6.3 0.2
Convenience 4 0.2 0.0
Refurbishment/Deactivation (4) (3.2) 0.8
1,501 1,127.1 0.8
Northeast
South
North
Midwest
TOTAL
As of 03/31/2019
As of 12/31/2018
Southeast
Lojas Americanas S.A. Press Release 3Q18
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existing initiatives, investing in startups, leading the O2O fronts and prospecting new opportunities, including M&A operations. Ame is one of IF first initiatives. The digital financial platform, which will revolutionize the way people relate to money, continues to accelerate and present impressive metrics.
The app already has more than 2.1 million downloads in just 11 months of operation.
The official launch was on Americanas.com (Jun/18) and we quickly expanded to Shoptime (Jun/18), Submarino (Sep/18) and Sou Barato, the Americanas.com outlet (Jan/19).
Ame has been gaining strong traction in B2W brands, optimizing the offer of discounts for customers, generating a greater purchase recurrence and increasing the spending.
In Aug/18, Ame has been integrated with the B2W Marketplace promotional tool (Promo Seller), allowing sellers to invest in additional cashback offerings for customers who pay with Ame.
Lojas Americanas continue investing in proprietary technology to enhance the acceptance and evolve the customer buying experience with Ame in the stores. With this, it comes increasing the Ame acceptance in a short time (from 6 pilot stores at the end of Oct-18 to 657 stores currently), and developing unique features to the physical world, as the cash-in LASA (launched in mar-19). During 2019, Ame will be present in all Lojas Americanas physical stores and other retailers.
Lojas Americanas increased the dissemination of Ame in physical stores and intensified the cashback offer as a main strategy for discounts, sales leverage and customer loyalty. To ensure the best customer experience in use of Ame, also began an intensive program of training for all associates.
In line with the goal of revolutionizing the way people Interact with money, in mar/19, Ame launched new features: payment of bills (invoices), cell phone recharge, cash in LASA (deposit in Ame via LASA’s POS), cash in and cash out (transfer from bank account to Ame or from Ame to bank account).
In May/19, other features were launched, as the cash-in (deposit) via invoice, interactive map (with the location of the commercial stablishments which accept Ame) and shop keeper portal (allowing the shop keeper who accept Ame manage all your sales information directly in the cashier system from its store).
Also in May/19, the personal credit was launched. The Ame client (pre-selected and approved base) can contract loans through the app in a simple, fast and 100% digital way, with the amount contracted being credited directly to the Ame account. The customers will be able to use the resources to make purchases in the merchant’s network that accept Ame or for other necessities, by making the cash-out to the bank account. The rates offered will be from 2.90% p.m. and the payment term may be up to 24 installments.
CONVENIENCE STORES - LOCAL
In the 1Q19, we opened 4 local stores in the cities of São Paulo and Rio de Janeiro. In this cycle, we prioritize smaller stores and within offices, always aiming to be closer to the consumer and be the best and quickest option. The learning generated through these new openings will allow us to expand our range to operations within high flow buildings such as offices, universities,
condominiums and hospitals.
A smaller sales area makes assortment accuracy even more critical. On the one hand it is necessary to reduce the amount of items in these environments, on the other hand the presence of a captive audience of daily frequency allows to create a continuous dialogue through research, experimentation and customized actions. With this, there is an increase in assertiveness as well as the importance of the store to the region.
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The controlled environments also allow us to try out unassisted selling models, such as the Ame Go store.
In addition, for the Carnival event, we offered to the Rio de Janeiro revelers 50% of cashback for the beer purchase made with Ame. The action boosted the participation of these items on sale. O2O (Online to Offline)
The O2O initiatives of Lojas Americanas and B2W Digital have been improving the customer buying experience, with increasingly representative results. The physical and online experience enables us to lead the market by offering the best of both worlds. Over the past twelve months, more than 1.5 million customers have made purchases through these initiatives.
Lojas Americanas in Marketplace: In the 1Q19, were registered orders from customers in more than 3,500 Brazilian cities, proving the ability to increase the capillarity of Lojas Americanas by selling its products on Americanas.com. Throughout the year, the product assortment increase and the availability of new services will be accelerated, offering even more convenience to customers.
Click and Collect: At the end of the 1Q19, the service was already available in 1,250 stores, being the only click and collect model with presence in all Brazilian states. In addition to Lojas Americanas, the option is also available, as a pilot, in 8 physical stores of B2W Marketplace sellers.
Click and Collect Now: The customer buys online inventory from the store with withdrawal at the store in up to 1 hour and without the freight charge. Today we are operating in all 1,501 Company stores with a selected assortment.
LASA Entrega (ship from store): Lojas Americanas and B2W launched in March/19 the "ship from store" pilot, allowing customers to buy the closest Lojas Americanas products online and receive their purchases at their addresses within 2 hours. On May/19, the pilot which was initially only available in São Paulo, was expanded to some stores in Rio de Janeiro. The O2O initiatives bring us closer to the customer, allowing them to buy what they want, when, where and how they want. LET’S – LOGISTICS AND DISTRIBUTION
Shared management platform for the logistics and distribution assets of Lojas Americanas and B2W that aims to optimize the Companies’ operations through a flexible fulfillment model.
o Fast Delivery: The program, launched in Jun/18, reduced in 50% (in average) the delivery times of 1P and 3P items (for sellers connected to B2W Entrega). The Fast Delivery establishes a new format for the Freight Menu:
“Click & Collect Now”: product is picked and available for in-store pickup within 1 hour (Brazil)
“Click & Collect”: delivery to store within 48 hours (main capitals) “2 Hours”: delivery in up to 2 hours (capitals: SP and RJ) “Same Day”: delivery in up to 8 hours (capitals: SP and RJ) “Next Day”: delivery in up to 24 hours (capitals: SP and RJ) “2 Days”: delivery in up to 48 hours (capitals: SP, RJ, MG, PR, SC, RS and PE) “Standard”: delivery within 7 days (Brazil)
o Delivery time: Currently, 50% of all deliveries made by the logistics platform of B2W are performed within 2 days.
o B2W Entrega (Delivery): The platform that operates and controls B2W Marketplace deliveries. Sellers connected to B2W Entrega have 5 types of service: Fulfillment (storage + delivery), Pick Up -
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Large Operations (product withdrawal from the seller DC + delivery), Direct Collect - Small and Medium operations (product withdrawal from the Seller DC + delivery), Drop Off Hub (seller delivers to one of the Direct Hubs + delivery) and Drop Off in Store (seller delivers to one of the Lojas Americanas locations + delivery).
Connected Sellers: B2W Entrega reached more than 22.5 thousand sellers at the end of 1Q19, representing 88% of the total base of sellers and participating in more than 70% of orders placed on the Marketplace. At the end of 2017, B2W Entrega was integrated into the Prime loyalty program, allowing sellers to make their items available to members of the program.
PRODUCTS AND SERVICES PLATFORM: +AQUI
+AQUI is a platform responsible for the management and promotion of services at Lojas Americanas and offers customers credit solutions, insurance, content cards, services and sales operation.
With the premise of providing credit, protecting assets and surpassing client’s expectations with excellence service, +AQUI seeks partnerships with specialized companies that are outstanding in their sectors of activity, expanding Lojas Americanas’ services portfolio and guaranteeing solutions to the diverse demands of its clients.
In the 1Q19, the + AQUI continued to enhance the experience in its integrated platform. The new system aims to improve the customer experience, optimize sales force time and increase assertiveness in service delivery from a unified register. The service platform continues to evolve in the results and promoter productivity monitoring, with score reports that use the gameplay of the sale of services. The Lojas Americanas 100% achievement program, which performs benchmarks with the objective of leveraging the result of the stores with worse performing and disseminating best practices. This year, the program has been incorporated into the management system of +AQUI and already presents significant results. The change raised the level of engagement and result, contributing to the assertiveness in the offer of services and the improvement of customer service. In 1Q19, services were offered for more than 3 million people in stores that have the +AQUI service.
1Q19 HIGHLIGHTS i. O2O: +AQUI started to operate the services Click and Collect, Click and Collect and LASA
Entrega (ship from store) in the stores where it has presence. When the customer goes to the store to take the product previously purchased through the digital channels, he/she has at his disposal the convenience of the wide range of services offered by +AQUI with personalized and consultative service. The combination of O2O and service operations has raised the level of customer satisfaction and result.
ii. B2B Gift Card: Expanding the options to acquire Lojas Americanas gift card, the +AQUI has launched a new channel for its acquisition. The purchase can be made through the address www.cartaolojasamericanas.lasa.com.br, in simple and automatic way.
iii. Trade-in: In order to encourage conscious consumption and increase the purchasing power of our customers, +AQUI launched the trade-in operation of used cell phones. The interested customer can have their smartphone evaluated by the promoters and receive credit for the purchase of a new device immediately.
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RELATED PARTIES
Lojas Americanas points out that all operations involving related parties, such as the O2O initiatives, kiosks, Ame, Let's, among others, aim to offer the best service to the customer and generate value for the shareholders of the Companies. Such transactions are governed by specific negotiations between the parties and follow the Related Party Transactions and Conflicts of Interest Policy, prepared in accordance with CVM Instruction 586 (available on the CVM and Lojas Americanas Investor Relations website).
These transactions take into account the financial and operational individuality of the Companies and therefore are only carried out if they are convenient for Companies singly. Due to these operations, the revenues and their corresponding taxes, as well as related expenses, are recorded in the Company that provides the services. The main expenses of these operations that are recognized in each Company, are with personnel, rent and machinery.
The descriptions and values of operations with related parties in the period can be found in explanatory note n.12 to the account statements.
PRIVATE LABELS
Lojas Americanas has 15 private label brands the offer product with quality and fair prices in almost all categories sold: food, sweets, housewares, clothing, stationery, toys, amog others.
The 1Q19 had many innovations that had important and increasing participation in the sale of the main events of the Company. The first was “Back to School” of School Basics and Office Basics brands. We achieved an excellent sales growth, further increasing the participation of our private label in this category. The customer had at his disposal a wide assortment of products with options of backpacks, notebooks, stationery, calendars, among other items. Then, at the Carnival, the Brink+ brand had a strong presence, with accessories and costumes for the revelers, in addition, Basic+ developed exclusive t-shirts for the party, with funny phrases for all tastes.
In Leven's private label, we launched the tapioca gum and expanded the line of snacks with the lentil chips. In keeping with the Leven brand's health and sustainability goals, these chips have the Vegan product certification seal of the Brazilian Vegetarian Society (SVB), as well as other branded snacks that have also acquired the label. During the summer, the mineral water Leven presented an expressive sale, positioning itself as the largest brand of water of the category.
Also in the 1Q19, we began preparing for one of the Company's major events: Easter. The D'elicce's private label has offered many novelties, such as licensed eggs with free gifts, and mini eggs for children and Easter cakes and different types of chocolate eggs for adults.
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DIGITAL PLATFORM – B2W DIGITAL
B2W DIGITAL ANNOUNCES GROWTH OF 15.3% IN GMV AND REDCUTION OF R$ 92 MM IN CASH CONSUMPTION IN 1T19
B2W Digital reduced the cash consumption in R$ 92.3 MM in 1Q19. In the 1Q19, the cash consumption was R$ 385.2 MM, a reduction of R$ 92.3 MM vs R$ 477.5 MM registered in the 1Q18.
B2W Marketplace conected more than 3.6 thousand new sellers in 1Q19, going from a base of 21.9 thousand sellers in Dec/18 for more than 25.5 thousand sellers in Mar/19. The base of sellers increased by 2.1x from 1Q18 to 1Q19 (from 12.1 thousand to 25.5 thousand sellers).
B2W Entrega conected more than 4.0 thousand sellers in 1Q19, totaling a base of 22.5 thousand sellers and representing 88.2% of sellers connected to the B2W Marketplace.
B2W Digital has expanded Americanas Mundo assortment to more than 410 thousand SKUs. Launched on Mar/19, the cross border operation continues to expand rapidly and already has more than 410 thousand SKUs, enabling customers to purchase products from Sellers from all over the world.
B2W Digital reaches 35MM of downloaded apps. In addition, at the end of the quarter, the brand apps totaled 11 MM active users (MAU: Monthly Active Users – Source: App Annie).
DIGITAL LAB
The "Digital Lab" aims to strengthen the interaction between the market and educational institutions. The connection with academic knowledge is one of the ways to update the business, placing the Company in contact with the most modern and innovative in the market and bringing new perspectives. Lojas Americanas believes that fostering research and innovation, as well as bringing real solutions to its challenges, can generate fruits for the socioeconomic development of the country.
To this end, the Company sponsored for the second time the Brazil Conference at Harvard & MIT, which took place April 5-7 in Boston. The event is held by the Brazilian student community in Boston to promote the meeting with leaders and representatives of Brazil's diversity. The event's mission is to establish a plural space for the debate and the creation of ideas about the future of our country, bringing it to the greatest possible number of Brazilians.
In line with the promotion of research and innovation, we have renewed our partnership with the MIT Industrial Liaison Program (ILP), which aims to create and strengthen mutually beneficial relationships between MIT and corporations around the world. In addition, in this quarter, we developed a partnership with the University of Illinois to develop a project led by the University's MBA students. Between the 18th and 20th of March we received at the Company's headquarters the students who are participating in this project. We took the opportunity to tell them a little more about the Companies and challenges, besides making guided tours in some stores.
Another relevant action of the period was the Hackathon promoted by the Company, between March 29 and April 1, in partnership with the Istituto Europeo di Design (IED). The marathon had the challenge of creating new spaces for different store models, such as Local.
Pricing The focus of the pricing project in 1Q19 was the consolidation of the methodology for the coloring department and the analysis of modeling for new departments. The pricing model for the color department allowed the maintenance of competitiveness and margin gains. In March 2019, we had the
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Women's Festival, which was hugely successful in the stores and where we could see the potential for modeling improvements.
The cookie department was chosen for the next job of the pricing team. The data of the main lines of salted and stuffed biscuits were shared with the researchers of PUC-Rio. The first tests of the biscuit category model allowed us to evaluate the cross-effects of the price changes in the main substitute items, suggesting competitive prices of the items to maximize profit or revenue. From this, we have already obtained volume and margin increases as the first results.
The project continues to contribute to the process of continuous improvement of the prices definition, which is used to support the Company's commercial decisions. AWARDS AND RECOGNITIONS
Lojas Americanas invests in actions that improve its management processes such as improvements in customer service, quality control of products and services, supplier audits, operation of distribution centers and optimization of internal processes. As a consequence of this effort, the Company has received several awards and recognitions that reinforce the brand's value, its reputation and its commitment to customers.
