FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of July, 2020
Brazilian Distribution Company
(Translation of Registrant’s Name Into English)
Av. Brigadeiro Luiz Antonio,
3142 São Paulo, SP 01402-901
Brazil
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F)
Form 20-F X Form 40-F
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101 (b) (1)):
Yes ___ No X
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101 (b) (7)):
Yes ___ No X
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes ___ No X
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
A free translation from Portuguese into English of Independent Auditor’s Report on Review of Quarterly Financial Information
Independent auditor’s review report on quarterly information
To the Shareholders, Directors and Officers
Companhia Brasileira de Distribuição
São Paulo – SP – Brazil
Introduction
We have reviewed the accompanying individual and consolidated interim financial information, contained in the Quarterly Information Form (ITR) of Companhia Brasileira de Distribuição for the quarter ended June 30, 2020, comprising the statement of financial position as of June 30, 2020 and the related statements of profit or loss and comprehensive income for three and six-month periods then ended, and of changes in equity and of cash flows for the six-month period then ended, including the explanatory notes.
Management is responsible for the preparation of the individual and consolidated interim financial information in accordance with Accounting Pronouncement NBC TG 21 - Interim Financial Reporting and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the fair presentation of this information in conformity with the rules issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of the Quarterly Information Form (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of review
We conducted our review in accordance with Brazilian and International Standards on Review Engagements (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion on the individual and consolidated interim financial information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the quarterly information referred to above are not prepared, in all material respects, in accordance with NBC TG 21 and IAS 34 applicable to the preparation of Quarterly Information Form (ITR), and presented consistently with the rules issued by the Brazilian Securities and Exchange Commission (CVM).
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Emphasis of matter
Restatement of corresponding figures
As mentioned in Note 4.1, due to the adoption of the accounting pronouncement NBC TG 06 and IFRS 16 – Leases, the corresponding individual and consolidated figures related to the interim financial information comprising the statements of profit or loss for three and six-month periods ended June 30, 2019 and cash flows for the six-month period ended June 30, 2019, presented for comparison purposes, were adjusted and restated as required by NBC TG 23 - Accounting Policies, Changes in Accounting Estimates and Error Correction. Our conclusion is not modified in respect of this matter.
Other matters
Statements of value added
The abovementioned quarterly information include the individual and consolidated statements of value added (SVA) for the six-month period ended June 30, 2020, prepared under the Company’s Management responsibility and presented as supplementary information by IAS 34. These statements have been subject to review procedures performed together with the review of the quarterly information with the objective to conclude whether they are reconciled to the interim financial information and the accounting records, as applicable, and if its format and content are in accordance with the criteria set forth by NBC TG 09 – Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that they were not prepared, in all material respects, consistently with the overall individual and consolidated interim financial information.
São Paulo, July 29, 2020.
ERNST & YOUNG
Auditores Independentes S.S.
CRC-2SP034519/O-6
Antonio Humberto Barros dos Santos
Accountant CRC-1SP161745/O-3
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Company Information | |
Capital Composition | 5 |
Individual Interim Financial Information | |
Balance Sheet – Assets | 6 |
Balance Sheet – Liabilities | 7 |
Statement of Operations | 8 |
Statement of Comprehensive Income | 9 |
Statement of Cash Flows | 10 |
Statement of Changes in Shareholders’ Equity | |
1/1/2020 to 6/30/2020 | 11 |
1/1/2019 to 6/30/2019 | 12 |
Statement of Value Added | 13 |
Consolidated Interim Financial Information | |
Balance Sheet – Assets | 14 |
Balance Sheet – Liabilities | 15 |
Statement of Operations | 16 |
Statement of Comprehensive Income | 17 |
Statement of Cash Flows | 18 |
Statement of Changes in Shareholders’ Equity | |
1/1/2020 to 6/30/2020 | 20 |
1/1/2019 to 6/30/2019 | 21 |
Statement of Value Added | 22 |
Comments on the Company`s Performance | 23 |
Notes to the Interim Financial Information | 47 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Number of Shares (thousand) | Current Quarter 6/30/2020 | |
Share Capital | ||
Common | 268,049 | |
Preferred | 0 | |
Total | 268,049 | |
Treasury Shares | ||
Common | 239 | |
Preferred | 0 | |
Total | 239 |
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Individual Interim Financial Information / Balance Sheet - Assets | |||
R$ (in thousands) | |||
Code | Description | Current Quarter 06/30/2020 | Previous Year 12/31/2019 |
1 | Total Assets | 32,578,000 | 29,660,000 |
1.01 | Current Assets | 8,410,000 | 7,491,000 |
1.01.01 | Cash and Cash Equivalents | 3,056,000 | 2,863,000 |
1.01.03 | Accounts Receivable | 454,000 | 424,000 |
1.01.03.01 | Trade Receivables | 328,000 | 256,000 |
1.01.03.02 | Other Receivables | 126,000 | 168,000 |
1.01.04 | Inventories | 3,406,000 | 3,358,000 |
1.01.06 | Recoverable Taxes | 514,000 | 516,000 |
1.01.08 | Other Current Assets | 980,000 | 330,000 |
1.01.08.01 | Assets Held for Sale | 448,000 | 171,000 |
1.01.08.03 | Other | 532,000 | 159,000 |
1.01.08.03.01 | Financial Instruments - Derivatives | 334,000 | 45,000 |
1.01.08.03.02 | Others assets | 198,000 | 114,000 |
1.02 | Noncurrent Assets | 24,168,000 | 22,169,000 |
1.02.01 | Long-term Assets | 3,710,000 | 3,158,000 |
1.02.01.04 | Accounts Receivable | 495,000 | 157,000 |
1.02.01.04.01 | Trade receivables, net | 15,000 | 1,000 |
1.02.01.04.02 | Other accounts receivable | 480,000 | 156,000 |
1.02.01.07 | Deferred Taxes | 280,000 | 285,000 |
1.02.01.09 | Receivables from related parties | 544,000 | 248,000 |
1.02.01.10 | Other Noncurrent Assets | 2,391,000 | 2,468,000 |
1.02.01.10.04 | Recoverable Taxes | 1,707,000 | 1,735,000 |
1.02.01.10.05 | Restricted deposits for legal proceedings | 592,000 | 639,000 |
1.02.01.10.06 | Financial Instruments - Fair Value Hegde | 2,000 | 2,000 |
1.02.01.10.07 | Other Noncurrent Assets | 90,000 | 92,000 |
1.02.02 | Investments | 9,663,000 | 7,750,000 |
1.02.02.01 | Investments in Associates | 9,663,000 | 7,750,000 |
1.02.02.01.02 | Investments in Subsidiaries | 9,663,000 | 7,750,000 |
1.02.03 | Property and Equipment, Net | 8,849,000 | 9,352,000 |
1.02.03.01 | Property and Equipment in Use | 5,231,000 | 5,774,000 |
1.02.03.02 | Leased Properties | 3,618,000 | 3,578,000 |
1.02.04 | Intangible Assets, net | 1,946,000 | 1,909,000 |
1.02.04.01 | Intangible Assets | 1,946,000 | 1,909,000 |
1.02.04.01.02 | Intangible Assets | 1,362,000 | 1,296,000 |
1.02.04.01.03 | Intangible Right-of-use | 584,000 | 613,000 |
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Individual Interim Financial Information / Balance Sheet - Liabilities | |||
R$ (in thousands) | |||
Code | Description | Current Quarter 06/30/2020 | Previous Year 12/31/2019 |
2 | Total Liabilities | 32,578,000 | 29,660,000 |
2.01 | Current Liabilities | 8,341,000 | 9,218,000 |
2.01.01 | Payroll and Related Taxes | 500,000 | 392,000 |
2.01.02 | Trade payables, net | 4,220,000 | 5,022,000 |
2.01.03 | Taxes and Contributions Payable | 243,000 | 203,000 |
2.01.04 | Borrowings and Financing | 2,064,000 | 2,016,000 |
2.01.05 | Other Liabilities | 1,314,000 | 1,585,000 |
2.01.05.01 | Payables to Related Parties | 205,000 | 234,000 |
2.01.05.02 | Other | 1,109,000 | 1,351,000 |
2.01.05.02.01 | Dividends and interest on own capital | 1,000 | 156,000 |
2.01.05.02.07 | Pass-through to Third Parties | 19,000 | 10,000 |
2.01.05.02.08 | Financing Related to Acquisition of Assets | 49,000 | 127,000 |
2.01.05.02.09 | Deferred Revenue | 40,000 | 60,000 |
2.01.05.02.12 | Other noncurrent liabilities | 482,000 | 465,000 |
2.01.05.02.17 | Lease Liability | 518,000 | 533,000 |
2.02 | Noncurrent Liabilities | 11,671,000 | 9,502,000 |
2.02.01 | Borrowings and Financing | 5,313,000 | 3,356,000 |
2.02.02 | Other Liabilities | 5,406,000 | 5,182,000 |
2.02.02.02 | Others | 5,406,000 | 5,182,000 |
2.02.02.02.03 | Taxes payable in installments | 339,000 | 376,000 |
2.02.02.02.07 | Other noncurrent liabilities | 29,000 | 33,000 |
2.02.02.02.08 | Provision for Losses on Investments in Associates | 568,000 | 385,000 |
2.02.02.02.09 | Lease Liability | 4,470,000 | 4,388,000 |
2.02.04 | Provisions | 932,000 | 940,000 |
2.02.06 | Deferred Revenue | 20,000 | 24,000 |
2.03 | Shareholders’ Equity | 12,566,000 | 10,940,000 |
2.03.01 | Share Capital | 6,859,000 | 6,857,000 |
2.03.02 | Capital Reserves | 465,000 | 447,000 |
2.03.02.04 | Stock Option | 458,000 | 440,000 |
2.03.02.07 | Capital Reserve | 7,000 | 7,000 |
2.03.04 | Earnings Reserve | 3,640,000 | 3,529,000 |
2.03.04.01 | Legal Reserve | 556,000 | 556,000 |
2.03.04.05 | Earnings Retention Reserve | 230,000 | 230,000 |
2.03.04.07 | Tax Incentive Reserve | 58,000 | 58,000 |
2.03.04.10 | Expansion Reserve | 2,916,000 | 2,916,000 |
2.03.04.12 | Transactions with non-controlling interests | 30,000 | -81,000 |
2.03.04.14 | Settlement of Equity Instrument | -150,000 | -150,000 |
2.03.05 | Retained Earnings/ Accumulated Losses | 199,000 | 0 |
2.03.08 | Other comprehensive income | 1,403,000 | 107,000 |
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Individual Interim Financial Information / Statement of Operations | |||||
R$ (in thousands) | |||||
Code | Description | Current Quarter
| Year to date current period 01/01/2020 to 06/30/2020 | Previous Quarter
| Year to date previous period 01/01/2019 to 06/30/2019 |
3.01 | Net operating revenue | 7,023,000 | 13,526,000 | 6,389,000 | 12,625,000 |
3.02 | Cost of sales | -5,196,000 | -10,046,000 | -4,698,000 | -9,128,000 |
3.03 | Gross Profit | 1,827,000 | 3,480,000 | 1,691,000 | 3,497,000 |
3.04 | Operating Income/Expenses | -1,291,000 | -2,895,000 | -1,442,000 | -2,888,000 |
3.04.01 | Selling Expenses | -1,130,000 | -2,209,000 | -1,151,000 | -2,290,000 |
3.04.02 | General and administrative expenses | -190,000 | -340,000 | -180,000 | -365,000 |
3.04.05 | Other Operating Expenses | -148,000 | -567,000 | -290,000 | -569,000 |
3.04.05.01 | Depreciation and Amortization | -253,000 | -507,000 | -234,000 | -463,000 |
3.04.05.03 | Other operating expenses, net | 105,000 | -60,000 | -56,000 | -106,000 |
3.04.06 | Share of Profit of associates | 177,000 | 221,000 | 179,000 | 336,000 |
3.05 | Profit from operations before net financial expenses | 536,000 | 585,000 | 249,000 | 609,000 |
3.06 | Net Financial expenses | -225,000 | -452,000 | -263,000 | -513,000 |
3.07 | Income (loss) before income tax and social contribution | 311,000 | 133,000 | -14,000 | 96,000 |
3.08 | Income tax and social contribution | -37,000 | 17,000 | 53,000 | 108,000 |
3.08.01 | Current | 20,000 | 21,000 | 163,000 | 155,000 |
3.08.02 | Deferred | -57,000 | -4,000 | -110,000 | -47,000 |
3.09 | Net Income from continued operations | 274,000 | 150,000 | 39,000 | 204,000 |
3.10 | Net Income (loss) from discontinued operations | 60,000 | 54,000 | 379,000 | 340,000 |
3.10.01 | Net Income (loss) from Discontinued Operations | 60,000 | 54,000 | 379,000 | 340,000 |
3.11 | Net Income for the period | 334,000 | 204,000 | 418,000 | 544,000 |
3.99.01 | Basic Earnings per Share | 0 | 0 | 0 | 0 |
3.99.01.01 | ON | 1.24723 | 0.74311 | 1.56773 | 2.04031 |
3.99.02 | Diluted Earnings per Share | 0 | 0 | 0 | 0 |
3.99.02.02 | ON | 1.24488 | 0.74171 | 1.56553 | 2.03752 |
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Individual Interim Financial Information / Statement of Comprehensive Income | |||||
R$ (in thousands) | |||||
Code | Description | Current Quarter
| Year to date current period 01/01/2020 to 06/30/2020 | Previous Quarter
| Year to date previous period 01/01/2019 to 06/30/2019 |
4.01 | Net income for the Period | 334,000 | 204,000 | 418,000 | 544,000 |