Follow below the main awards and recognitions received in the 1Q19:
Great Place to Work Lojas Americanas received the Great Place to Work seal, certification based on the evaluation of the associates on how it works in the Company. The research is conducted independently by the GPTW consultancy and certification reinforces our commitment to the constant development of the team.
Reputation Pulse - Reputation Institute Lojas Americanas was ranked in first place in the Retail category. In addition, it was ranked 7th place among the most reputable (national) companies and ranked in 32nd place among the best reputable companies in Brazil (national and multinational). More than 300 companies were surveyed by the Reputation Institute, with results that reinforce the importance of reputation to influence public perception of organizations. The Powerful of Global Retail - Deloitte Lojas Americanas was ranked as the best placed retailer among Brazilian companies in the sector, ranking 6th in Latin America and 178th in the overall ranking. The ranking is compiled by the Deloitte consulting firm, based on the 250 companies listed in the Global Power of Retailing study, based on revenues from retail companies in the previous fiscal year. SUSTAINABILITY
The commitment to the development of initiatives directly related to the United Nations (UN) Sustainable Development Objectives (ODS), a global agenda with 17 Objectives to be achieved by 2030, is fundamental for the Company's socio-environmental growth. From the Green Company Committee, created more than ten years ago, the entire sustainability
strategic plan is based on this agenda.
In January 2019, held the gradution of the first class of the Retail Operations course, with emphasis on Attendance and Leadership, another fruit of the partnership between Lojas Americanas and Instituto Rumo Náutico (Projeto Grael). During 6 months, 30 young’s underwent an intense training that combines the practice of sailing to the understanding of basic contents such as citizenship, labor market, Portuguese, mathematics and English and to the technical qualification
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in retail, taught by SENAC and by volunteers associates of Lojas Americanas, strengthening the volunteer program of the Company.
Seeking to strengthen and promote the ODS of education, decent work, reduction of inequalities, consumption and responsible production and partnerships, Lojas Americanas is investing in projects of Environmental Education and Waste Management, Digital Inclusion and Technological Training, Promotion of Entrepreneurship and Improvement of Literacy in the Amazon. The initiatives impact 123 riverine and indigenous communities and reach more than 1,500 people. The partner for the execution of these projects is the Amazonas Sustainable Foundation (FAS), which has been working for more than 10 years in the environmental conservation and improvement of the quality of life of the riverside and indigenous communities of the Amazon.
GENERAL CONSIDERATIONS
ABOUT LOJAS AMERICANAS S.A.
Lojas Americanas is a Company that adopts a unique approach in order to better serve its clients offering its different formats of stores (traditional, express and convenience – Local) and its digital platform (through B2W Digital, with the brands Americanas.com, Submarino, Shoptime and Sou Barato).
With regard to physical stores, Lojas Americanas operates with three store formats: traditional, express and convenience. The first one has an average sales area of 1,000 m², an automated replenishment model and an assortment of 60,000 items. The second format has an average sales area of 400 m², just-in-time logistics and an assortment of 15,000 items, selected according to each location’s needs. The third has on average of 100 m² of sales area, daily stock replenishment and mix of products for food convenience with assortment of up to 3,000 items. Lojas Americanas’ assortment is in continuous evolution, always aiming to exceed clients’ expectations when meeting their needs.
In 03/31/2019, the 1,501 stores – 863 in the Traditional format, 596 in the Express format and 42 in the Convenience format – have a sales area equivalent to 1,127.1 thousand square meter. They are present in 603 cities on all Brazilian states and are served by four distribution centers, located in Minas Gerais, Pernambuco, São Paulo and Rio de Janeiro. Our stores are distributed as follows: 52.8% in Southeast region, 27.6% in North/Northeast and 19.6% in South/Midwest. B2W Digital is the leader in Latin America e-commerce and aims to connect people, businesses, products and services in a digital platform. Has the greatest and most beloved internet brands (Americanas.com, Submarino, Shoptime and Sou Barato), a rapidly growing Marketplace operation, in addition to offering technology services, logistics, distribution, customer service and payments. IF – Inovação e Futuro was born with the mission to build disruptive business and leverage various initiatives in Lojas Americanas and B2W. Its main vertical performances are: incubate new businesses, accelerate existing initiatives, invest in startups (venture capital), lead the O2O fronts and prospect new opportunities, including M&A opportunities.
LET´S – Logística e Distribuição is a shared management platform for the logistics and distribution assets of Lojas Americanas and B2W, that aims to optimize the Companies’ operations through a flexible fulfillment model.
Lojas Americanas’ shares are listed on the B3 through ticker symbols LAME3 (common) and
LAME4 (preferred).
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CORPORATE GOVERNANCE
Lojas Americanas S.A. has been listed on the Brazilian Stock Exchange (B3) since 1940. The Company has a shareholder base composed of common shares (LAME3) and preferred shares (LAME4). In addition, the Company approved in an Extraordinary General Meeting held on August 17th, 2017 the proposal to migrate to the special listing segment of the Level 1 of Corporate Governance. The Company has a Board of Directors composed by eight members – five appointed by the controllers and three appointed by the Board of Directors. Lojas Americanas also has a Fiscal Council formed by three members, one indicated by the controllers and two indicated by the minority shareholders.
“We Always Want More”
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APPENDIX I – INCOME STATEMENT
Adjusted EBITDA - Operating profit before interest, taxes, depreciation and amortization, other operating income/expenses, equity accounting, minority/statutory interest.
Lojas Americanas S.A.
Income Statement
(in million of Brazilian reais) 1Q191Q18
w/ IFRS 16Variação 1Q19
1Q18
w/ IFRS 16Variação
Gross Merchandise Volume (GMV) - - - 6,217.6 6,038.0 3.0%
Gross Sales and Services Revenue 2,671.5 2,964.6 -9.9% 4,246.6 4,744.9 -10.5%
Taxes on sales and services (370.6) (389.9) -4.9% (694.3) (723.2) -4.0%
Net Sales and Services Revenue 2,300.9 2,574.7 -10.6% 3,552.3 4,021.7 -11.7%
Cost of goods and services sold (1,413.6) (1,587.0) -10.9% (2,325.1) (2,684.0) -13.4%
Gross Profit 887.3 987.7 -10.2% 1,227.2 1,337.7 -8.3%
Gross Margin (% NR) 38.6% 38.4% +0.2 p.p. 34.5% 33.3% +1.2 p.p.
Operating Revenue (Expenses) (596.5) (592.4) 0.7% (979.6) (978.7) 0.1%
Selling expenses (381.4) (402.6) -5.3% (591.7) (635.6) -6.9%
General and administrative expenses (28.3) (27.1) 4.4% (74.7) (63.3) 18.0%
Depreciation and amortization (186.8) (162.7) 14.8% (313.2) (279.8) 11.9%
Operating Income before Net Financial Result290.8 395.3 -26.4% 247.6 359.0 -31.0%
Net Financial Result (233.1) (241.5) -3.5% (385.1) (362.6) 6.2%
Equity accounting (82.6) (69.6) 18.7% - - -
Other operating income (expenses)* (9.3) (8.3) 12.0% (20.7) (19.5) 6.2%
Minority/statutory interest - - - 53.6 44.6 20.2%
Income tax and social contribution (19.3) (52.1) -63.0% 51.1 2.3 2121.7%
Net Income of the Period (53.5) 23.8 - (53.5) 23.8 -
Net Margin (% NR) -2.3% 0.9% -3.2 p.p. -1.5% 0.6% -2.1 p.p.
Adjusted EBITDA 477.6 558.0 -14.4% 560.8 638.8 -12.2%
Adjusted EBITDA Margin (% NR) 20.8% 21.7% -0.9 p.p. 15.8% 15.9% -0.1 p.p.
*Under the old accounting norm, called "non-operational result"
Parent Company
Quarters ended in March 31
Consolidated
Quarters ended in March 31
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APPENDIX II – INCOME STATEMENT – 1Q18 W/ IFRS 16 VS. 1Q18 W/O IFRS 16
¹Operating revenue (expenses), occupation line (note 26) ²Depreciation and amortization (note 26) ³Net financial result, interest and monetary variation, anticipation of receivables and leasing 4Adjusted EBITDA - Operating profit before interest, taxes, depreciation and amortization, other operating income/expenses, equity accounting, minority/statutory interest.
Lojas Americanas S.A.
Income Statement
(in million of Brazilian reais)1Q18
w/ IFRS 16Adjustments
1Q18
w/o IFRS 16
1Q18
w/ IFRS 16Adjustments
1Q18
w/o IFRS 16
Gross Merchandise Volume (GMV) 6,038.0 - 6,038.0
Gross Sales and Services Revenue 2,964.6 - 2,964.6 4,744.9 - 4,744.9
Taxes on sales and services (389.9) - (389.9) (723.2) - (723.2)
Net Sales and Services Revenue 2,574.7 - 2,574.7 4,021.7 - 4,021.7
Cost of goods and services sold (1,587.0) - (1,587.0) (2,684.0) - (2,684.0)
Gross Profit 987.7 - 987.7 1,337.7 - 1,337.7
Gross Margin (% NR) 38.4% - 38.4% 33.3% - 33.3%
Operating Revenue (Expenses) (592.4) (44.7) (637.1) (978.7) (47.0) (1,025.7)
Selling expenses¹ (402.6) (102.0) (504.6) (635.6) (115.5) (751.1)
General and administrative expenses (27.1) - (27.1) (63.3) - (63.3)
Depreciation and amortization² (162.7) 57.3 (105.4) (279.8) 68.5 (211.3)
Operating Income before Net
Financial Result395.3 (44.7) 350.6 359.0 (47.0) 312.0
Net Financial Result³ (241.5) 37.3 (204.2) (362.6) 42.3 (320.3)
Equity accounting (69.6) 1.1 (68.5) - - -
Other operating income (expenses)* (8.3) - (8.3) (19.5) - (19.5)
Minority interest - - - 44.6 (0.7) 43.9
Income tax and social contribution (52.1) 2.5 (49.6) 2.3 1.6 3.9
Net Income of the Period 23.8 (3.8) 20.0 23.8 (3.8) 20.0
Net Margin (% NR) 0.9% +0.1 p.p. 0.8% 0.6% +0.1 p.p. 0.5%
Adjusted EBITDA4 558.0 (102.0) 456.0 638.8 (115.5) 523.3
Adjusted EBITDA Margin (% NR) 21.7% +4 p.p. 17.7% 15.8% +2.8 p.p. 13.0%
*Under the old accounting norm, called "non-operational result"
Parent Company
Quarters ended in March 31
Consolidated
Quarters ended in March 31
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APPENDIX III – BALANCE SHEET
Lojas Americanas S.A.
Balance Sheet
(In Million Reais)03/31/2019 12/31/2018
w/ IFRS 16
03/31/2019 12/31/2018w/ IFRS 16
ASSETS
CURRENT ASSETS
Cash and cash equivalents 3,980.5 3,693.2 7,725.4 6,813.8
Marketable securities and other financial assets 1,347.3 1,227.3 4,616.1 3,295.8
Clients accounts receivable 1,271.2 1,713.4 1,695.7 1,870.1
Inventories 2,954.2 2,626.9 3,795.0 3,506.7
Recoverable taxes 349.4 404.9 808.1 906.8
Dividends receivable 0.3 0.3 - -
Prepaid expenses 45.9 21.7 79.6 59.0
Other accounts receivable 506.5 617.0 919.4 1,061.4
Total Current Assets 10,455.3 10,304.7 19,639.3 17,513.6
NON-CURRENT ASSETS
Marketable securities and other financial assets 53.0 - 41.4 -
Loans e advances to subsidiaries companies 14.5 21.0 - -
Receivables from stockholders - Stock Option Plan 51.5 51.0 51.5 51.0
Deferred income tax and social contribution 113.9 133.2 1,361.4 1,316.6
Escrow deposits 322.0 320.5 414.2 404.7
Recoverable taxes 433.1 400.2 1,762.3 1,655.8
Other non-Current - - 70.8 70.9
Investments 2,868.2 2,945.3 - -
Property, plant and equipment 3,288.6 3,211.6 3,712.5 3,647.7
Intangible assets 433.8 422.4 3,795.9 3,763.2
Right of real estate use 1,556.2 1,595.8 1,783.0 1,840.0
Total Non-Current Assets 9,134.8 9,101.0 12,993.0 12,749.9
TOTAL ASSETS 19,590.1 19,405.7 32,632.3 30,263.5
LIABILITIES AND SHAREHOLDER´S EQUITY
CURRENT LIABILITIES
Suppliers 2,861.4 2,967.3 4,698.5 4,973.6
Leasing to pay 280.1 282.8 350.7 348.8
Loans and financing 626.0 1,080.5 2,302.5 1,807.6
Debentures 577.7 483.2 577.7 483.2
Payroll and related charges 89.5 93.9 145.7 152.2
Taxes payable 110.0 123.1 156.3 181.3
Income tax and currents social contribution - 127.1 5.1 144.6
Dividends and participations proposed 126.2 126.2 126.2 126.2
Provisions for court proceedings and contingencies 29.8 33.7 29.8 33.7
Accounts payable - business combination - - 1.2 1.5
Other current liabilities 164.8 157.1 480.7 498.8
Total Current Liabilities 4,865.5 5,474.9 8,874.4 8,751.5
NON-CURRENT LIABILITIES
Long term liabilities:
Loans e advances to subsidiaries companies 27.0 60.4 - -
Leasing to pay 1,551.4 1,627.2 1,744.8 1,840.8
Loans and financing 3,185.3 3,235.5 10,601.5 9,156.5
Debentures 5,230.8 4,233.5 5,230.8 4,233.5
Taxes payable - - 0.3 0.3
Provisions for court proceedings and contingencies 55.2 59.7 204.0 211.7
Provisions for loss on investiments 12.4 11.6 - -
Accounts payable - business combination - - 7.9 7.8
Other non-current liabilities - - 5.1 6.0
Total Non-Current Liabilities 10,062.1 9,227.9 17,794.4 15,456.6
SHAREHOLDER'S EQUITY
Social capital 3,958.0 3,958.0 3,958.0 3,958.0
Capital reserves 147.4 134.9 147.4 134.9
Goodwill on capital transactions (20.1) (20.1) (20.1) (20.1)
Profit reserves 643.8 643.8 643.8 643.8
Treasury shares (44.5) (44.5) (44.5) (44.5)
Adjustment of equity valuation 31.4 30.8 31.4 30.8
Profit/ loss for the period (53.5) - (53.5) -
Minority interest - - 1,301.0 1,352.5
Total Shareholders' Equity 4,662.5 4,702.9 5,963.5 6,055.4
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 19,590.1 19,405.7 32,632.3 30,263.5
Parent Company Consolidated
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APPENDIX IV – CASH FLOW STATEMENT
Lojas Americanas S.A.