4.02 | Other Comprehensive Income | 919,000 | 1,293,000 | 11,000 | 4,000 |
4.02.02 | Foreign Currency Translation | 920,000 | 1,299,000 | 4,000 | 5,000 |
4.02.04 | Fair Value of Trade Receivables | 0 | 0 | 10,000 | -7,000 |
4.02.05 | Cash Flow Hedge | -2,000 | -6,000 | 0 | 0 |
4.02.06 | Income Tax Related to Other Comprehensive Income | 1,000 | 0 | -3,000 | 6,000 |
4.02.08 | Other Comprehensive Income | 0 | 0 | 0 | 0 |
4.03 | Total Comprehensive Income for the Period | 1,253,000 | 1,497,000 | 429,000 | 548,000 |
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Individual Interim Financial Information / Statement of Cash Flows - Indirect Method | |||
R$ (in thousands) | |||
Code | Description | Year to date current period 01/01/2020 to 06/30/2020 | Year to date previous period 01/01/2019 to 06/30/2019 |
6.01 | Net Cash Operating Activities | -579,000 | -1,249,000 |
6.01.01 | Cash Provided by the Operations | 642,000 | 656,000 |
6.01.01.01 | Net Income for the Period | 204,000 | 544,000 |
6.01.01.02 | Deferred Income Tax and Social Contribution (Note 20) | 4,000 | -9,000 |
6.01.01.03 | Gain (Losses) on Disposal of Property and equipments | -218,000 | 68,000 |
6.01.01.04 | Depreciation/Amortization | 569,000 | 521,000 |
6.01.01.05 | Interest and Inflation Adjustments | 446,000 | 496,000 |
6.01.01.06 | Adjustment to Present Value | -1,000 | 0 |
6.01.01.07 | Share of Profit (Loss) of Subsidiaries and Associates (Note 12) | -221,000 | -336,000 |
6.01.01.08 | Provision for Risks | 36,000 | -9,000 |
6.01.01.10 | Share-based Payment | 18,000 | 25,000 |
6.01.01.11 | Allowance for Doubtful Accounts (Note 7.1) | 19,000 | 11,000 |
6.01.01.13 | Allowance for obsolescence and damages (Note 9.1) | 4,000 | -3,000 |
6.01.01.14 | Other Operating Expenses | -158,000 | 39,000 |
6.01.01.15 | Deferred Revenue | -38,000 | -11,000 |
6.01.01.16 | Loss or gain on lease liabilities | -22,000 | -71,000 |
6.01.01.18 | Gain in disposal of subsidiaries | 0 | -609,000 |
6.01.02 | Changes in Assets and Liabilities | -1,221,000 | -1,905,000 |
6.01.02.01 | Accounts Receivable | -107,000 | -8,000 |
6.01.02.02 | Inventories | -52,000 | 240,000 |
6.01.02.03 | Recoverable Taxes | 30,000 | -77,000 |
6.01.02.04 | Other Assets | -54,000 | -123,000 |
6.01.02.05 | Related Parties | -376,000 | -166,000 |
6.01.02.06 | Restricted Deposits for Legal Proceeding | 45,000 | -42,000 |
6.01.02.07 | Trade Payables | -804,000 | -1,875,000 |
6.01.02.08 | Payroll and Related Taxes | 108,000 | -36,000 |
6.01.02.09 | Taxes and Social Contributions Payable | 0 | -1,000 |
6.01.02.10 | Payments of provision for risk | -68,000 | -39,000 |
6.01.02.11 | Deferred Revenue | 26,000 | 10,000 |
6.01.02.12 | Other Payables | 20,000 | 157,000 |
6.01.02.13 | Income Tax and Social contribution,paid | 0 | -4,000 |
6.01.02.15 | Received Dividends and Interest on own capital | 11,000 | 59,000 |
6.02 | Net Cash of Investing Activities | -156,000 | 2,043,000 |
6.02.02 | Acquisition of Property and Equipment (Note 15.2) | -398,000 | -421,000 |
6.02.03 | Increase in Intangible Assets (Note 16.2) | -44,000 | -60,000 |
6.02.04 | Sales of Property and Equipment | 286,000 | 13,000 |
6.02.08 | Cash received from subsidiary sale | 0 | 2,511,000 |
6.03 | Net Cash of Financing Activities | 928,000 | 301,000 |
6.03.01 | Capital Increase | 2,000 | 11,000 |
6.03.02 | Proceeds from Borrowings and Financing (Note 17.2) | 2,731,000 | 1,099,000 |
6.03.03 | Payments of Borrowings and Financing (Note 17.2) | -1,165,000 | -147,000 |
6.03.05 | Payment of Dividends and Interest on own Capital | -156,000 | -192,000 |
6.03.07 | Acquisition of companies | 0 | -19,000 |
6.03.09 | Payment of lease liability | -484,000 | -451,000 |
6.05 | Increase (Decrease) in Cash and Cash Equivalents | 193,000 | 1,095,000 |
6.05.01 | Cash and Cash Equivalents at the Beginning of the Period | 2,863,000 | 2,935,000 |
6.05.02 | Cash and Cash Equivalents at the End of the Period | 3,056,000 | 4,030,000 |
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Individual Interim Financial Information / Statement of Changes in Shareholders' Equity 01/01/2020 to 06/30/2020 | |||||||
R$ (in thousands) | |||||||
Code | Description | Share Capital | Capital Reserves, Options Granted and Treasury Shares | Earnings Reserve | Retained Earnings /Accumulated Losses | Other comprehensive income | Shareholders' Equity |
5.01 | Opening balance | 6,857,000 | 447,000 | 3,529,000 | 0 | 107,000 | 10,940,000 |
5.03 | Adjusted opening balance | 6,857,000 | 447,000 | 3,529,000 | 0 | 107,000 | 10,940,000 |
5.04 | Capital Transactions with Shareholders | 2,000 | 18,000 | 0 | -2,000 | 0 | 18,000 |
5.04.01 | Capital Increases | 2,000 | 0 | 0 | 0 | 0 | 2,000 |
5.04.03 | Share based expenses | 0 | 15,000 | 0 | 0 | 0 | 15,000 |
5.04.08 | Share based expenses of Subsidiaries | 0 | 3,000 | 0 | 0 | 0 | 3,000 |
5.04.11 | Others | 0 | 0 | 0 | -2,000 | 0 | -2,000 |
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 201,000 | 1,296,000 | 1,497,000 |
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 204,000 | 0 | 204,000 |
5.05.02 | Other Comprehensive Income | 0 | 0 | 0 | -3,000 | 1,296,000 | 1,293,000 |
5.05.02.04 | Foreign currency translation | 0 | 0 | 0 | -3,000 | 1,302,000 | 1,299,000 |
5.05.02.08 | Cash Flow Hedge | 0 | 0 | 0 | 0 | -6,000 | -6,000 |
5.06 | Internal Changes of Shareholders’ Equity | 0 | 0 | 111,000 | 0 | 0 | 111,000 |
5.06.05 | Transactions with Non-controlling Interests | 0 | 0 | 111,000 | 0 | 0 | 111,000 |
5.07 | Closing Balance | 6,859,000 | 465,000 | 3,640,000 | 199,000 | 1,403,000 | 12,566,000 |
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Individual Interim Financial Information / Statement of Changes in Shareholders' Equity 01/01/2019 to 06/30/2019 | |||||||
R$ (in thousands) | |||||||
Code | Description | Share Capital | Capital Reserves, Options Granted and Treasury Shares | Earnings Reserve | Retained Earnings /Accumulated Losses | Other comprehensive Income | Shareholders' Equity |
5.01 | Opening balance | 6,825,000 | 413,000 | 3,062,000 | 0 | -66,000 | 10,234,000 |
5.03 | Adjusted opening balance | 6,825,000 | 413,000 | 3,062,000 | 0 | -66,000 | 10,234,000 |
5.04 | Capital Transactions with Shareholders | 11,000 | 25,000 | -137,000 | -42,000 | 18,000 | -125,000 |