CASH FLOW STATEMENT - INDIRECT METHOD
(In Million of Brazilian Reais)03/31/2019 03/31/2018
c/ IFRS 16
03/31/2019 03/31/2018
c/ IFRS 16
Net income (loss) for the exercise: (53.5) 23.8 (107.1) (20.8)
Adjustments to net income:
Depreciation and amortization 114.0 162.7 223.7 280.4
Depreciation right of real state 72.7 - 90.2 -
Residual and deferred value of fixed assets write-off 5.2 5.0 5.3 5.0
Equity accounting 82.6 69.6 - -
Income tax and social contribution current - 35.4 4.4 41.2
Income tax and social contribution referred 19.2 16.6 (55.6) (43.5)
Interest on credits and debits 1.7 1.4 1.7 2.1
Interest and variations financing 206.4 196.8 351.4 343.7
Adjustment in provision for contingencies - - 3.2 1.7
Reversal of provision for court proceedings and contingencies (3.1) (2.6) (9.5) (3.5)
Stock option plan 9.1 9.1 14.6 11.7
Provision for estimated credit losses - credit cards 0.1 - 2.6 0.6
Provision for losses in inventories (12.9) (15.6) (19.5) (15.8)
Others 26.3 0.5 15.2 14.0
Adjusted net income 467.8 502.7 520.6 616.8
Decrease (increase) in operating assets:
Clients accounts receivable 449.1 476.9 174.0 560.6
Inventories (265.3) 184.4 (289.9) 335.5
Recoverable taxes 22.6 83.4 3.7 (6.0)
Prepaid expenses (34.2) (32.6) (19.8) (27.8)
Escrow deposits (1.5) (14.6) (9.5) (21.8)
Other accounts receivable 109.8 99.0 142.0 45.6
280.5 796.5 0.5 886.1
Increase (decrease) in operating liabilities:
Suppliers (175.4) (647.6) (269.2) (1,094.7)
Payroll and related charges (4.4) 8.0 (6.5) 8.2
Taxes payable (16.2) (26.9) (28.2) (40.5)
Current income tax and social contribution (127.1) (125.2) (144.6) (131.7)
Contingencies payments (7.2) (6.6) (7.2) (6.6)
Loans and advances from subsidiaries (27.0) (95.6) - -
Interest settlement on loans and debentures (90.9) (132.6) (220.3) (227.0)
Interest over leasing right to use of real state (33.9) (37.3) (39.5) (42.4)
Other accounts payable 7.8 (25.8) (18.7) (43.0)
(474.3) (1,089.6) (734.2) (1,577.7)
Net cash provided by operating activities 274.0 209.6 (213.1) (74.8)
Cash Flow from Investing Activities
Marketable securities (189.8) 880.1 (1,375.8) 1,348.3
Plant, property and equipment (173.4) (188.4) (176.1) (190.5)
Intangible (34.3) (16.9) (150.3) (92.2)
Dividends received - 4.1 - -
Net cash provided (used) by investment activities (397.5) 678.9 (1,702.2) 1,065.6
Cash Flow from Financing Activities
Loans e financing (current and non-current):
Borrowings 4.6 - 2,738.4 1,000.0
Liquidations (482.4) (194.9) (784.3) (201.8)
(477.8) (194.9) 1,954.1 798.2
Debentures (current and non-current)
Borrowings 1,000.0 - 1,000.0 -
Liquidations - (500.0) - (500.0)
1,000.0 (500.0) 1,000.0 (500.0)
Leasing right to use real state (111.5) (64.8) (127.3) (73.1)
Receivables from Stock Option Plan 0.1 0.1 0.1 0.1
Net cash provided by financing activities 410.8 (759.6) 2,826.9 225.2
Net increase in cash and cash equivalents 287.3 128.9 911.6 1,216.0
Cash at the begining of the exercise 3,693.2 2,029.2 6,813.8 3,567.5
Cash at the end of the exercise 3,980.5 2,158.1 7,725.4 4,783.5
Net increase in cash and cash equivalents 287.3 128.9 911.6 1,216.0
Parent Company Consolidated
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APPENDIX V – NUMBER OF STORES EVOLUTION
Period Number of Stores Sales AreaNumber of
Associates
03/31/2018 1,320 1,075 thousand m² 23,030
Opened 13
Transfered/Deactivated -4
06/30/2018 1,329 1,081 thousand m² 23,030
Opened 35
Transfered/Deactivated -4
09/30/2018 1,360 1,091 thousand m² 24,098
Opened 134
Transfered/Deactivated -4
12/31/2018 1,490 1,126 thousand m² 25,003
Opened 15
Transfered/Deactivated -4
03/31/2019 1,501 1,127 thousand m² 24,661
Evolution of the number of stores, associates and sales area - Lojas Americanas
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EARNINGS RESULTS CONFERENCE CALL
EBITDA (CVM 527/12) – Net income of the period plus income taxes, net financial expenses of financial revenues and depreciation, amortization and depletion. Adjusted EBITDA (Operating profit before interest, taxes, depreciation and amortization, other operating income/expenses, equity accounting, minority/statutory participation, statutory participation and discontinued operations) is presented as additional information because we believe it represents an important indicator of our operating performance, besides being useful for keeping the comparability with previous reported results.
Statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Lojas Americanas, eventually expressed in this report are merely projections and, as such, are based exclusively on the expectations of Lojas Americanas’ management concerning the future of the business and its continued access to capital to fund the Company’s business plan. Such statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and are, therefore, subject to change without prior notice
MSCI Brand logo: The use of Morgan Stanley Capital International Inc. registered trademarks and indices ("MSCI") does not constitute any type of sponsorship, endorsement or promotion on the part of MSCI, its affiliates, its suppliers or other parties involved or related in the compilation, computation or creation of any MSCI index. MSCI’s indices are registered trademarks of MSCI or its affiliates and Lojas Americanas S.A. has been granted a license to use these trademarks for given purposes.
Lojas Americanas S.A. Notes to the financial statements September 30, 2018 and 2017 In thousands of Brazilian Reais, unless otherwise stated
1. Operational context Lojas Americanas S.A. (“LASA” or “Company”) is a publicly traded company with shares traded on B3 – Brasil, Bolsa, Balcão under the codes LAME3 - ON and LAME4 - PN and is engaged in the retail trade of consumer products through stores in the traditional, AmericanasExpress and convenience, “Local”, models, located in the main capitals and cities of the country, as well as distribution centers.
The Company, through its subsidiaries (the “Group”), also operates e-commerce and marketplace through its subsidiary B2W COMPANHIA DIGITAL (“B2W”), that operates the following brands: Americanas.com, Submarino, Shoptime and Sou Barato, besides offering a complete platform of services in the verticals of technology, storage and customer service, consumer financing and digital payments through Ame.
2. Description of significant accounting policies The main accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently in the quarters presented, unless otherwise stated.
2.1 Basis of accounting
The parent interim financial information were presented in accordance with the CPC 21 (R1) - Interim Financial Reporting technical pronouncement and the consolidated interim financial information in accordance with the standards 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 standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of the Quarterly Information.
In accordance with CPC 21 (R1) - Interim Financial Statements and the Management's assessment of the material impacts of the information to be disclosed, the explanatory notes described below are not being presented. Other explanatory notes are being presented in a way that allows for the perfect understanding of these quarterly information if read in combination with the notes disclosed in the financial statements of December 31, 2018.
Explanatory notes that are not being provided:
• Accounting practices and policies; • Critical accounting estimates and judgments; • Credit quality of financial assets; • Insurance coverage; and • Other information The issuance of these quarterly information was authorized by the Board on May 2, 2019.
2.2 Accounting Practices and Policies Except when described as in note 2.3 of the quarterly information, accounting policies are consistently presented in accordance with the accounting practices adopted in the parent and consolidated financial statements for the year ended on December 31, 2018. Therefore, the quarterly information should be read in conjunction with the information disclosed in the financial statements as of December 31, 2018.
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
35
2.3 Changes in significant accounting policies
Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended December 31, 2019. The CPC 06 (R2) 16/IFRS introduced a single model of accounting for leases in the balance sheet of tenants. As a result, the group as tenant, recognized the right to use assets that represent your rights to use the underlying assets and lease liabilities that represent your obligation to make lease payments (note 16). Lessor accounting remains similar to previous accounting policies. The Group adopted the CPC 06 (R2)/IFRS 16 - Leasing Operations (see a), and used the modified retrospective approach, in which the cumulative effect of the initial adoption is recognized as an adjustment to the opening balance of retained earnings at January 1, 2019. Therefore, the comparative information presented for 2018 was not revived – i.e., is presented as previously reported in accordance with the CPC 06/IAS 17 and related interpretations. Below we present the main lines of financial statements, with the amendments introduced by the CPC 06 (R2)/IFRS 16 - Leasing Operations, if recognized and presented in comparative form: Balance Sheets at January 1, 2019
Parent Company
Consolidated
Published Impact Adjusted
Published Impact Adjusted
Non current asset
7,412,780 1,688,192 9,100,972
10,791,035 1,958,894 12,749,929 Investment 2,959,712 (14,401) 2,945,311 - - - Differed IR/CSLL
26,369 106,793 133,162
1,197,780 118,853 1,316,633
Right to use real state
- 1,595,800 1,595,800
- 1,840,041 1,840,041
Current Liability
5,192,108 282,776 5,474,884
8,402,748 348,752 8,751,500
Leasing to pay – net
- 282,776 282,776
- 348,752 348,752
Non current liability
7,600,767 1,627,119 9,227,886
13,615,783 1,840,857 15,456,640
Leasing to pay – net
- 1,627,119 1,627,119
- 1,840,857 1,627,120
Shareholders Equity
4,924,597 (221,703) 4,702,894
6,286,125 (230,715) 6,055,410
Earnings reserve 865,667 (221,703) 643,964 865,667 (221,703) 643,963
Participation of non controlling shareholders
- - - 1,361,528 (9,012) 1,352,516
(a) CPC 06 (R2) / IFRS 16 - Leasing Operations
The CPC 06 (R2)/IFRS 16 introduced a single model of accounting for leases in the balance sheet for tenants. A tenant recognizes a right to use that represents the right to use the leased assets and lease liabilities that represents the obligation to make rental payments. Exemptions are available for short-term rentals and low-value items. As the basis for conclusion, the IASB suggests as low-value for those whose underlying assets, when new, are up to U$5000.
Lessor accounting remains similar to the current standard, that is, the leases continue to classify the financial or operational leases.
The CPC 06 (R2)/IFRS 16 entered into force from January 1, 2019, and replaces the following standards:
-IAS 17 - Leases (CPC 06); -IFRIC 4 - Determine if an agreement contains a lease (ICPC 03); -SIC 15 – Operating Leases - Incentives (ICPC 03);
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
36
-SIC 27 - Evaluating the essence of transactions involving the legal form of a lease (ICPC 03).
2.4 Adjustment to present value The purchases in terms, basically suppliers from merchandise and services, were carried at their present value considering the terms of said transactions. Using the average rate of 6.40% p.y. on March 31, 2019 (6.48% p.y. in December 31, 2018), the base of funding for years. The constitution of the adjustment to present value of purchases is recorded under "Suppliers" (note 17) and "Inventories" (note 9) and your rollback has as a counterpart to the item "Financial Expenses" (note 27), for the enjoyment of term, in the case of suppliers, and completion of inventories in relation to values on them recorded under "cost of goods sold and services rendered". Sales operations in the long term, with the same value of sale, prefixed, represented mainly by the sales period with credit cards, were brought to your present value considering the deadlines of such transactions. We used the average 7.13% p.y. on March 31, 2018 (7.24% p.a. in December 31, 2018), base discounts of receivables in the period-bases. About the adjustments identified, applied the tax rates in the bases. The adjustment to present value of sales in the long term has in return the item "trade accounts receivable" (note 8) and the achievement is recorded under "financial income" (note 27) for the enjoyment of the period.
3. Critical accounting estimates and assumptions
Accounting estimates and judgments are continuously evaluated and are based on historical experience and other factors, including expectations of future events, which are considered reasonable for the circumstances. Until the period ended in March 31, 2019, there were no changes in accounting estimates and judgments in relation to those disclosed in the accounting statements as of December 31, 2018.
4. Financial Risk Management 4.1 Financial risk factors
In the normal course of its business, the Group is exposed to market risks related to fluctuations in interest rates and exchange rate variations, as well as credit risk in its term sales and liquidity risk. The Group use hedging instruments to minimize their exposure to these risks, based on their monitoring under the management of their directors and supervised by the Board of Directors. This management determines the strategies to be adopted and the Administration contracts protection instruments appropriate to each circumstance and inherent risks. The Group does not have options, swaptions, repurchase swaps, flexible options, derivatives embedded in other products, structured transactions with derivatives and “exotic derivatives”. The Group does not operate with derivative financial instruments for the purpose of speculation, thus reaffirming their commitment to the conservative cash management policy, both in relation to their financial liabilities and to their cash position.
(a) Market risk
(i) Foreign exchange risk
The Group use traditional swaps for the purpose of eliminating exchange losses arising from sharp devaluations of the Brazilian Real currency (BRL) against these funds in foreign currency.
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
37
Traditional swaps (recorded in the loans and financing account) The counterpart of these traditional swaps is the financial institution that provides loans in foreign currency (US dollars). These CDI-denominated swap operations aim to offset exchange rate risk by transforming the cost of debt (note 18) to local currency and local interest rates, varying from 115.7% to 141% of the CDI. These agreements have a reference value of R$ 438,951 in the parent company and R$ 1,375,275 in the consolidated on March 31, 2019 (R$ 496,109 and R$ 1,632,433 on December 31, 2018, respectively). These transactions are matched in terms of value, terms and interest rates. The Company and its controlling companies intend to settle such contracts simultaneously with the respective loans. In this type of operation there are no contractual terms of margin call.