5.04.01 | Capital Increases | 11,000 | 0 | 0 | 0 | 0 | 11,000 |
5.04.03 | Share based expenses | 0 | 19,000 | 0 | 0 | 0 | 19,000 |
5.04.07 | Interest on own Capital | 0 | 0 | -137,000 | -37,000 | 0 | -174,000 |
5.04.08 | Share based expenses of Subsidiaries | 0 | 6,000 | 0 | 0 | 0 | 6,000 |
5.04.09 | Deconsolidation Via Varejo | 0 | 0 | 0 | -5,000 | 18,000 | 13,000 |
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 544,000 | 4,000 | 548,000 |
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 544,000 | 0 | 544,000 |
5.05.02 | Other Comprehensive Income | 0 | 0 | 0 | 0 | 4,000 | 4,000 |
5.05.02.04 | Foreign currency translation | 0 | 0 | 0 | 0 | 5,000 | 5,000 |
5.05.02.07 | Fair value of trade receivables | 0 | 0 | 0 | 0 | -7,000 | -7,000 |
5.05.02.09 | Income taxes related to other comprehensive income | 0 | 0 | 0 | 0 | 6,000 | 6,000 |
5.06 | Internal Changes of Shareholders’ Equity | 0 | 0 | -5,000 | 0 | 0 | -5,000 |
5.06.05 | Transactions with Non-controlling Interests | 0 | 0 | -5,000 | 0 | 0 | -5,000 |
5.07 | Closing Balance | 6,836,000 | 438,000 | 2,920,000 | 502,000 | -44,000 | 10,652,000 |
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Individual Interim Financial Information / Statement of Value Added | |||
R$ (in thousands) | |||
Code | Description | Year to date current period 01/01/2020 to 06/30/2020 | Year to date previous period 01/01/2019 to 06/30/2019 |
7.01 | Revenues | 15,179,000 | 14,264,000 |
7.01.01 | Sales of Goods, Products and Services | 14,813,000 | 13,690,000 |
7.01.02 | Other Revenues | 368,000 | 572,000 |
7.01.04 | Allowance for/Reversal of Doubtful Accounts | -2,000 | 2,000 |
7.02 | Products Acquired from Third Parties | -11,495,000 | -10,972,000 |
7.02.01 | Costs of Products, Goods and Services Sold | -9,718,000 | -9,463,000 |
7.02.02 | Materials, Energy, Outsourced Services and Other | -1,777,000 | -1,509,000 |
7.03 | Gross Value Added | 3,684,000 | 3,292,000 |
7.04 | Retention | -569,000 | -521,000 |
7.04.01 | Depreciation and Amortization | -569,000 | -521,000 |
7.05 | Net Value Added Produced | 3,115,000 | 2,771,000 |
7.06 | Value Added Received in Transfer | 406,000 | 742,000 |
7.06.01 | Share of Profit of Subsidiaries and Associates | 221,000 | 336,000 |
7.06.02 | Financial Revenue | 131,000 | 66,000 |
7.06.03 | Other | 54,000 | 340,000 |
7.07 | Total Value Added to Distribute | 3,521,000 | 3,513,000 |
7.08 | Distribution of Value Added | 3,521,000 | 3,513,000 |
7.08.01 | Personnel | 1,662,000 | 1,501,000 |
7.08.01.01 | Direct Compensation | 964,000 | 966,000 |
7.08.01.02 | Benefits | 326,000 | 290,000 |
7.08.01.03 | Government Severance Indemnity Fund for Employees (FGTS) | 107,000 | 97,000 |
7.08.01.04 | Other | 265,000 | 148,000 |
7.08.02 | Taxes, Fees and Contributions | 1,027,000 | 863,000 |
7.08.02.01 | Federal | 515,000 | 510,000 |
7.08.02.02 | State | 395,000 | 205,000 |
7.08.02.03 | Municipal | 117,000 | 148,000 |
7.08.03 | Value Distributed to Providers of Capital | 628,000 | 605,000 |
7.08.03.01 | Interest | 596,000 | 591,000 |
7.08.03.02 | Rentals | 32,000 | 14,000 |
7.08.04 | Value Distributed to Shareholders | 204,000 | 544,000 |
7.08.04.01 | Interest on shareholders' equity | 0 | 174,000 |
7.08.04.03 | Retained Earnings/ Accumulated Losses for the Period | 204,000 | 370,000 |
13 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information /Balance Sheet - Assets | |||
R$ (in thousands) | |||
Code | Description | Current Quarter 06/30/2020 | Previous Year 12/31/2019 |
1 | Total Assets | 63,086,000 | 57,991,000 |
1.01 | Current Assets | 21,155,000 | 19,892,000 |
1.01.01 | Cash and Cash Equivalents | 7,736,000 | 7,954,000 |
1.01.03 | Accounts Receivable | 1,109,000 | 1,108,000 |
1.01.03.01 | Trade Receivables | 805,000 | 727,000 |
1.01.03.02 | Other Receivables | 304,000 | 381,000 |
1.01.04 | Inventories | 9,138,000 | 8,625,000 |
1.01.06 | Recoverable Taxes | 1,742,000 | 1,627,000 |
1.01.08 | Other Current Assets | 1,430,000 | 578,000 |
1.01.08.01 | Assets Held for Sale | 586,000 | 218,000 |
1.01.08.03 | Other | 844,000 | 360,000 |
1.01.08.03.01 | Financial Instruments - Derivatives | 446,000 | 73,000 |
1.01.08.03.02 | Others assets | 15,000 | 0 |
1.01.08.03.03 | Others assets | 383,000 | 287,000 |
1.02 | Noncurrent Assets | 41,931,000 | 38,099,000 |
1.02.01 | Long-term Assets | 4,651,000 | 4,338,000 |
1.02.01.04 | Accounts Receivable | 530,000 | 193,000 |
1.02.01.04.01 | Trade receivables, net | 16,000 | 1,000 |
1.02.01.04.02 | Other accounts receivable | 514,000 | 192,000 |
1.02.01.07 | Deferred Taxes | 362,000 | 354,000 |
1.02.01.09 | Receivables from related parties | 119,000 | 104,000 |
1.02.01.10 | Other Noncurrent Assets | 3,640,000 | 3,687,000 |
1.02.01.10.04 | Recoverable Taxes | 2,717,000 | 2,702,000 |
1.02.01.10.05 | Restricted deposits for legal proceedings | 732,000 | 795,000 |
1.02.01.10.06 | Financial Instruments - Fair Value Hegde | 14,000 | 13,000 |
1.02.01.10.07 | Other Noncurrent Assets | 177,000 | 177,000 |
1.02.02 | Investments | 4,272,000 | 3,612,000 |
1.02.02.01 | Investments in Associates | 848,000 | 749,000 |
1.02.02.02 | Investment properties | 3,424,000 | 2,863,000 |
1.02.03 | Property and Equipment, Net | 24,778,000 | 22,709,000 |
1.02.03.01 | Property and Equipment in Use | 16,049,000 | 15,638,000 |
1.02.03.02 | Leased Properties | 8,729,000 | 7,071,000 |
1.02.04 | Intangible Assets, net | 8,230,000 | 7,440,000 |
1.02.04.01 | Intangible Assets | 8,230,000 | 7,440,000 |
1.02.04.01.02 | Intangible Assets | 7,426,000 | 6,604,000 |
1.02.04.01.03 | Intangible Right-of-use | 804,000 | 836,000 |
14 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Balance Sheet - Liabilities | |||
R$ (in thousands) | |||
Code | Description | Current Quarter 06/30/2020 | Previous Year 12/31/2019 |
2 | Total Liabilities | 63,086,000 | 57,991,000 |
2.01 | Current Liabilities | 21,594,000 | 23,135,000 |
2.01.01 | Payroll and Related Taxes | 1,174,000 | 980,000 |
2.01.02 | Trade payables, net | 12,211,000 | 14,887,000 |
2.01.03 | Taxes and Contributions Payable | 898,000 | 531,000 |
2.01.04 | Borrowings and Financing | 4,328,000 | 3,488,000 |
2.01.05 | Other Liabilities | 2,983,000 | 3,249,000 |
2.01.05.01 | Payables to Related Parties | 200,000 | 215,000 |
2.01.05.02 | Other | 2,783,000 | 3,034,000 |
2.01.05.02.01 | Dividends and interest on own capital | 11,000 | 168,000 |