Controladora Consolidado
03/31/2019 12/31/2018 03/31/2019 12/31/2018
Hedge item 508,618 615,050 1,418,462 1,783,334
Swap passive position (% CDI) (473,621) (562,807) (1,419,358) (1,727,114)
Accounting balance swap adjustment (notes 7
and 18 (a)) 34,997 52,243
(896) 56,220
Controladora Consolidado
31/03/2019 31/12/2018 31/03/2019 31/12/2018
Amortized Cost 508,618 615,050 1,418,462 1,783,334
Hedge item (debt) Fair Value 513,211 614,309 1,389,413 1,751,720
4,593 (741) (29,049) (31,614)
Swaps
Asset position (Dollar/Euro +
Pre)
Amortized Cost (508,618) (615,050) (1,418,462) (1,783,334)
Fair Value (520,455) (627,392) (1,422,758) (1,793,334)
11,837 12,342 4,296 10,000
Passive position (% CDI)
Amortized Cost (473,621) (562,807) (1,419,358) (1,727,114)
Fair Value (480,865) (575,890) (1,452,703) (1,768,728)
(7,244) (13,083) (33,345) (41,614)
4,593 (741) (29,049) (31,614)
Considering that the Company’s exposure to the risk of exchange rate fluctuations is mitigated by the traditional swap operations contracted for exchange protection, and therefore simultaneously with the respective foreign currency loans, the variation of the US Dollar against the Brazilian Real, is due to the current market condition, and has no material effects on the Company’s quarterly financial statements.
(ii) Interest rate risk The Group uses resources generated by operating activities to manage their operations, as well as to guarantee their investments and growth. In order to complement its cash requirements for growth, as well as sustain cash applications when necessary, the Group obtains loans and financing from the country’s main financial institutions, substantially indexed to the CDI variation (Around 85%). The inherent risk arises from the possibility of significant fluctuations in the CDI (sensitivity analysis in item (d) below). The CDI indexed financial investments policy partially mitigates this effect.
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
38
(b) Credit risk Credit risk is managed on a Company-wide basis. Credit risk arises from cash and cash equivalents, derivative financial instruments, deposits with banks and other financial institutions, as well as from credit exposures to customers. For banks and other financial institutions, individual risk limits are determined based on internal or external classifications in accordance with the limits determined by the Board of Directors. The use of credit limits is monitored regularly. Sales to retail customers are settled in cash or through the major credit cards on the market. Credit risk is minimized as the receivables of the Group are essentially with the main credit card companies that have minimal levels of credit rating. Approximately 55.9% (33.3% in Consolidated) of the Company's sales are made in cash and the remainder mainly through credit cards managed by third parties.
(c) Liquidity risk Management monitors ongoing forecasts of the Company's liquidity requirements to ensure that it has sufficient cash to meet its operating needs. This forecast takes into account the Company’s debt financing plans, compliance with clauses, compliance with the internal targets of the balance sheet quotient and, if applicable, external or legal regulatory requirements, such as currency restrictions. Treasury invests excess cash in interest-bearing bank accounts, term deposits, short-term deposits and securities, choosing instruments with appropriate maturities or sufficient liquidity to provide 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 net basis by the Group by maturity bands corresponding to the period remaining between the balance sheet date and the contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of cash flows.
Parent Company
Less
than one
year
Between
one
and two
years
Between
two and five
years
Above
five
years
On March 31, 2019
Suppliers 2,861,356 - - - Loans and financing and debentures 1,191,293 532,965 7,220,339 4,671,359 Leasing to pay 426,846 403,996 949,525 577,447 On December 31, 2018 Suppliers 2,967,313 - - -
Loans and financing and debentures 1,813,347 909,929 7,176,038 2,288,886
Consolidated
Less
than one
year
Between
one
and two
years
Between
two
and five
years
Above
five
years
On March 31, 2019
Suppliers 4,698,474 - - -
Loans and financing and debentures 1,874,451 3,090,569 14,731,014 4,982,978
Leasing to pay 491,640 484,366 1,073,703 629,107 On December 31, 2018 Suppliers 4,973,577 - - - Loans and financing and debentures 2,556,208 3,416,684 11,721,692 3,149,317
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
39
(d) Additional sensitivity analysis required by Securities Commission (CVM) Sensitivity analysis of swap transactions The swap transactions recorded by the Group, were contracted simultaneously with the foreign currency loan operations, including maturities, rates and equivalent amounts, exchanging exchange exposure of the loans with the CDI exposure. The Company’s gross debt in USD was represented as follows:
Parent Company Consolidated
March 31,
2019
December 31,
2018 March 31,
2019
December 31,
2018
Loans in foreign currency - USD (Note 18 (a))
508,618 615,050 943,885 1,299,141
EUR (Note 18 (a))
- - 474,577 484,193
USD rate at closing date 3.8967 3.8748 3.8967 3.8748 EUR rate at closing date - - 4.3760 4.4390
USD estimated final rate, published by Bacen 3.7000 3.8000 3.7000 3.8000
EUR estimated final - - 4.4825 4.4825
Scenarios I and II were estimated with a deterioration of 25% and 50%, respectively, above the probable expectation, as shown in the table below:
Parent Company:
Scenario I - Scenario II -
Probable 25% 50% Operation Risk Scenario Deterioration Deterioration
US Dollar
Exchange rate on March 31, 2019
3.8967 3.8967 3.8967
Estimated exchange rate for 2019
3.7000 4.6250 5.5500
Loans in foreign currency (variation US$) (25,674) 95,062 215,798
Swaps (Active End in Foreign Currency) (variation US$) 25,674 (95,062) (215,798)
Net Effect
Null Null Null
Consolidated:
Scenario I - Scenario II -
Probable 25% 50% Operation Risk Scenario Deterioration Deterioration
US Dollar
Exchange rate as of March 31, 2019 3.8967 3.8967 3.8967
Estimated exchange rate for 2019 3.7000 4.6250 5.5500
Loans in foreign currency (variation US$) (47,646) 176,414 400,473 Swaps (Active End in Foreign Currency) (variation US$) 47,646 (176,414) (400,473) Net Effect
Null Null Null
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
40
Scenario I - Scenario II -
Probable 25% 50%
Operation Risk Scenario Deterioration Deterioration
Euro
Exchange rate as of March 31, 2019 4.3760 4.3760 4.3760
Estimated exchange rate for 2018 4.4825 5.6031 6.7238
Loans in foreign currency (variation EUR) 11,550 133,079 254,619 Swaps (Active End in Foreign Currency) (variation EUR) (11,550) (133,079) (254,619) Net Effect
Null Null Null
Sensitivity analysis to CDI rate variation
The Group maintains big part of its debt (around 90%) and its cash and cash equivalents indexed to the CDI variation, considering the foreign currency debt swap due to CDI variation with traditional swaps. The net debt was represented as follows:
Parent Company Consolidated
March 31,
2019
December 31,
2018 March 31,
2019
December 31,
2018
Net debt:
- Cash and cash equivalents 3,980,514 3,693,154 7,725,360 6,813,846 - Securities 1,400,322 1,227,258 4,657,556 3,295,849 - Loans and funds (3,811,314) (4,316,068) (12,903,939) (10,964,064) - Debentures (5,808,492) (4,716,773) (5,808,492) (4,716,773)
(4,238,970) (4,112,429) (6,329,515) (5,571,142)
CDI rate on the closing date 6.40% 6.40% 6.40% 6.40%
CDI rate final estimated 6.50% 6.50% 6.50% 6.50%
In addition, Management performed 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 -
Probable 25% 50% Operation Scenario Deterioration Deterioration
Annual effective CDI rate in September 30, 2018 6.40% 6.40% 6.40% Net debt 4,238,970 4,238,970 4,238,970
Estimated annual CDI rate in 2018 6.50% 8.13% 9.75%
Annual effect on net debt:
Increase 4.239 73.334 142.005 Reduction - - -
Consolidated:
Scenario I - Scenario II -
Probable 25% 50% Operation Scenario Deterioration Deterioration
Annual effective CDI rate in September 30, 2018 6,40% 6,40% 6,40% Net debt 6.329.515 6.329.515 6.329.515 Estimated annual CDI rate in 2018 6.50% 8.13% 9.75%
Annual effect on net debt Increase 6,330 109,501 212,039
Reduction - - -
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
41
4.2 Capital management The objective of the Group in managing its capital is to ensure the continuity of its operations to offer shareholder returns and benefits to other stakeholders, as well as maintaining an ideal capital structure to minimize the associated costs. The Company and its controlling companies monitor the levels of indebtedness through the Net debt / Adjusted EBITDA ratio, which represents, more appropriately, its debt metrics, since it reflects the consolidated financial obligations net of immediate cash and cash equivalents, considering its generation operating cash flow.
4.3 Fair Value Estimate
It is assumed that the balances of accounts receivable from customers and accounts payable to suppliers at their book value, less impairment in the case of accounts receivable, are close to their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the prevailing market interest rate that is available to the Group for similar financial instruments. The group uses the market approach to estimate the fair value of its financial instruments. The Group applies CPC 46 / IFRS 13 to financial instruments measured in the balance sheet at fair value, which requires disclosure of fair value measurements at the following hierarchy level: (Level 1) quoted (unadjusted) prices in active markets for identical assets or liabilities, which the
entity may have access on the measurement date;
(Level 2) information that is observable for the asset or liability, either directly or indirectly, except quoted prices in level 1;
(Level 3) information (inputs) are unobservable data for the asset or liability. The table below shows the assets and liabilities of the consolidated view measured at fair value as of March 31, 2019. Consolidated
Balance
Level 1 Level 2 Level 3 total
Assets
Fair value through profit or losses
Assets that compose the FIDC portfolio (F. Fênix) - 999,496 - 999,496
Assets that compose the FIDC portfolio (F. Fenícia) - 41,417 - 41,417
CDB - 10,635,631 - 10,635,631
Derivatives used for hedge - swap - 42,297 - 42,297
Commitment debentures and fixed income fund quotas - 440,205 - 440,205
Total of assets - 12,159,046 - 12,159,046
Liabilities
Fair value through profit or losses
Loans and Financing (Foreign Currency) - 1,418,462 - 1,418,462
Derivatives used to hedge - swap 42,810 42,810
Total liabilities - 1,461,272 - 1,461,272
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
42
The table below shows the assets and liabilities of the consolidated view measured at fair value as of December 31, 2018.
Consolidated
Balance
Level 1 Level 2 Level 3 total
Assets
Fair value through profit or losses
Assets that comprise the FIDC (F. Fenícia) - 12,044 - 12,044
CDB - 9,363,961 - 9,363,961
Committed debentures and fixed income fund quotas - 429,040 - 429,040
Derivatives used to hedge - swap - 56,364 - 56,364
Total of assets - 9,861,409 - 9,861,409
Liabilities
Fair value through profit or losses
Loans and Financing (Foreign Currency) - 1,783,334 - 1,783,334
Derivatives used for hedge - swap - 143 - 143
Total liabilities - 1,783,477 - 1,783,477
5 Financial instruments by category Amounts presented free of funding costs:
Consolidated
Loans and receivables
Fair value through profit
or loss Total As of March 31, 2019 Assets, according to the balance sheet Marketable securities - 1,481,118 1,481,118
CDB - 10,635,631 10,635,631
Derivative financial instruments - swap - 42,297 42,297
Accounts receivable from clients and other accounts
receivable, excluding prepayments 2,685,919 - 2,685,919
Cash and cash equivalents 223,870 - 223,870
2,909,789 12,159,046 15,068,835
Consolidated Fair Value
through profit or loss
Amortized Cost
Total As of March 31, 2019 Liabilities, according to the balance sheet
Loans - 11,600,415 11,600,415
National currency 1,418,462 - 1,418,462
Foreign currency 42,810 - 42,810
Derivative financial instruments - swaps - 5,193,433 5,193,433
Suppliers and other obligations, excluding legal obligations
- 5,844,566 5,844,566
Debentures - 11,600,415 11,600,415
1,461,272 22,638,414 24,099,686
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
43
Consolidated
Loans and receivables
Fair value through profit
or loss Total As of December 31, 2018 Assets, according to the balance sheet Marketable securities - 441,084 441,084 CDB - 9,363,961 9,363,961 Derivative financial instruments - swaps - 56,364 56,364 Accounts receivable from clients and other accounts
3,002,248
-
3,002,248 receivable, excluding prepayments 3,113,845 - 3,113,845 Cash and cash equivalents 248,286 - 248,286
3,250,534 9,861,409 13,111,943
Consolidated
Fair value through result
Amortized Cost
Total
Balance on 31 December 2017 Liabilities, according to the balance sheet
Loans
Local currency - 9.307.018 9.307.018
Foreign currency 1.783.334 - 1.783.334
Derivative financial instruments - swap 143 - 143
Suppliers and other obligations, - 5.487.719 5.487.719
excluding legal obligations
Debentures - 4.749.473 4.749.473
1.783.477 19.544.210 21.327.687
6 Cash and cash equivalents
Parent Company Consolidated
March 31,
2019
December 31,
2018 March 31,
2019
December 31,
2018
Cash resources
99,984
150,614
100,001
150,691
Bank resources 16,694 88,059 123,869 97,595 Certificates of Deposit Banking
CDBs and Debentures (i) 3,863,836 3,454,481 7,501,490 6,565,560
3,980,514
3,693,154
7,725,360
6,813,846
(i) Remunerated at an average CDI rate of up to 106.25% as of March 31, 2019 (up to 101.4% in December 31, 2018). The CDB's and Debentures
classified as cash equivalents have immediate liquidity without risk of changing value in the event of early redemption.
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
44
7 Securities and other financial assets
Parent Company
Consolidated
March 31,
2019
December 31, 2018
March 31,
2019
December 31, 2018
Fair value through profit or loss
Investment Funds (FIDC)
-
-
999,497
-
Junior Quota (Fênix - FIDC)
52,980
-
-
-
Senior Quota (Fenícia - FIDC) - - 41,417 12,044
Derivatives used for hedge – swap (iv) 35,655 52,386 42,297 56,364
Certificates of Bank Deposit – CDBs (i)
1,287,946
1,151,494
3,174,243
2,798,401
Fixed income funds (ii)
23,741
23,378
39,113
38,515
Committed debentures (iii)
-
-
360,989
390,525
1,400,322
1,227,258
4,657,556
3,295,849
Current Part 1,347,342 1,227,258 4,616,139 3,295,849
Non Current Part 52,980 - 41,417 -
(i) – Remunerated at the average CDI rate of up to 106.25% on 03/31/2019 (up to 101.4% as of 12/31/2018). (ii) - Composed of 8,609,023.37 quotas and 14,178,497.02 quotas as of 03/31/2019 (8.609.023,37 quotas 14.178.497,02 quotas as of 12/31/2018), parent company and consolidated, respectively. Managed by a leading financial institution, which basically applies to federal government securities, debentures and bank deposit certificates, and can be traded at any time. (iii) – Remunerated at the average CDI rate of up to 101.0% on 03/31/2019 (up to 101.1% as of 12/31/2018), parent company and consolidated. Classified as fair value through profit or loss, and may be traded at any time. (iv) – Transactions in foreign currency are hedged against foreign exchange fluctuations through swap derivative financial instruments (note 4.1).