2.01.05.02.07 | Pass-through to Third Parties | 121,000 | 164,000 |
2.01.05.02.08 | Financing Related to Acquisition of Assets | 101,000 | 231,000 |
2.01.05.02.09 | Deferred Revenue | 368,000 | 365,000 |
2.01.05.02.11 | Acquisition of Companies | 565,000 | 466,000 |
2.01.05.02.12 | Other current liabilities | 674,000 | 703,000 |
2.01.05.02.17 | Lease liability | 943,000 | 937,000 |
2.02 | Noncurrent Liabilities | 25,872,000 | 21,345,000 |
2.02.01 | Borrowings and Financing | 13,314,000 | 10,706,000 |
2.02.02 | Other Liabilities | 10,556,000 | 8,560,000 |
2.02.02.02 | Others | 10,556,000 | 8,560,000 |
2.02.02.02.03 | Taxes payable in installments | 340,000 | 376,000 |
2.02.02.02.07 | Other noncurrent liabilities | 73,000 | 68,000 |
2.02.02.02.08 | Provision for Losses on Investments in Associates | 568,000 | 386,000 |
2.02.02.02.09 | Lease Liability | 9,575,000 | 7,730,000 |
2.02.03 | Deferred taxes | 671,000 | 748,000 |
2.02.04 | Provisions | 1,310,000 | 1,305,000 |
2.02.04.01 | Tax, Social Security, Labor and Civil Provisions | 1,310,000 | 1,305,000 |
2.02.06 | Deferred Revenue | 21,000 | 26,000 |
2.03 | Shareholders’ Equity | 15,620,000 | 13,511,000 |
2.03.01 | Share Capital | 6,859,000 | 6,857,000 |
2.03.02 | Capital Reserves | 465,000 | 447,000 |
2.03.02.04 | Stock Option | 458,000 | 440,000 |
2.03.02.07 | Capital Reserve | 7,000 | 7,000 |
2.03.04 | Earnings Reserve | 3,640,000 | 3,529,000 |
2.03.04.01 | Legal Reserve | 556,000 | 556,000 |
2.03.04.05 | Earnings Retention Reserve | 230,000 | 230,000 |
2.03.04.07 | Tax Incentive Reserve | 58,000 | 58,000 |
2.03.04.10 | Expansion Reserve | 2,916,000 | 2,916,000 |
2.03.04.12 | Transactions with non-controlling interests | 30,000 | -81,000 |
2.03.04.14 | Settlement of Equity Instrument | -150,000 | -150,000 |
2.03.05 | Retained Earnings/ Accumulated Losses | 199,000 | 0 |
2.03.08 | Other comprehensive income | 1,403,000 | 107,000 |
2.03.09 | Non-Controlling interests | 3,054,000 | 2,571,000 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Operations | |||||
R$ (in thousands) | |||||
Code | Description | Current Quarter
| Year to date current period 01/01/2020 to 06/30/2020 | Previous Quarter
| Year to date previous period 01/01/2019 to 06/30/2019 |
3.01 | Net operating revenue | 20,766,000 | 40,448,000 | 13,081,000 | 25,790,000 |
3.02 | Cost of sales | -16,255,000 | -31,781,000 | -10,260,000 | -20,172,000 |
3.03 | Gross Profit | 4,511,000 | 8,667,000 | 2,821,000 | 5,618,000 |
3.04 | Operating Income/Expenses | -3,595,000 | -7,437,000 | -2,396,000 | -4,740,000 |
3.04.01 | Selling Expenses | -2,526,000 | -4,985,000 | -1,728,000 | -3,411,000 |
3.04.02 | General and administrative expenses | -508,000 | -1,009,000 | -255,000 | -524,000 |
3.04.05 | Other Operating Expenses | -591,000 | -1,407,000 | -404,000 | -778,000 |
3.04.05.01 | Depreciation and Amortization | -556,000 | -1,099,000 | -331,000 | -656,000 |
3.04.05.03 | Other operating expenses, net | -35,000 | -308,000 | -73,000 | -122,000 |
3.04.06 | Share of Profit of associates | 30,000 | -36,000 | -9,000 | -27,000 |
3.05 | Profit from operations before net financial expenses | 916,000 | 1,230,000 | 425,000 | 878,000 |
3.06 | Net Financial expenses | -473,000 | -899,000 | -299,000 | -601,000 |
3.07 | Income (loss) before income tax and social contribution | 443,000 | 331,000 | 126,000 | 277,000 |
3.08 | Income tax and social contribution | -121,000 | -112,000 | -62,000 | -77,000 |
3.08.01 | Current | -197,000 | -290,000 | 31,000 | -78,000 |
3.08.02 | Deferred | 76,000 | 178,000 | -93,000 | 1,000 |
3.09 | Net Income from continued operations | 322,000 | 219,000 | 64,000 | 200,000 |
3.10 | Net Income (loss) from discontinued operations | 60,000 | 54,000 | 322,000 | 376,000 |
3.10.01 | Net Income (loss) from Discontinued Operations | 60,000 | 54,000 | 322,000 | 376,000 |
3.11 | Net Income for the period | 382,000 | 273,000 | 386,000 | 576,000 |
3.11.01 | Attributable to Controlling Shareholders - continued operations | 334,000 | 204,000 | 418,000 | 544,000 |
3.11.02 | Attributable to Non-controlling Shareholders | 48,000 | 69,000 | -32,000 | 32,000 |
3.99.01 | Basic Earnings per Share | - | - | - | - |
3.99.01.01 | ON | 1.24723 | 0.74311 | 1.56773 | 2.04031 |
3.99.02 | Diluted Earnings per Share | - | - | - | - |
3.99.02.01 | ON | 1.24488 | 0.74171 | 1.56553 | 2.03752 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Comprehensive Income | |||||
R$ (in thousands) | |||||
Code | Description | Current Quarter 04/01/2020 to 06/30/2020 | Year to date current period 01/01/2020 to 06/30/2020 | Previous Quarter 04/01/2019 to 06/30/2019 | Year to date previous period 01/01/2019 to 06/30/2019 |
4.01 | Net income for the Period | 382.000 | 273,000 | 386,000 | 576,000 |
4.02 | Other Comprehensive Income | 1.274.000 | 1,773,000 | 11,000 | 4,000 |
4.02.02 | Foreign Currency Translation | 1.271.000 | 1,778,000 | 4,000 | 5,000 |
4.02.04 | Fair Value of Trade Receivables | 0 | 0 | 10,000 | -17,000 |
4.02.05 | Cash Flow Hedge | 0 | -5,000 | 0 | 0 |
4.02.06 | Income Tax Related to Other Comprehensive Income | 1.000 | 0 | -3,000 | 16,000 |
4.02.07 | Income taxes on Cash Flow Hedge | 2.000 | 0 | 0 | 0 |
4.02.08 | Other Comprehensive Income | 2.000 | 0 | 0 | 0 |
4.03 | Total Comprehensive Income for the Period | 1.656.000 | 2,046,000 | 397,000 | 580,000 |
4.03.01 | Attributable to Controlling Shareholders | 1.255.000 | 1,497,000 | 429,000 | 548,000 |
4.03.02 | Attributable to Non-Controlling Shareholders | 401.000 | 549,000 | -32,000 | 32,000 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Cash Flows - Indirect Method | |||
R$ (in thousands) | |||
Code | Description | Year to date current period 01/01/2020 to 06/30/2020 | Year to date previous period 01/01/2019 to 06/30/2019 |
6.01 | Net Cash Operating Activities | -1,444,000 | -3,948,000 |
6.01.01 | Cash Provided by the Operations | 1,471,000 | 1,901,000 |
6.01.01.01 | Net Income for the Period | 273,000 | 576,000 |
6.01.01.02 | Deferred Income Tax and Social Contribution (Note 20) | -178,000 | 62,000 |
6.01.01.03 | Gain (Losses) on Disposal of Property and equipments | -95,000 | 112,000 |
6.01.01.04 | Depreciation/Amortization | 1,229,000 | 724,000 |
6.01.01.05 | Interest and Inflation Adjustments | 862,000 | 892,000 |
6.01.01.06 | Adjustment to Present Value | -1,000 | 0 |
6.01.01.07 | Share of Profit (Loss) of Subsidiaries and Associates (Note 12) | 36,000 | 11,000 |
6.01.01.08 | Provision for Risks (Note 20) | 38,000 | 147,000 |
6.01.01.10 | Share-based Payment | 18,000 | 29,000 |
6.01.01.11 | Allowance for Doubtful Accounts (Note 7.1) | 40,000 | 259,000 |
6.01.01.13 | Allowance for obsolescence and damages (Note 9.1) | -1,000 | -11,000 |
6.01.01.14 | Other Operating Expenses | -158,000 | 18,000 |
6.01.01.15 | Deferred Revenue | -478,000 | -215,000 |
6.01.01.16 | Loss or gain on lease liabilities | -114,000 | -94,000 |
6.01.01.18 | Gain in disposal of subsidiaries | 0 | -609,000 |
6.01.02 | Changes in Assets and Liabilities | -2,915,000 | -5,849,000 |
6.01.02.01 | Accounts Receivable | -143,000 | -63,000 |
6.01.02.02 | Inventories | -37,000 | -24,000 |
6.01.02.03 | Recoverable Taxes | -61,000 | -21,000 |
6.01.02.04 | Other Assets | 13,000 | -301,000 |
6.01.02.05 | Related Parties | -26,000 | -97,000 |
6.01.02.06 | Restricted Deposits for Legal Proceeding | 62,000 | -20,000 |
6.01.02.07 | Trade Payables | -3,445,000 | -4,775,000 |
6.01.02.08 | Payroll and Related Taxes | 141,000 | -169,000 |
6.01.02.09 | Taxes and Social Contributions Payable | 308,000 | 98,000 |
6.01.02.10 | Payments of provision for risk | -84,000 | -364,000 |
6.01.02.11 | Deferred Revenue | 463,000 | 12,000 |
6.01.02.12 | Other Payables | -106,000 | -44,000 |
6.01.02.13 | Income Tax and Social contribution,paid | 0 | -93,000 |
6.01.02.15 | Received Dividends and Interest on own capital | 0 | 12,000 |
6.02 | Net Cash of Investing Activities | -543,000 | 1,144,000 |
6.02.02 | Acquisition of Property and Equipment (Note 15.2) | -1,120,000 | -1,000,000 |
6.02.03 | Increase in Intangible Assets (Note 16.2) | -88,000 | -197,000 |
6.02.04 | Sales of Property and Equipment | 672,000 | 15,000 |
6.02.08 | Cash received from subsidiary sale | 0 | 2,326,000 |
6.02.09 | Net cash from discontinueted subsidiaries (Note 14) | -7,000 | 0 |
6.03 | Net Cash of Financing Activities | 1,314,000 | -571,000 |
6.03.01 | Capital Increase | 2,000 | 11,000 |
6.03.02 | Proceeds from Borrowings and Financing (Note 17.2) | 5,390,000 | 3,246,000 |
6.03.03 | Payments of Borrowings and Financing | -2,953,000 | -2,672,000 |
6.03.05 | Payment of Dividends and Interest on own Capital | -280,000 | -192,000 |
6.03.06 | Transactions with Non-controlling Interest | 3,000 | 0 |
6.03.07 | Acquisition of companies | 0 | -19,000 |
6.03.09 | Payment of lease liability | -848,000 | -945,000 |
6.04 | Exchange rate changes in cash and cash equivalents | 455,000 | 0 |
6.05 | Increase (Decrease) in Cash and Cash Equivalents | -218,000 | -3,375,000 |
6.05.01 | Cash and Cash Equivalents at the Beginning of the Period | 7,954,000 | 8,080,000 |
6.05.02 | Cash and Cash Equivalents at the End of the Period | 7,736,000 | 4,705,000 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Changes in Shareholders' Equity 01/01/2020 to 06/30/2020 | |||||||||
R$ (in thousands) | |||||||||
Code | Description | Share Capital | Capital Reserves, Options Granted and Treasury Shares | Earnings Reserves | Retained Earnings/ Accumulated Losses | Other comprehensive Income | Shareholders' Equity | Non-Controlling Interest | Consolidated Shareholders' Equity |
5.01 | Opening balance | 6,857,000 | 447,000 | 3,529,000 | 0 | 107,000 | 10,940,000 | 2,571,000 | 13,511,000 |
5.03 | Adjusted opening balance | 6,857,000 | 447,000 | 3,529,000 | 0 | 107,000 | 10,940,000 | 2,571,000 | 13,511,000 |
5.04 | Capital Transactions with Shareholders | 2,000 | 18,000 | 0 | -2,000 | 0 | 18,000 | -69,000 | -51,000 |
5.04.01 | Capital Increases | 2,000 | 0 | 0 | 0 | 0 | 2,000 | 0 | 2,000 |
5.04.03 | Share based expenses | 0 | 15,000 | 0 | 0 | 0 | 15,000 | 0 | 15,000 |
5.04.06 | Dividends | 0 | 0 | 0 | 0 | 0 | 0 | -69,000 | -69,000 |
5.04.08 | Share based expenses of Subsidiaries | 0 | 3,000 | 0 | 0 | 0 | 3,000 | 0 | 3,000 |
5.04.11 | Others | 0 | 0 | 0 | -2,000 | 0 | -2,000 | 0 | -2,000 |
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 201,000 | 1,296,000 | 1,497,000 | 549,000 | 2,046,000 |
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 204,000 | 0 | 204,000 | 69,000 | 273,000 |
5.05.02 | Other Comprehensive Income | 0 | 0 | 0 | -3,000 | 1,296,000 | 1,293,000 | 480,000 | 1,773,000 |
5.05.02.04 | Foreign currency translation | 0 | 0 | 0 | -3,000 | 1,302,000 | 1,299,000 | 479,000 | 1,778,000 |
5.05.02.08 | Cash Flow Hedge | 0 | 0 | 0 | 0 | -6,000 | -6,000 | 1,000 | -5,000 |
5.06 | Internal Changes of Shareholders’ Equity | 0 | 0 | 111,000 | 0 | 0 | 111,000 | 3,000 | 114,000 |
5.06.05 | Transactions with Non-controlling Interests | 0 | 0 | 111,000 | 0 | 0 | 111,000 | 3,000 | 114,000 |
5.07 | Closing balance | 6,859,000 | 465,000 | 3,640,000 | 199,000 | 1,403,000 | 12,566,000 | 3,054,000 | 15,620,000 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Changes in Shareholders' Equity 01/01/2019 to 06/30/2019 | |||||||||
R$ (in thousands) | |||||||||
Code | Description | Share Capital | Capital Reserves, Options Granted and Treasury Shares | Earnings Reserves | Retained Earnings/ Accumulated Losses | Other comprehensive Income | Shareholders' Equity | Non-Controlling Interest | Consolidated Shareholders' Equity |
5.01 | Opening balance | 6,825,000 | 413,000 | 3,062,000 | 0 | -66,000 | 10,234,000 | 2,925,000 | 13,159,000 |
5.03 | Adjusted opening balance | 6,825,000 | 413,000 | 3,062,000 | 0 | -66,000 | 10,234,000 | 2,925,000 | 13,159,000 |
5.04 | Capital Transactions with Shareholders | 11,000 | 25,000 | -137,000 | -42,000 | 18,000 | -125,000 | -3,285,000 | -3,410,000 |
5.04.01 | Capital Increases | 11,000 | 0 | 0 | 0 | 0 | 11,000 | 0 | 11,000 |
5.04.03 | Share based expenses | 0 | 19,000 | 0 | 0 | 0 | 19,000 | 0 | 19,000 |
5.04.07 | Interest on own Capital | 0 | 0 | -137,000 | -37,000 | 0 | -174,000 | 0 | -174,000 |
5.04.08 | Share based expenses of Subsidiaries | 0 | 6,000 | 0 | 0 | 0 | 6,000 | 4,000 | 10,000 |
5.04.09 | Deconsolidation Via Varejo | 0 | 0 | 0 | -5,000 | 18,000 | 13,000 | -3,289,000 | -3,276,000 |
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 544,000 | 4,000 | 548,000 | 32,000 | 580,000 |
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 544,000 | 0 | 544,000 | 32,000 | 576,000 |
5.05.02 | Other Comprehensive Income | 0 | 0 | 0 | 0 | 4,000 | 4,000 | 0 | 4,000 |