(a) Investment Fund in Retail Credit Rights – Fênix FIDC do Varejo II
In October 2018, was approved by the Company's administration the structure of PHOENIX CREDIT RIGHTS INVESTMENT FUND II RETAIL ("Fênix FIDC do Varejo II"), with the duration of 20 (twenty) years, whose goal set in regulation is the acquisition of credit rights owned by the Company, among others, originating through credit cards used in transactions for the purchase and sale of products and services, whose electronic transactions are captured and processed by systems of accrediting of commercial establishments. The "Fênix FIDC do Varejo II", initially will issue 1.1 million shares with nominal value of R$1 (thousand reais), being 1,017,500 senior with profitability target quotas corresponding to 106.50% of the variation of DI and 82,500 subordinate shares to be subscribed by the Company and by the subsidiary B2W, totaling senior shares and subject to a R$1.1 million of Equity of "Fênix FIDC do Varejo II". The total value of senior units corresponding to the principal invested will be amortized/rescued on a single date, the working day corresponding to the end of the period of 5 (five) years from your date of issue. The value of senior units corresponding to the increased profitability to senior units after your date of issue will be repaid semi-annually, each period of 6 (six) months from the date of issue. The structure of the Fênix FIDC do Varejo II, as well as the remuneration of quotas is so represented: QUOTAS
Quantity
% 03/31/2019
Bechmark - DI
Senior
1,017,500
92,5% 1,025,264
106.50% Subject
83,602
7,5% 83,255
-
100,0% 1,108,519
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
45
Balance Sheet:
March 31, 2019 Assets Cash and equivalente 4 Marketable securities 999,496 Accounts receivable Lojas Americanas 3,998 B2W 105,121 Total assets 1,108,619
Liabilities Accounts payable (Current) 100 Financing (Non current) 1,025,264 Shareholders equity 83,255
Total liabilities and shareholders equity 1,108,619
Income Statement in the quarter ended in:
March 31, 2019 Financial revenues 970 Financial expenses (215) Quarter’s net income 755
(b) Investment Fund in Retail Credit Rights Fenícia – Controlling Company B2W
The Fund aims to raise funds for application mainly credit rights, in accordance with the investment policy, composition and diversification of the Fund's portfolio. The Fund is composed in the form of gated community, so that their shares may only be redeemed as defined in the respective rescue dates or supplements due to liquidation of the Fund. The Fund aims to provide investors the appreciation of their shares, through the application of the resources of the Fund mainly in acquiring credit rights. The Fund will have a period of indefinite duration and may be settled by decision of the General Shareholders Meeting in accordance with the fund rules.
8 Accounts Receivable
Parent Company
Consolidated
March 31,
2019 December 31,
2018
March 31,
2019 December 31,
2018
Credit Cards (i)
1,245,608
1,712,285
1,502,540
1,815,356
Investment fund in creditory
rights (FIDC) (note 7 (a))
3,998 - 109,119 -
Electronic debits and checks
29,221 13,197 29,888 13,346 Other accounts receivable (ii)
6,145 8,718 122,119 109,135
1,284,972
1,734,200
1,763,666
1,937,837
Adjustment to present value (Note 2.4) (iii)
(12,780)
(19,844)
(19,470)
(21,785)
Allowance for accounts
(1,022)
(966)
(48,539)
(45,971)
1,271,170
1,713,390
1,695,657
1,870,081
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
46
(i) - Credit card transactions can be split up, usually within twelve months. The credit risk of the Company and its subsidiaries is minimized as the receivables portfolio is monitored by the credit card management companies. (ii) - Other accounts receivable represent, mainly, sales made to corporations through corporate operations, by the subsidiary B2W, loyalty projects and commercial agreements. (iii) - The adjustment to present value was calculated on the accounts receivable net of anticipations.
The aging list of trade accounts receivable is as follows:
Parent Company
Consolidated
March 30,
2019
December 31, 2018
March 30,
2019
December 31, 2018
Due
1,284,972 1,734,200 1,719,342 1,904,565
Due
Up to 30 days
- - 13,474 8,225
From 1 until 60 days
- - 6,740 1,693
From 61 until 90 days
- - 802 781
From 91 until 120 days
- - 2,239 696
From 121 until 180 days
- - 409 496
> 180 days - - 20,660 21,381
1,284,972 1,734,200 1,763,666 1,937,837
There are no overdue installments at the parent company, as credits receivable are maintained with credit card operators. In the Consolidated, the amount of expected losses on doubtful accounts is based on the Management’s analysis of expected losses on loans due and overdue.
The movement of the estimated credit loss provision is as follows:
Parent
Company
Consolidated
Balance as of December 31, 2017
(1,007) (35,342)
Write-offs or reversals
(49) (609)
Balance as of March 31, 2018
(1,056) (35,951)
Additions 90 (10,020)
Balance as of December 31, 2018 (966) (45,971)
Additions (56) (2,568)
Balance as of March 31, 2019
(1,022) 422)
(48,539)
9 Inventories
Parent Company
Consolidated
March 30,
2019
December 31, 2018
March 30,
2019
December 31, 2018
Goods:
In stores
2,248,580
1,898,612
2,248,580
1,898,612
In distribution centers
710,420
720,684
1,556,404
1,598,777
1,5981,598,779
Adjustment to present value (note 2.4)
(42,933)
(29,024)
(51,736)
(30,661) Supplies and packaging
19,742
18,284
23,416
21,600
Advances to suppliers 18,350 18,350 18,350 18,350
2,954,159
2,626,906
3,795,014 3,506,678
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
47
The accounts above are presented by the net amounts of the provision for inventory and obsolescence losses. The changes in the provision for losses are shown below:
Parent
Company
Consolidated
Balances as of December 31, 2016
(50,998) (131,563)
Reversal
15,564 15,808
Balances as of September 30, 2017
(35,434) (115,755) Additions (18,094) (9,120)
Balances as of December 31, 2017 (53,528) (124,875)
Reversal 12,851 19,503
Balances as of September 30, 2018
(40,677) (105,372)
10 Recoverable Taxes
Parent Company
Consolidated
March 30,
2019
December 31, 2018
March 30,
2019
December 31, 2018
Value and Services - ICMS:
Marketing of goods
656,039
604,681
849,363
787,334
Property, plant and equipment
23,663
23,399
23,663
23,399
679,702
628,080
873,026
810,733
Withholding Tax Return - IRRF
20,363
18,601
42,882
87,169
PIS and COFINS
76,574 152,668
1,300,379 1,369,591 Income Tax Legal Entity (“IRPJ”) and
Social Contribution on Net Profits (“CSLL”)
-
-
337,752
279,957
Others
5,866
5,801
16,375
15,141
782,505
805,150
2,570,414
2,562,591
Current portion
349,442
404,919
808,076
906,836
Non-current portion
433,063
400,231
1,762,338
1,655,755
Below is the estimate of realization of the main recoverable taxes:
Parent Company
Consolidated
In PIS and COFINS
IR and CSLL ICMS
PIS and COFINS
IR and
CSLL ICMS
2019
76,574
230,952
6,155
230,952
119,041 206,591
230,952
169,545
230,952
218,829 2020
- 14,208 270,143 196,949 78,872 363,679
2021
- - 122,377 355,825 32,653 122,377 2022 to 2025
- - 144,478 541,014 99,564 144,478
76,574 20,363
656,039
1,300,379 380,634 849,363
The Company constantly evaluates the recovery of its tax credits and maintains the net balance of the recovery expectation in the balance sheet.
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
48
11 Income and social contribution taxes
(a) Breakdown of deferred income and social contribution taxes
Parent Company
Consolidated
March 31,
2019 December 31,
2018
March 31,
2019 December 31,
2018
Tax losses
6,950
-
737,443
681,298
Negative bases
2,502
-
265,483
245,271 Tax credit of subsidiaries abroad 71,398 71,398 71,398 71,398 Temporary differences:
Contingencies
28,886 31,747
70,415
50,957 Unsettled swap transactions
22,819 30,622
50,838
59,317
Adjustment to present value credits
and obligations
6,915 3,954
49,136
49,718
Provision for doubtful accounts and losses
14,178 18,528
39,865
68,019 Interest and leasing depreciation 51,047 49,020 51,047 49,020 Temporal differed without leasing operations 99,371 - 112,015 - Others 35,553 37,596 173,736 177,796 Asset
339,619 242,865
1,621,376
1,452,794 Temporary differences
Review of the useful life
162,695 153,499
163,440
154,510 Capitalization of interest
- -
27,911
32,153
Expenses with leasing 62,997 62,997 62,997 62,997 Others
- -
5,676
5,354
Liability
225,692 216,496
260,024
255,014
Net deferred tax
113,927 26,369
1,361,352
1,197,780
(b) Expected realization of deferred income and social contribution taxes
The Group presents a history of projections of taxable income, taking into account various financial and business assumptions considered in technical studies carried out at the end of the year ended December 31, 2018. With respect to tax credits, it is estimated that they will be recoverable, as follows:
In
Parent Company
Consolidated
2019
57,400 65,232
2020
40,785 41,720
2021
52,918 112,710
2022
10,990 141,539
2023
11,586 224,574
2024
12,242 327,234 2025 12,964 425,839 2026 to 2028 140,734 282,528
339,619 1,621,376
The company reiterates the confidence in its business plan, which made the operational structure of the business development platforms more robust, and will continue monitoring the internal and external indicators in order to better assess the evolution of its estimates.
(c) Reconciliation between nominal and effective rates
The reconciliation between income tax and social contribution at the nominal rate, in addition to the actual amounts in income, is shown below:
Lojas Americanas S.A. Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
49
Parent Company
Consolidated
March 31,
2019
March 31,
2018
March 31,
2019
March 31,
2018
Income (loss) for the semester before income tax, social contribution and participation in subsidiaries
48,357 138,086 (158,208) (27,741)
Nominal tax rate
34%
34%
34%
34%
(16,441) (46,949) 53,791 9,432
Effect of (additions) or exclusions
to accounting profit
Other permanent net exclusions (additions)
(2,792) (2,589) (2,665) (5,555)
Tax return and social contribution
at the effective rate (19,233) (49,538) 51,126 3,877
Current - (35,442) (4,443) (41,217) Deferred (19,233) (14,096) 55,569 45,094
Income tax and social contribution (19,233) (49,538) 51,126 3,877
Effective rate 39.8% 35.9% 32.3% 14.0%
Lojas Americanas S.A. Notes to the Financial Statements on September 30, 2018 and 2017 In thousands of Brazilian Reais, unless otherwise provided
50
12 Related party transactions
Balances
Transactions
Receivable (payable)
Sales
Purchases
Revenues (expenses)
Transactions
September
30, 2018
December 31, 2017
September
30, 2018
September
30, 2017
September
30, 2018
September
30, 2017
September
30, 2018
September
30, 2017
a) Operations of the Parent Company with direct and indirect subsidiaries: B2W Companhia Digital (iv) - Rental of headquarters, distribution centers and sundry 5,057
3,148
-
-
-
-
5,511 5,084
- Resale Goods - sale 4,891
13,213
(23)
68,343
-
-
-
- - Resale Goods - purchase (35)
(19,786)
-
-
35
127
-
-
- Operations in kiosks (i) (8,885)
(7,501)
-
-
-
-
7,043
5,973 - Means of payment
1,028
(10,926)
(23)
68,343
35
127
12,554
11,057
ST Impostações Ltda. / QSM
- Goods for resale (6,496)
(16,297)
-
-
133,557
161,213
-
-
Other operations with subsidiaries
- BWU Comércio e Entretenimento S.A. 750
839
-
-
-
-
-
- - Klanil Services Ltda.
- Current Account - - - - - - - - - Louise Holdings Ltda. - Current Account 1 1 - - - - - - - Cheyney Financial S.A - - - - - - - Current Account 381 381 - - - - - - - Auchal Investments S.A - - - - - - - Current Account 136 136 - - - - - - - Click - Rodo Entregas Ltda. -
-
-
-
-
-
-
-
- Direct (6,227) (7,968) - - 8,470 5,322 - - - Bit Services (2,289) (5,822) - - 5,635 4,086 - - - Posto Vicom Ltda. -
-
-
-
-
-
-
-
- Freijó Administrações e Participações Ltda. 238
228
-
-
-
-
-
-
Non-current asset 14,538
20,971
-
-
-
-
-
-
Non-current liability (27,016)
(60,399)
-
-
-
-
-
-
b) Operations of the direct subsidiary B2W Companhia Digital
- Management remuneration (ii) -
-
-
-
-
-
-
(283)
- Debentures (iii) (204,040)
(200,246)
-
-
-
-
3,794
3,983
(i) - In order to increase brand synergy, Americanas.com installed kiosks in the Company’s commercial premises. The amounts from this transaction are fully transferred to B2W, net of the costs incurred by the company with the operation. (ii) - Payment of a member of the board of directors One of the members of the Board of Directors of B2W, Mr. Love Goel, appointed to this position by the Administration, holds a stake in GVG, which is the CEO, who provides project development services related to customers’ shopping experience on the subsidiary B2W Companhia Digital. The choice of the company by the subsidiary was based on the need for B2W and through benchmarking. The values related to the project are compatible with market values; (iii) - On 7 December 2010, at a meeting of the Board of Directors of the subsidiary B2W, the first private issue of simple, non-convertible debentures of the subordinated type, in a single series, in the amount of R$ 200,000, eliminated in the consolidation of the Company. The debentures were subscribed by BWU, as described in note 18 (c); (iv) - Licensing of the use of the Americanas.com brand and similar trademarks - The subsidiary B2W has entered into a license agreement for the use of the Company's trademark, where the trademark licensing will be free of charge as long as the Company has a relevant equity interest in the Subsidiary.
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
51
13 Investments - parent company
(a) Changes in investments in subsidiaries
BWU
Freijó
B2W
Comércio e
Administração
Louise
Klanil
Companhia
Entretenimento
Participações
JSM Holdings
Services
Digital
S.A.
Ltda.
Global Ltda.
Ltd.
Total
As of December 31, 2017
2,622,568 454,346 2,333 -
109,659 - 3,188,906
Profit sharing (71,376) 2,584 - - 38 221 (68,533) Direct adjustments to shareholders’ equity of subsidiaries
2,556 - - - 524 (2) 3,078
Transfer to provision for investment losses (i) - - - - - (219) (219)
As of March 31, 2018
2,553,748 456,930 2,333 -
110,221 - 3,123,232
Capital integralization - - - 52 - - 52 Profit sharing (173,071) (1,212) 351 - 4,862 (3,674) (172,744) Direct adjustments to shareholders’ equity of subsidiaries
(3,658) - - - 9,499 (6,329) (488)
Transfer to provision for investment losses (i) - - - - - 10,003 10,003
Dividends
- (343) - - - - (343) As of December 31, 2018 2,377,019 455,375 2,684 52 124,582 - 2,959,712
Profit sharing (85,644) 2,558 (9) - 1,243 (756) (82,608)
Direct adjustments to subsidiaries shareholders’ equity
(11,040)
708
- -
707 (50) (9,675)
Transfer of provision for investment losses (i) - - - - - 806 806
As of March 31, 2019
2,280,335 458,641 2,675 52 126,532 - 2,868,235
(i)At the Extraordinary Shareholders’ Meeting held by subsidiary B2W, on March 25, 2017, a capital increase of R$ 1,210,000 was approved, through the private issuance of 110,000,000 registered common shares at a price of R$ 11.00 per share. The capital increase was approved at a meeting of the Board of Directors of the subsidiary, held on August 24, 2017. The Company subscribed the total of 68,378,511 shares, integralizing R$ 752,163, that corresponded to the Company’s proportional participation in the subsidiary’s share capital, on the date of notice to the shareholders of the capital increase. Upon subscription, the Company’s interest in the subsidiary's capital stock, on the date of approval, remained at 62.16%.
(ii)An allowance for losses on investments in companies with short-term liabilities classified as Non-Current Liabilities, “Long-Term Liabilities” was established.
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
52
(b) Subsidiaries
(i) BWU Comércio Entretenimento S.A. As of March 31, 2019, the subsidiary has R$ 250,888 in cash and cash equivalents and securities (R$ 246,595 at December 31, 2018). These amounts include debentures issued by the subsidiary B2W Companhia Digital (note 19 (b)).
(ii) B2W - Companhia Digital
Find below the movement that occurred in the quarter:
Non-
Controlling shareholders
Controlling shareholders
Total
Balances as of December 31, 2018 - net of goodwill 2,175,587 1,361,528 3,537,115
Result for the period (85,644) (53,598) (139,242)
Direct adjustment to shareholders’ equity (11,040) (6,910) (17,950)
Balances as of March 31, 2019 - net of goodwill 2,078,903 1,301,020 3,379,923
Number of common shares 281,261,673 176,019,131 457,280,804
Interest % 61.51% 38.49% 100%
(c) Investment Information in subsidiaries
March 31, 2019
% Social Shareholder’s Net income Interest Capital Equity (loss)
Direct subsidiaries BWU Comércio e Entretenimento S.A. 100 17,753 285,481 2,558 B2W - Companhia Digital 61.51 5,742,330 3,379,923 (139,242) Freijó Administrações e Participações Ltda. 100 5 2,675 (9) Louise Holdings Ltd. 100 509,074 126,532 1,243 Klanil Services Ltd. 100 65,689 (12,396) (756) JSM Global 100 52 52 - Indirect subsidiaries Posto Vicom Ltda. 100 4,129 1,420 (170) Submarino Finance Promotora de Crédito Ltda. 61.51 12,005 88,794 1,692 ST Importações Ltda. 61.51 4,050 77,527 1,144 BFF Logistica e Distribuição Ltda. 61.51 163,198 180,637 722 Mesa Express 61.51 275 - - QSM 61.51 5,000 28,872 1,089 BIT Services 61.51 170,013 192,023 1,597 Click-Rodo 61.51 44,928 12,234 (112) Direct 61.51 237,755 81,116 (1,477) Digital Finance 61.51 500 12,906 2,333
Rental 61.48 2 (23,261) (24)
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
53
December 31, 2018
% Capital Shareholder’s Net income Interest
Equity (loss)
Direct subsidiaries BWU Comércio e Entretenimento S.A. 100 17,753 282,215 1,372 B2W - Companhia Digital 61.51 5,742,330 3,537,115 (397,427) Freijó Administrações e Participações Ltda. 100 5 2,684 351 Louise Holdings Ltd. 100 506,213 124,582 4,900 Klanil Services Ltd. 100 65,320 (11,590) (3,453) JSM Global 100 52 52 - Indirect subsidiaries Posto Vicom Ltda. 100 4,129 1,589 (392) Submarino Finance Promotora de Crédito Ltda. 61.51 12,005 87,102 7,301 ST Importações Ltda. 61.51 4,050 76,461 14,561 BFF Logistica e Distribuição Ltda. 61.51 163,198 181,398 21,342 Mesa Express 61.51 275 - - QSM 61.51 5,000 29,528 6,706 BIT Services 61.51 170,013 191,746 7,923 Click-Rodo 61.51 44,928 12,346 (1,131) Direct 61.51 237,755 82,593 2,232 Digital Finance 61.51 500 10,573 9,584
Rental 61.51 2 (23,238) (107) Infoprice 36.90 - - (1,218)
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
54
14 Property, plant and equipment
Parent Company
Consolidated
March 31, 2019
December 31,
2018
March 31, 2019
December 31, 2018
Accumulated Accumulated
depreciation depreciation
Cost amortization Liquid
Liquid Cost amortization Liquid Liquid
Facilities, furniture and fixtures
1,057,390 (316,761) 740,629 729,958 1,181,023 (386,402) 794,621 785,556
IT machinery and equipment
1,391,580 (602,160) 789,420 783,380 1,978,401 (874,210) 1,104,191 1,106,741
Lease hold improvements
2,553,320 (980,762) 1,572,558 1,522,568 2,635,946 (1,025,802) 1,610,144 1,535,718
Buildings
134,862 (32,967) 101,895 103,243 140,879 (32,967) 107,912 109,261
Others
111,659 (27,598) 84,061 72,493 157,965 (62,357) 95,608 110,444
5,248,811 (1,960,249) 3,288,562 3,211,6422 6,094,214 (2,381,739) 3,712,475 3,647,720
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
55
Changes in property, plant and equipment throughout the quarters:
Parent Company Consolidated
March 31, December 31, March 31, December
31,
2019
2018 2019 2018
Net balances at the beginning of the quarter 3,211,642 2,810,785 3,647,720 3,283,046
Additions (i) 173,384 188,366 176,121 190,523
Write-offs (5,241) (4,991) (5,276) (5,015)
Depreciation (ii) (91,223) (85,096) (106,090) (99,954)
Net balances at the end of the quarter 3,288,562 2,909,064 3,712,475 3,368,600
(i) In the consolidated view, in the quarter ended on March 31, 2019, the main investments occurred in the Lines of Improvements in third-party buildings, facilities and furniture and appliances and machinery and equipment in the amounts of R$ 91,300, R$ 33,900 and R$ 48,100, respectively. (ii) In the consolidated in the quarters ended March 31, 2019 and 2018, the depreciation of the fleet of Click-Rodo and Direct, in the amount of R$765 and R$678, respectively, were recorded in cost of goods and services sold.
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
56
15 Intangible assets
Parent Company
Consolidated
March 31, 2019
December 31,
2018
March 31, 2019
December 31,
2018
Accumulated Am Accumulated Am
Cost Amortization Liquid
Liquid Cost Amortization Liquid Liquid
Goodwill on acquisitions of investments
- - - - 1,021,492 (93,275) 928,218 928,439
Software right-to-use
826,195 (444,974) 381,221 367,803 1,118,419 (639,169) 479,250 468,552
Brands Right
95,945 (43,767) 52,178 54,108 112,445 (51,687) 60,758 63,018
Development of web sites and systems
- - - - 3,705,061 (1,386,373) 2,318,688 2,294,054
Others
63,229 (62,784) 446 446 98,449 (89,436) 9,013 9,158
985,369 (551,524) 433,845 422,357 6,055,866 (2,259,940) 3,795,926 3,763,221
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
57
Changes in intangible assets throughout the periods:
Interest on Capitalized Loan–B2W Subsidiary
Goodwill on investment acquisitions
The subsidiary B2W evaluates goodwill on an annual basis in order to verify probable impairment, being the last valuation carried out as of December 31, 2018. B2W monitored the assumptions used and did not identify any indicative loss or need for a new valuation as of March 31, 2019.
16 Assets and Liabilities of leasing IFRS 16 / CPC 06 (R2) On March 31, 2019, the Company and its controlled company B2W have classified as contracts of lease to its commercial, logistics and administrative units From January 1, 2019, in compliance with the IFRS 16/CPC 06 (R2), the Company and its controlled company B2W adopted the modified retrospective approach and started to recognize the value of the minimum leasing, established in lease agreements, as assets and lease liabilities. The portion of rent and expenses set out in the contracts continue to be recognized, by competence, as occupancy costs. The measurement of the cost of the asset of right to use immovable property corresponds to the net amount of the lease liability, calculated on the minimum rent set out in contracts, discounted to present value the rates and time limits laid down in those agreements designed to lease. The monthly depreciation of the asset of right to use real estate is calculated linearly for a period of validity provided for in the contract, regardless of renewal clause in accordance with the company's internal policies. Below we present the assets to the right to use the real state property and the corresponding obligations:
Parent Company Consolidated
March 31, March 31, March 31, March 31,
2019
2018 2019 2018
Net balances at the beginning of the semester
422.357 387.576 3.763.221
3.749.345
Additions 34.306 16.894 142.100 81.905
Interest capitalization - - 8.239 10.338
Amortization (22.818) (20.289) (117.634) (112.007)
Net balances at the end of the semester 433.845 384.181 3.795.926 3.729.581
March 31, March 31,
2019
2018
Interest on Capitalized Loans
8,239 10,338
Rate – weighted average CDI rate for loans raised by the subsidiary
115.9% 114.0%
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
58
a) Right to use real state property - Leasing
Parent Company Consolidated
March 31, 2019
March 31, 2019
Accumulated
Accumulated
Cost
depreciation
Liquid
Cost
depreciation
Liquid
Right to use real state 2,780,581
(1,224,358)
1,556,223
3,024,822
(1,241,854)
1,782,968
2,780,581
(1,224,358)
1,556,223
3,024,822
(1,241,854)
1,782,968
The right to use real state property rentals in the quarter:
Parent Company
Consolidated
March 31, 2019
March 31, 2019
Net balances arising in the beginning of the quarter
1.595.800
1.840.041
Additions
33.127
33.127
Depreciation
(72.704)
(90.200)
Net balances arising in the end of the quarter
1.556.223
1.782.968
b) Leasing to pay
Parent Company
Consolidated
March 31, 2019
March 31, 2019
Leasing to pay
2,331,991
2,652,993
Leasing interest
(500,484)
(557,553)
1,831,507
2,095,440
Current part 280,138 350,671
Non current part 1,551,369 1,744,769
Movement of rentals in the quarter:
Parent Company
Consolidated
March 31, 2019
March 31, 2019
Net balances arising in the beginning of the quarter 1,909,895
2,189,609
Adition because of new contracts
33,127
33.127
Payments
(145,464)
(166.769)
Appropriate interest
33,949
39.473
Net balances arising in the end of the quarter
1,831,507
2,095,440
c) Commitments – Leasing Contracts (c.1) Parent Company
On March 31, 2019, the Company has 1,493 leasing contracts (1,483 leasing contracts on December 31, 2018) to their commercial, logistics and administrative units. These leasing contracts, in your most, provide variable rent payments on sales, or minimum value. The Company's monthly obligation is to pay the greater value between both with computation semiannual or annual. Were framed as leasing liabilities, as CPC 06 (R2)/IFRS 16 portions of the contracts defined as minimum rent. The plots defined as variables, continue to be recognized, by competence, as occupancy expense. The minimum values of contracts are adjusted annually according to the variation of main indices of inflation. The contracts of rent of logistics and administrative areas have values set on contract, with annual
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
59
adjustments as variation of main indices of inflation, these being classified as leasing liabilities (see (b)). For the quarter ended March 31, 2019 the variables expenses from rentals, condominiums and other related totaled R$46,600 in the parent company. Future commitments, based on the existing stores in March 31, 2019, with adjustment in the ratio of 3.89% (IPCA designed for 2019) from these leases, are as follows:
2019 2020 2021 2022 2023 onwards 267,407 363,691 378,276 393,444 409,222
(c.2) Controlled company B2W A B2W e suas controladas mantém Instrumento Particular de Contrato de Locação de Imóvel Comercial e Outras Avenças para todos os seus imóveis, com vencimentos a curto e longo prazo, cujo aluguel é atualizado anualmente com base, principalmente, nos índices IGP-M e IPC-A. No trimestre findo em 31 de março de 2019, a B2W e suas controladas incorreram em despesas de aluguéis e outras relacionadas aos imóveis o montante de R$ 27.991 (R$ 22.261 no trimestre findo em 31 de março de 2018).
Foram enquadrados como passivo de arrendamento, conforme CPC 06 (R2) / IFRS 16 os valores de aluguel previstos nos contratos com vigência superior a 12 meses. O aluguel correspondente aos contratos de curto prazo continua sendo reconhecido, por competência, como despesa de ocupação, cujos compromissos futuros, a valores de 31 de março de 2019, totalizaram R$ 9.952.
B2W and its subsidiaries maintains Particular Instrument of Lease of Commercial Property and Other Covenants for all their real states, with short-and long-term maturities, whose rent is updated annually based mainly in the IGP-M and IPC-A.
For the quarter ended March 31, 2019 B2W and its subsidiaries incurred rental expenses and other real estate related the amount of R$ 27,991 (R$ 22,261 in the quarter ended March 31, 2018).