5.05.02.04 | Foreign currency translation | 0 | 0 | 0 | 0 | 5,000 | 5,000 | 0 | 5,000 |
5.05.02.07 | Fair value of trade receivables | 0 | 0 | 0 | 0 | -7,000 | -7,000 | -10,000 | -17,000 |
5.05.02.09 | Income taxes related to other comprehensive income | 0 | 0 | 0 | 0 | 6,000 | 6,000 | 10,000 | 16,000 |
5.06 | Internal Changes of Shareholders’ Equity | 0 | 0 | -5,000 | 0 | 0 | -5,000 | 328,000 | 323,000 |
5.06.05 | Transactions with Non-controlling Interests | 0 | 0 | -5,000 | 0 | 0 | -5,000 | 328,000 | 323,000 |
5.07 | Closing balance | 6,836,000 | 438,000 | 2,920,000 | 502,000 | -44,000 | 10,652,000 | 0 | 10,652,000 |
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ITR – Interim Financial Information – June 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Value Added | |||
R$ (in thousands) | |||
Code | Description | Year to date current period 01/01/2020 to 06/30/2020 | Year to date previous period 01/01/2019 to 06/30/2019 |
7.01 | Revenues | 45,192,000 | 28,626,000 |
7.01.01 | Sales of Goods, Products and Services | 44,557,000 | 28,046,000 |
7.01.02 | Other Revenues | 647,000 | 578,000 |
7.01.04 | Allowance for/Reversal of Doubtful Accounts | -12,000 | 2,000 |
7.02 | Products Acquired from Third Parties | -36,427,000 | -23,127,000 |
7.02.01 | Costs of Products, Goods and Services Sold | -32,489,000 | -20,386,000 |
7.02.02 | Materials, Energy, Outsourced Services and Other | -3,938,000 | -2,741,000 |
7.03 | Gross Value Added | 8,765,000 | 5,499,000 |
7.04 | Retention | -1,229,000 | -724,000 |
7.04.01 | Depreciation and Amortization | -1,229,000 | -724,000 |
7.05 | Net Value Added Produced | 7,536,000 | 4,775,000 |
7.06 | Value Added Received in Transfer | 377,000 | 453,000 |
7.06.01 | Share of Profit of Subsidiaries and Associates | -36,000 | -27,000 |
7.06.02 | Financial Revenue | 359,000 | 104,000 |
7.06.03 | Other | 54,000 | 376,000 |
7.07 | Total Value Added to Distribute | 7,913,000 | 5,228,000 |
7.08 | Distribution of Value Added | 7,913,000 | 5,228,000 |
7.08.01 | Personnel | 3,650,000 | 2,199,000 |
7.08.01.01 | Direct Compensation | 2,484,000 | 1,437,000 |
7.08.01.02 | Benefits | 651,000 | 464,000 |
7.08.01.03 | Government Severance Indemnity Fund for Employees (FGTS) | 157,000 | 139,000 |
7.08.01.04 | Other | 358,000 | 159,000 |
7.08.01.04.01 | Profit (cost) sharing | 358,000 | 159,000 |
7.08.02 | Taxes, Fees and Contributions | 2,675,000 | 1,716,000 |
7.08.02.01 | Federal | 649,000 | 859,000 |
7.08.02.02 | State | 1,815,000 | 685,000 |
7.08.02.03 | Municipal | 211,000 | 172,000 |
7.08.03 | Value Distributed to Providers of Capital | 1,315,000 | 737,000 |
7.08.03.01 | Interest | 1,271,000 | 722,000 |
7.08.03.02 | Rentals | 44,000 | 15,000 |
7.08.04 | Value Distributed to Shareholders | 273,000 | 576,000 |
7.08.04.01 | Interest on shareholders' equity | 0 | 174,000 |
7.08.04.03 | Retained Earnings/ Accumulated Losses for the Period | 204,000 | 370,000 |
7.08.04.04 | Noncontrolling Interest in Retained Earnings | 69,000 | 32,000 |
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São Paulo, July 29, 2020 - GPA [B3: PCAR3; NYSE: CBD] announces its results for the 2nd quarter of 2020. All comparisons are with the same period in 2019, except where stated otherwise. In addition, as from 2019, the results include the effects of IFRS 16/CPC 06 (R2) – Leases, which eliminates the distinction between operating and financial leases and requires the recognition of a financial asset and liability related to future leases discounted to present value for virtually all lease agreements of our stores.
2Q20 RESULTS
The following comments refer to numbers after the application of IFRS 16, unless indicated otherwise. The operations of Grupo Éxito related to 2Q20 are included in GPA’s consolidated results and the variations in relation to 2Q19 (pro forma) are for comparison purposes only.
Operating and Financial Performance | Consolidated Gross Revenue of R$ 22.9 billion in 2Q20, +61.1% in total sales and +19.3% in pro forma1, highlighting the strong increase of GPA operations in Brazil (+20.1%), superior than the market performance in the period. The successful expansion of Assaí (21 stores opened in the last 12 months), optimization of the Multivarejo store portfolio and the expressive acceleration of digital ecosystem explain this performance. Grupo Éxito continues to report consistent growth, despite the scenario of important restrictions on the movement of people, especially in Colombia. The multi-channel, multi-format and multi-region strategy once again proves successful, with rapid adaptability and strong adherence to client demands and new consumption conditions, which is also reflected on the growth in online sales. ▪ GPA Brazil (Food)2: R$ 17.1 billion, significant growth of 20.0% in total sales, 12.8% in ‘same-store’ sales and 14.8% in ‘same-store’ sales excluding gas stations and drugstores. ✔ Assaí: R$ 9.0 billion (+R$ 1.9 billion vs. the prior year – the biggest historical increase registered in a quarter), with growth of 26.4% in total sales and 10.0% in ‘same-store’ sales. The highlight was the accelerated expansion of new stores and the higher sales to individual consumers – more than offsetting the challenges of the food service segment in Brazil. ✔ Multivarejo: R$ 8.0 billion, significant growth of 13.6% in total sales and 15.8% in ‘same-store’ sales. Excluding the negative effect from the gas station (-37.0%) and drugstore (-15.4%) operations, ‘same-store’ sales grew 20.3%. There was strong sales performance in all banners, with an increase of 3.7x in online sales being the highlight, already representing 5.6% of food sales in Multivarejo and 15.3% of sales in the Pão de Açucar banner. ▪ Grupo Éxito: R$ 5.8 billion, which represents solid growth of 17.0% in pro forma sales and 6.0% in ‘same-store’ sales in a constant currency, despite the challenging scenario in Colombia. The highlight was the growth of innovative formats: Éxito Wow (+15.3%) and Carulla FreshMarket (+27.6%), which confirm the effectiveness of the strategy adopted by the Company. Uruguay registered a strong ‘same-store’ sales in a constant currency (+13.1%), driven by well-executed commercial campaigns. The online platform accelerated in all countries and remains an important growth lever, already representing 11.9%3 of total sales.