Were framed as leasing liabilities, as CPC 06 (R2)/IFRS 16 rental values specified in contracts with duration of more than 12 months. The rent corresponding to the short-term contracts continues to be recognized, by jurisdiction, as occupancy expense, whose future commitments, the values of March 31, 2019, totaled R$9,952.
17 Suppliers
Parent Company
Consolidated
March 31,
2019 December 31,
2018 March 31,
2019 December 31,
2018
Suppliers of goods, supplies and other
4,016,340
4,000,442
6,190,567
6,344,820
Commercial agreements (1,123,371) (995,026) (1,435,296) (1,320,304) Adjustment to Present value (note 2.4)
(31,613)
(38,103) (56,797) (50,939)
2,861,356
2,967,313 4,698,474
4,973,577
The commercial agreements are receivable, defined in partnership agreements entered into with suppliers. In financial transactions, when foreseen in a commercial agreement, settlements are made at the time of payment of invoices, to suppliers, by the net amount.
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
60
18 Loans and financing (a) Breakdown
Parent Company Consolidated
Final
Annual charges
Maturity
March 31,
2019 December 31,
2017 March 31,
2019 December 31,
2017
In local currency
BNDES (i)
TJLP + 1.4% p.a. 4.0% p.a.
04/13/2025
692,266
703,135
1,333,723 1,360,933
BNDES (i) Interest of up to 6% p.a. 04/13/2025 27,958 30,479 36,335 39,942 BNDES (i) Selic + up to 3.68% p.a. 09/15/2022 458,922
xxxx 475,396 790,992
xxxx
826,071 FINEP Interest from 3.5% to 7.0% p.a. 08/15/2028 133,873 139,265 298,665 318,076 Working Capital
109% to 140% of CDI
04/25/2022
1,002,551
1,159,515
7,092,301 5,522,187
Commercial Promissory Notes (iv) 112.0% to 115.3% of CDI 06/28/2022 1,030,554 1,239,809 1,030,554 1,239,809
FIDC Quotas
Interest from 108.9% to 157.0% of the CDI
02/14/2024
3,998
-
1,017,845
-
In foreign currency (ii)
Working capital (iii)
USD + interest of up to 9.15% p.a.
08/27/2021
508,618
615,050
943,885 1,299,141
Working capital (iii) EUR + 17.647% p.a. 01/18/2023 - - 474,577 484,193 Swap operations
Interest from 115.7% to 141.0% of CDI
01/18/2023
276
143
42,810 143
Cost of borrowing (IOF and others)
(47,702)
(46,724)
(157,748) (126,431)
3,811,314
4,316,068
12,903,939 10,964,064
Installments non-current portion
626,030
1,080,543
2,302,472 1,807,611
Current portion
3,185,284
3,235,525
10,601,467 9,156,453
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
61
(i)Financing of BNDES related to the FINEM program (opening and remodeling of stores, logistics and technology), FINAME (acquisition of machinery and equipment) and PEC (Working Capital). (ii) The operations in foreing currency are protected against the exchange oscillations through swap derivative financial instruments (note 4.1). (iii)Captation according to Resolution n. 2,770 of Brazilian Central Bank (BACEN). (iv) Commercial Promissory Notes being 1,800 with a nominal value of R$ 5000, issued in 06/29/2017, with the expiration date of 06/28/2022, remunerated at the rates 115.3% p.y. for DI rate, base in 252 working days, occurring the interest payment in the final expiration date.
(b) Long-term loans and financing by maturity year
Parent Company
Consolidated
March 31,
2019 December 31,
2018 March 31,
2019 December 31,
2018
2020 295,326 459,971 2,069,731
2,707,174
2021 330,064
422,972 1,519,062
1,620,104
2022
1,332,702
1,314,660 2,718,138 2,708,700
2023 414,499
413,583 998,221
1,002,146
2024 679,655
491,572 3,049,533
872,281
2025 112,978 112,623 188,752 188,144
2026 onwards 20,141 20,144 58,030
57,904
3,185,284
3,235,525 10,601,467 9,156,453
The Company and its subsidiaries are subject to certain debt restriction clauses (Debt Covenants and Cross Default) included in the loan and financing agreements. These clauses include, among others, the maintenance of certain financial ratios, calculated based on the financial statements disclosed by Management. As of March 31, 2018 and December 31, 2019, all indexes were met.
(c) Guarantees
Parent Company
Consolidated
March 31,
2019 December 31,
2018 March 31,
2019 December 31,
2018
Letter of guarantee 844,583 845,540 1,991,277 2,042,287
Promissory notes 51,104 148,320 51,104 148,320
Guarantee insurance 26,389 26,316 26,390 26,316
922,076 1,020,176 2,068,771 2,216,923
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
62
19 Debentures (a) Breakdown
Due Date
Amount Amount
Fees
Date of Issuance
Type of Securities in nominal in nominal in financial March 31, December 31,
issue issue circulation issue 09/30/2018 annual 2019 2018
4th Issuance
09/05/2011
06/25/2024
Public
50,000
500,000 450,000
113.5% of CDI
458,407
450,390
7th Issuance - Lame 27
12/21/2012
12/21/2022
Public
35,000
350,000 350,000
114.50% CDI
356,571
350,493
8th Issuance - Lame 38 07/15/2013 07/15/2021 Public 20,000 200,000 200,000 IPCA + 6.9%
211,132 206,778
9th Issuance - Lame 19 06/25/2014 06/25/2024 Public 70,000 700,000 700,000 113% of CDI 713,079 700,608
9th Issuance - Lame 29 – Lame 38
06/25/2014 06/25/2024 Public 25,000 250,000 187,500 113% of CDI 197,726 194,399
10th Issuance - Lame 10 – Lame 38
11/21/2016 11/21/2019 Public 30,000 300,000 300,000 112% of CDI 307,368 302,242
11th Issuance - Lame A1
04/15/2017 04/15/2022 Public 126,335 1,263,350
1,263,350
115% of CDI 1,304,417 1,282,085
11th Issuance - Lame B1
04/15/2017 04/15/2024 Public 23,665 236,650 236,650 IPCA +7.0972% 253,569 248,967
12th Issuance - Lame A2 04/20/2018 04/20/2023 Public 100,000 1,000,000 1,000,000 116% of CDI 1,031,320 1,013,511
13th Issuance - Lame A3 (i) 01/10/2019 01/10/2026 Public 100,000 1,000,000 1,000,000 116.7% of CDI 1,010,976 -
5,844,566
4,749,473
(36,074)
(32,700)
Funding costs
5,808,492
4,716,773
Current portion
577,677 483,243
Non-current portion 5,230,815 4,233,530
(i) 13st Issuance Lame A3– Issued 100,000 debentures, with a nominal value of R$ 10,000, in unique series, received on 01/10/2019. The debentures, of unsecured type, will have the maturity date of seven year accounted from the issuance date, being amortized in a single installment on the maturity date. It will have compensatory interest of 116.7% of DI - base 252 working days, payed semianual in the months of January and July. The issuance approval of the unique series debentures occurred in the Board Members Meeting held on December 13, 2018.
Lojas Americanas S.A.
Notes to the Financial Statements on September 30, 2018 and 2017 In thousands of Brazilian Reais, unless otherwise stated
(i) Parent Company Movement
4th
Private
6th
Issuance
6th
Issuance
7th
Issuance
8th
Issuance
8th
Issuance
9th
Issuance
9th
Issuance
10th
Issuance
11th
Issuance
11th
Issuance
12th
Issuance
13th
Issuance
Issuance
Lame 16
Lame 26
Lame 27
Lame 18
Lame 38
Lame 19
Lame 29
Lame 10
Lame A1
Lame B1
Lame A2
Lame A3
Total
Balances as of December 31, 2017
461,812 311,271 207,514 350,530 80,445 209,005 700,628 261,962 302,484 1,284,404 253,975
-
-
4,424,030
Amortization of principal
- (300,000) (200,000) - - - - - - - - -
-
(500,000)
Amortization of interest (17,736) (13,027) (8,685) - (3,384) - - - - - - -
-
(42,832)
Financial Charges 8,251 1,756 1,171 6,389 1,384 3,575 12,601 4,712 5,391 23,514 5,476 -
-
74,220
Balances as of March 31, 2018
452,327 - - 356,919 78,445 212,580 713,229 266,674 307,875 1,307,918 259,451 -
-
3,955,418
Funding – 12st issuance - - - - - - - - - - -
1,000,000
-
1,000,000
Amortization of principal - - - -
(77,300) - -
(62,500) - - -
-
-
(139,800)
Amortization of interest (26,659) - - (25,436) (2,760) (17,000) (51,183) (21,080) (21,535) (94,452) (23,084) (34,518) - (317,707)
Financial Charges 24,722 - - 19,010 1,615 11,198
38,562 11,305 15,902 68,619 12,600 48,029 - 251,562
Balances as of December 31, 2018
450,390
-
-
350,493
-
206,778
700,608
194,399
302,242
1,282,085
248,967
1,013,511
-
4,749,473
Funding – 13th issuance - - - - - - - - - - - - 1,000,000 1,000,000
Financial Charges 8,017 - - 6,078 - 4,354 12,471 3,327 5,126 22,332 4,602 17,809
10,976
95,093
Balances as of March 31, 2019
458,407 - - 356,571 - 211,132 713,079 197,726 307,368 1,304,417 253,569 1,031,320
1,010,976
5,844,566
Lojas Americanas S.A.
Notes to the Financial Statements on September 30, 2018 and 2017 In thousands of Brazilian Reais, unless otherwise stated
(b) Issuance of debentures by the subsidiary B2W - Companhia Digital
(i) Breakdown
Type of Titles in Value on
the date of Financial
Charges March 31, December 31, Issuing Date Due Date issue circulation issue annual 2019 2018
1st private issue 12/22/2010 12/22/2022 Private 200,000 1,000 125.0% CDI 204,040 200,246
(ii) Movement
1st Issue
Private
On January 1, 2018 200,265
Financial Charges 3,983
On March 31, 2018 204,248
Amortization of interest (16,138)
Financial Charges 12,136
On December 31, 2018 200,246
Financial Charges 3,794
On March 31, 2019 204,040
(iii) Information on issued debentures:
Nature 1st private issue
Date of Issuance 12/22/2010
Maturity Dates 12/22/2022
Amount issued 200
Unit price R$ 1,000
Annual financial charges 125.0% DI
Convertibility Simple, non-convertible into shares
Type and form Nominative and book entry
Amortization of unit value Full on the due date
Payment of remunerative interest December 22 of each year (2011 to 2022)
Guarantees Does not have it
Renegotiation
Permitted, provided that by common agreement between issuer and debenture holder
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
65
20 Taxes payables
Parent Company
Consolidated
March 31,
2019 December 31,
2018 March 31,
2019 December 31,
2018
ICMS 104,251
112,868
134,786
149,529 Withholding Income Tax - IRRF - 3,795 1,029 4,561
Social Integration Program - PIS/Contribution for Social Security Financing - COFINS
2
1
7,976
12,848
Tax on services - ISS 984
1,180
3,773
5,336 Others 4,733
5,264
8,999
9,281
109,970
123,108
156,563
181,555
Current portion 109,970
123,108
156,312
181,304
Non-current portion - - 251
251
21 Provision for court lawsuits and contingencies
(a) Provisions recorded
Parent Company
Consolidated
March 31,
2019 March 31,
2018 March 31,
2019 March 31,
2018
Tax 39,205 41,659 72,819 82,442 Labor 34,243 38,596 99,237 96,702 Civil 11,407 13,017 61,605 66,082 Others 103 101 103 101
84,958 93,373 233,764 245,327
Current portion 29,776 33,650 29,776 33,650
Non-current portion 55,182 59,723 203,988 988
211,677
In the Parent Company, until March 31, 2019, payments of R$ 7,204 occurred, basically payment of tax contingencies and labor contingencies, resulting in a reduction in the balance of provision for contingencies when compared to December 31, 20178 Tax
The main tax lawsuits of the Company and its subsidiaries, in the amount of R$ 31,723, are basically represented by the statement of ICMS ST reimbursement made in the book recording of the Distributions Centers of Rio de Janeiro and São Paulo in 2002 and 2005; collection of the difference between the ICMS ST collected by the Company and the calculated as due by the State Treasury Secretaries of Mato Grosso and Bahia in the years of 2012 and 2015 and by the difference between the magnetic file and the physical inventory bookkeeping in the inventory record book of establishments located in the States of Ceará and Bahia, in the years 2009 to 2012.
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
66
Labor The Company and its subsidiaries are also parts to lawsuits of a labor nature. None of these lawsuits refers to individually significant amounts and the discussions involve mainly overtime claims among others. Civil The Company is a party, together with its subsidiaries, in lawsuits arising from the ordinary course of its operations and its subsidiaries, of a civil nature, representing, as of March 31, 2019, the amount indicated as contingent liability referring to these matters. There is no individual action of significant value.
(b) Contingent liabilities not provisioned On March 31, 2019, the Group has administrative and judicial claims of a tax, civil and labor nature in the approximate amount of R$ 2,785,509 in Parent Company (R$ 2,220,823 as of December 31, 2018) and R$ 3,668,787 in the consolidated (R$ 3,039,000 as of December 31, 2018), classified by their legal advisors as “possible losses and, for this reason, no provision was recorded. The Group has a fiscal position for federal taxes, based on legal counsel, classified as “possible losses, with a remote bias”, in the amount of R$ 618,111 in the Parent Company and R$ 1,428,811 in the consolidated (R$ 618,111 and R$ 1,428,811 as of December 31, 2018 respectively). The main changes occurred in the period basically result from monetary restatements and prospects of the existing processes, which are in accordance with the criteria and with the information disclosed in the Financial Statements of December 31, 2017. Among the main tax lawsuits of the subsidiary B2W, classified as "possible losses", we highlight: (i) the tax assessment notice drawn up for the collection of IRPJ and CSLL debt arising from allegedly undue use of tax loss and negative basis of CSLL, once the 30% limit for the realization of the compensation was not observed, in the approximate amount of R$ 77,555; and (iii) tax assessment notices resulting from the attribution of liability for the payment of a fine, in the approximate amount of R$ 273,867.
22 Accounts Payable - Business Combinations
With the objective of business expansion and in accordance with the strategic plan, B2W acquired companies with operations linked to digital services. Between 2013 and 2015, B2W acquired 19 companies operating in the areas of systems development, e-commerce operations and services, customer and product intelligence consulting, and 2 of Brazil’s leading e-commerce carriers. As of March 31, 2019, the balance payable referring to acquisitions of these companies was R$ 9,138 (R$ 9,322 as of December 31, 2018).
Consolidated - Current Consolidated - Non-current
March 31, 2019
March 31, 2018
March 31,
2019
March 31, 2018
Current
BIT Services
498
490 7,909 7,788
Others
731
1,044 - -
1,229 1,534 7,909 7,788
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
67
23 Shareholders’ Equity
(a) Capital The capital stock may be increased by the Board of Directors, regardless of statutory reform, up to the limit of 2,000,000,000 common and/or preferred shares. There is no preemptive right to subscribe for shares. The shareholding composition of the Company's capital as of March 31, 2019 and December 31, 2018 is as follows:
March 31, 2019 December 31, 2018
Ordinary
Shares
(ON)
Preferred
Shares
(PN) Total
Ordinary
Shares
(ON)
Preferred
Shares
(PN) Total
Carlos Alberto da Veiga Sicupira - 4.49% 2.98% - 4.49% 2.98%
Administrators 2.30% 5.42% 4.36% 2.33% 5.58% 4.48%
Cathos Holding LLC - 2.42% 1.60% - 2.42% 1.60%
S-Velame Adm. de Recursos e Participações S.A. 54.00% - 18.24% 54.00% - 18.24%
CEDAR TRADE LLC - 0.50% 0.33% - 0.50% 0.33%
LTS TRADING COMPANY LLC 0.03% 0.01% 0.02% 0.03% 0.01% 0.02%
BRC S.à r.l. (i) 6.78% 22.20% 16.99% 7.85% 22.20% 17.35%
Total of Controllers 63.11% 35.04% 44.52% 64.21% 35.20% 45.00%
Tobias Cepelowicz 6.06% - 2.05% 6.06% - 2.05%
Massachusetts Mutual Life Insurance Company - 9.39% 6.22% - 9.52% 6.30%
BlackRock - 5.57% 3.68% - 6.19% 4.10%
Others 30.83% 50.00% 43.53% 29.73% 49.09% 42.55%
Total Free Float 36.89% 64.96% 55.48% 35.79% 64.80% 55.00%
Total held in treasury 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
(b) Activity of capital shares Quantity of book-entry shares with no par value. Nominative Nominative Balance
common
shares preferred
shares Total in Brazilian
Reais On January 1, 2018 and March 31, 2018 539,943,630 1,057,488,141 1,597,431,771 4,019,358 Capital Increase – Stock option plan - 3,222,193 3,222,193 31,443 On December 31, 2018 and March 31, 2019 539,943,630 1,060,710,334 1,600,653,964 4,050,801 Costs attributable to the public offering - - - (92,840)
On March 31, 2019 – net of cost 539,943,630 1,060,710,334 1,600,653,964 3,957,961
At a meeting of the Board of Directors held on September 3, 2018 was approved an increase in the Company's capital stock with the issuance of 3,222,193 preferred shares, being 2,869,693 of these shares paid by capitalization of reserves, due to the exercise of the purchase options given in the Plan approved in the General Assembly on April 30, 2012 terms.
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
68
(c) Changes in treasury shares
Ordinary
Preferred
Balance
nominative
nominative
Total
in Brazilian
Reais
On January 1, 2018
- 2,300,719 2,300,719 44,545
On December 31, 2018 and on March 31, 2019 - 2,300,719 2,300,719 44,545
Average acquisition cost on
March 31, 2019
per share – R$
- 19.36
Market value on March 31, 2019
13.22 16.77
per share – R$
In a Board Meeting realized on May 9, 2018 was approved, according to art. 30, §1º, “b”, of 6.404/76 Law and CVM Instruction 567/15, a new repurchase of shares of issuance of the Company program, to cancellation or permanence in treasure to subsequent disposal, that will end on May 9, 2019, up to the limit of 10,000,000 common shares and 10,000,000 preferred shares. Up to March 31, 2019 there was no shares buyback.
24 Share-based Payment
(a) Share Subscription Plan of the Parent Company (Lojas Americanas S.A.)
In the quarter ended on March 31, 2019, no new plan was offered. The compensation costs of executives from the existing Plans for the quarter ended on March 31, 2019 were R$ 9,138 registered as operating expenses in the Parent Company (R$ 9,138 as of March 31, 2018). The compensation costs of the existing plans to be recognized (from 2019 to 2023) by the Parent Company for the vesting period of the Plans considering the assumptions used amount to R$ 55,585.
(b) Share Subscription Plan of subsidiary B2W In the quarter ended at March 31, 2019 no new plans were offered. The compensation costs arising from the B2W Plan for the quarter ended on March 31, 2019 was R$ 5,462 (R$ 24,145 on March 31, 2018). Remuneration costs are recorded in shareholders’ equity in reserve capital - reserve of recognized options granted, since the options, when exercised, are settled through the issuance of new shares or use of shares held in treasury. The cost of remuneration corresponds to the fair value of the B2W Plan, calculated on the date of grant, recorded during the service period that starts on the date of grant until the date the beneficiary acquires the right to exercise the option. The remuneration costs of the B2W Plan to be recognized by the Subsidiary for the remaining term (service rendering period to occur) based on the assumptions used totaled approximately R$ 27,654 on March 31, 2019 (R$ 32,091 on December 31, 2018). Based on the shareholding composition of the capital stock as of March 31, 2019, the maximum percentage of dilution of interest that may be submitted to the current shareholders of the Company in case of exercise of all the options granted is less than 1%.
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
69
25 Net revenue
Parent Company
Consolidated
March 31, 2019
March 31, 2018
March 31, 2019
March 31, 2018
Sales of goods and services 2,671,525 2,964,582 4,246,588 4,744,854 Sales and services taxes (368,088) (387,756) (691,729) (721,085) Others (2,558) (2,083) (2,557) (2,083)
2,300,879 2,574,743 3,552,302 4,021,686
26 Expenses by nature
The Company chose to present its statements of profit or loss for the quarters ended on March 31, 2019 and 2018 by function and presents the following breakdown by nature:
Parent Company
Consolidated
March 31, 2019
March 31, 2018
March 31, 2019
March 31, 2018
Sales
Personnel
Occupancy (207,849) (196,631) (276,871) (269,729) Supplies (112,974) (212,808) (121,356) (236,807) Fees and commissions (9,077) (9,158) (13,989) (13,880) Distribution (31,486) (34,510) (81,931) (79,232) Others (i) (7,340) (7,544) (14,131) (17,257) (12,659) (43,962) (83,374) (134,240)
(381,385) (504,613) (591,652) (751,145)
Administrative and others Personnel (18,104) (17,406) (42,519) (32,272) Occupancy (599) (575) (2,159) (3,532) Fees (3,616) (3,287) (5,715) (5,458) Depreciation and amortization (186,745) (105,385) (313,158) (211,283) Others (ii) (5,988) (5,798) (24,318) (21,948)
(215,052) (132,451) (387,870) (274,493)
Other revenue income (expenses) (iii) (9,387) (8,366) (20,737) (19,573)
(i) In the consolidated refer mainly to on-line and off-line media and outsourced customer service.
(ii) In the consolidated refer mainly to the legal fees, advisory services and consulting and judicial compensation.
(iii) Refers in the Parent Company, basically, to the expense of the stock plan.
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
70
27 Financial income (loss)
Parent Company
Consolidated
March 31, 2019
March 31, 2018
March 31, 2019
March 31, 2018
Interest and monetary securities
68,196 63,734 139,518 118,966
Financial discounts received and restatement
monetary - - 588 18,421 Adjustment to present value of accounts
26,902 26,306 75,188 69,822
Other financial income
484 484 845 7,925
Total of financial income
95,582 90,524 216,139 215,134
Interest monetary restatement on financing,
anticipation of receivables and leasing
(227.701) (184,319) (463,045) (387,797) Monetary restatement of
(4,074) (4,074) (4,106) (4,729)
Bank expenses, taxes on financial transaction taxes
and other financial expenses
(41,999) (46,975)
(50,448)
(59,759) Adjustment to present value of suppliers
(54,904) (59,292) (83,647) (83,043)
Total financial (loss)
(328,678) (294,660) (601,247) (535,328)
Net financial income (loss)
(233,096) (204,136) (385,108) (320,194)
28 Earnings per share
Basic result per share are computed by dividing net income by the weighted average number of common and preferred shares outstanding in the quarter. There is no difference between classes in the distribution of the result per share. The calculation of basic and diluted result per share is as follows:
Parent Company
Consolidated
March 31, 2019
March 31, 2018
March 31, 2019
March 31, 2018
Numerator
Net profit (loss) in the semester
(53,484) 20,015 (107,082) (23,864)
Non-controlling
- - (53,598) (43,879) Result attributable to shareholders
(53,484) 20,015 (53,484) 20,015
Denominator (in thousands of shares) basic
Weighted average number of outstanding shares
1,598,353 1,595,131 1,598,353
353,353 1,595,131
Basic Loss per share
Attributable to shareholders
(0,033) 0,013 (0,033) 0,013 Result per share (ON and PN)
(0,033) 0,013 (0,033) 0,013
Denominator (in thousands of shares) diluted Weighted average number of outstanding shares 1,608,010 1,607,049 1,608,010 1,607,049 Net loss per diluted share
Attributable to shareholders
(0.033) 0.012 (0.033) 0.012 Result per share (ON and PN) (0.033) 0.012 (0.033) 0.012
Lojas Americanas S.A.
Notes to the Financial Statements on September 30, 2018 and 2017 In thousands of Brazilian Reais, unless otherwise stated
29 Segment information
The information related to each reported segment are described below. The revenues of the segments is used to measure performance, because the understanding of this Administration is the most relevant information on the assessment of the results of the respective segments. Foreign operations are not relevant.
March 31, 2019
Physical trade
E-commerce Others
Total
Eliminations
Total
Net sales
2,300,879 1,282,563 2,472 3,585,914 (33,612) 3,552,302
Cost of goods and/or of services rendered (1,413,602) (934,727) (2,333) (2,350,662) 25,519 (2,325,143)
887,277 347,836 139 1,235,252 (8,093) 1,227,159
Gross profit
(186,745) (126,400) (13) (313,158) - (313,158)
Depreciation and amortization
(409,692) (264,595) (172)
(674,459) (8,095)
(666,364)
Selling, general and administrative expenses
(233,096)
(156,127) 4,115
(385,108)
-
(385,108)
Financial revenue/(expense)
(82,608) - - (82,608) 82,608 -
Interest in subsidiaries
(9,387) (11,712) (377) (21,476) 739 (20,737)
Other operational expenses
(34,251) (210,998) 3,692 (241,557) 83,349 (158,208)
Operating income (loss)
Tax return and social contribution
(19,233)
71,756
(1,397)
51,126
-
51,126
Net income (loss) of the quarter (53,484)
(139,242)
2,295
(190,431)
83,349
(107,082)
Net income (loss) of the attributable segment to the Company’s Shareholders atribuível
(53,484)
(139,242)
2,295
(190,431)
136,947
(53,484)
Interest of non-parent companies
- - - - (53,598) (53,598)
March 31, 2019 March 31, 2018
Current assets
10,455,294 8,013,883 382,419 18,851,596 787,688 19,639,284
Non-current assets
9,134,802 6,437,075 134,737 15,706,614 (2,713,639) 12,992,975
Current liability
4,865,469 3,101,758 2,662 7,969,889 904,473 8,874,362
Non-current liability
10,062,062 7,969,278
110,721
18,142,061
(347,749) 17,794,312
Lojas Americanas S.A.
Notes to the financial statements March 31, 2019 and 2018 In thousands of Brazilian Reais, unless otherwise stated
72
Net equity
4,662,565 3,379,922
403,773
8,446,260
(2,482,675) 5,963,585
Other information:
Investments in property, plant and equipment and/or intangible assets
207,690 110,531 - 318,221 - 318,221
Lojas Americanas S.A.
Notes to the Financial Statements on September 30, 2018 and 2017 In thousands of Brazilian Reais, unless otherwise stated
March 31, 2018
Physical trade
E-commerce Others
Total
Eliminations
Total
Net sales
2,574,743 1,590,226 1,891 4,166,860 (145,174) 4,021,686
Cost of goods and/or
of services provided
(1,587,091) (1,236,267) (1,752) (2,825,110) 141,088 (2,684,022)
Gross profit
987,652 353,959 139 1,341,750 (4,086) 1,337,664
Depreciation and amortization
(105,385) (105,884) (14) (211,282) - (211,282)
Selling, general and administrative expenses
(531,679)
(286,523) (240)
(818,443)
4,087
(814,356)
Financial revenue/(expense)
(204,136) (120,554) 4,496 (320,194) - (320,194)
Interest in subsidiaries
(68,533) - - (68,533) 68,533 -
Other operational expenses
(8,366) (11,054) (277) (19,697) 124
(19,573)
Operating income (loss)
69,553
(170,056) 4,104
(96,399)
68,658
(27,741)
Tax return and social contribution
(49,538) 54,801 (1,386) 3,877 - 3,877
Net income (loss) of the semester
20,015 (115,255) 2,718 (92,522) 68,658 (23,864)
Net income (loss) of the attributable segment attributable to the Company’s Shareholders
20,015
(115,143) 2,718
(92,410)
112,425
20,015
Interest of non-parent companies
-
(112) -
(112) (43,767)
(43,879)
December 31, 2017 December 31, 2017 Current assets
10,304,692 7,032,072 377,638 17,714,402 (200,781) 17,513,621
Non-current assets
7,412,780
5,999,122
132,793
13,544,695
(2,753,660) 10,791,035
Current liability
5,192,108 3,209,425 1,977 8,403,510 (762) 8,402,748
Non-current liability
7,600,767 6,284,654 108,931 13,994,352 (378,569) 13,615,783
Net equity
4,924,597 3,537,115 399,523 8,861,235 (2,575,110) 6,286,125
Other information:
Investments in property, plant and equipment and/or intangible assets
205,260
67,168 - 272,428 - 272,428
Lojas Americanas S.A. Notes to the Financial Statements On September 30, 2018 and 2017 In thousands of Brazilian Reais, unless otherwise stated
74
30 Remuneration of employees and administrators
In the quarters ended in March 31, 2019 and 2018, the total compensation (salaries and profit sharing) of the Company’s directors, officers and chief executives was R$ 8,733 and R$ 8,403, respectively (R$ 17,755 and R$ 17,376 in the consolidated), remunerations are within the limits approved in the corresponding Shareholders’ Meetings.
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