Consolidated Adjusted EBITDA came to R$ 1.6 billion (+83.2% vs. 2Q19), +32.6% in pro forma and margin of 7.6%, confirming the positive trend in the Brazilian and international operations in all formats and channels. ▪ GPA Brazil (Food)3: R$ 1.2 billion, +29.7% vs. 2Q19 with margin of 7.5% (+70 bps vs. 2Q19). Assaí’s adjusted margin expanded 30 bps to 7.3% (despite the strong comparison base of 7.0%), and Multivarejo had robust growth in both annual (+110 bps) and sequential (+50 bps vs. 1Q20 and +150 bps vs. 4Q19) comparisons, with adjusted margin of 7.7%. The strong sales contributed to the significant dilution of SG&A expenses in both formats, and consequently to margin expansion. ▪ Grupo Éxito: R$ 424 million, +29.2% vs. 2Q19, with margin of 8.1% (+70 bps vs. 2Q19), representing a strong contribution to the consolidated result despite the important challenges related to the restriction of movement of people, which put a higher pressure on the Group’s complementary businesses (Tuya credit cards, Puntos Colombia and Malls).
Net income from continuing operations came to R$ 274 million, +322.0% vs. 2Q19, with margin of 1.3%, reflecting the group’s operational improvement in all formats and the successful strategies adopted since the beginning of the year. Multivarejo’s important recovery, combined with Assaí’s solid performance and the consolidation of strong results of Grupo Éxito more than offset the increase in depreciation and higher cost of debt. | |
Leverage | ▪ The quarter was marked by strong operating cash inflow and the conclusion of another important step in the process of monetization of mature and non-core assets, which contributed to a reduction of R$ 1.5 billion in net debt vs 1Q20. Thus, net debt went from R$ 10.8 billion to R$ 9.2 billion and Net Debt/EBITDA4 was reduced from 2.5x in 1Q20 to 2.2x in 2Q20. ▪ The Company ended 2Q20 with a strong financial position of R$ 7.7 billion in cash, equivalent to approximately 2x the short-term debt (vs. 120% in 1Q20 and 156% in 2Q19). | |
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Capex | ▪ Gross investments of consolidated GPA came to R$ 536 million. Two (2) Assaí stores were opened and another 16 are under construction (13 organic and 3 conversions), in line with the Company’ strategy. It is important to mention that in the last 12 months, 21 Assaí’ new stores were opened. ▪ The Company reaffirms its expansion and optimization plan; however, due to the pandemic scenario, a few changes in deadlines or postponements may occur. We should end 2020 with the opening of 19 Assaí stores, conversions of 38 Extra Super into Mercado Extra, refurbishment of 8 Pão de Açúcar stores in the latest generation model. In Grupo Éxito we expect between 5 to 7 stores (from openings, conversions and remodeling), focused on innovative models Éxito WOW, Carulla FreshMarket and Surtimayorista by the end of the year. |
1 Pro forma: results of Grupo Éxito in 2Q19 included in the consolidated result for comparability purposes only;
2 GPA Brazil: GPA Food Brazil does not include result of “Others” (Cheftime, Stix Fidelidade and James);
3 Grupo Éxito’s online sales include Marketplace GMV
4 Pre-IFRS16 adjusted, accumulated in the last 12 months.
2Q20 RESULTS
Consolidated GPA:
2Q20
(1) Other: Includes the operations with most recent initiatives, such as James Delivery, Cheftime and Stix Fidelidade.
(2) Pro forma variation includes the results of Grupo Éxito in 2Q19 as if it were part of the group in the past and is presented for comparison purposes only.
(3) To reflect the calendar effect, the following reductions were made in 2Q20: 10 bps in GPA Food (10 bps in Assaí and 20 bps in Multivarejo) as well as 00 bps in Grupo Éxito.
(4) Includes increases in constant exchange rate for the international operations.
(5) Excludes the gas station and drugstore operations.
Significant growth in pro forma sales (+19.3%), driven by: i) accelerated expansion of Assaí’ banner (+26.4%), which opened 3 stores in 2020, despite a scenario marked by uncertainties due to the pandemic, and ii) strong growth in the retail operations at Multivarejo (+13.6%). There was an important recovery in Hypermarket (+19.3%) and 3.7x growth in online sales, which remain an important growth platform for the group, already accounting for 5.6% of food sales.
The international operations, demonstrated by Grupo Éxito, continued to post solid growth in pro forma basis (+17.0%) and in ‘same-store’ sales at constant exchange rate (+6.0%). Colombia’s operation, which represents 76% of Grupo Éxito’s total sales, grew 3.4% in ‘same-store’ sales in 2Q20, despite the scenario of strong restrictions on movement of people during the pandemic. The growth in food sales remains strong, especially in innovative and online formats (which represents 14.7%6 of sales in Colombia and 11.9%6 of the group total sales). Uruguay, the second largest market, continued to post strong growth (+25.6% in total sales and +13.1% in ‘same-store’ sales), driven by highly successful campaigns and strong expansion of the omnichannel format.
(6)Online sales of Grupo Éxito include marketplace GMV.
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(1) GPA Brazil results does not include results of “other businesses” (Stix, James and Cheftime);
(2) Operating income before interest, tax, depreciation and amortization;
(3) Adjusted for Other Operating Income and Expenses; Note: Tax credits were not materially different from previous quarters.
“The second quarter results reflect the success of our multi-channel, multi-format and multi-region strategy and of our digital ecosystem. We overcame important operational challenges posed by the new economic and consumption scenario, and reported strong and positive sales performance in all the retail formats we operate. In addition to the important growth in the food segment and the strong recovery in the non-food segment, we registered an accelerated growth in food e-commerce, which proved highly profitable and remains a major growth platform, both in Brazil and the international operations. The strong level of sales promoted significantly dilution of fixed expenses, which enabled us to attain important operating results, with EBITDA growth in all businesses and extremely healthy margins.
Assaí proved to be very resilient, attracted new individual clients and more than offset the challenges faced by the food service segment in the period. Multivarejo showed that its portfolio is highly aligned with consumers’ needs and new consumption models, with an important recovery at hypermarket and ensuring its leadership in the e-commerce segment in Brazil. Grupo Éxito reported growth with strong margins, despite facing significant restrictions on the movement of people in Colombia, its largest market, thereby contributing to the Company’s strong results.
We closed the quarter with net income from continuing operations of R$ 274 million and a robust financial position of R$ 7.7 billion in cash (approximately 2x higher than the short-term debt) which gives us the confidence to affirm that we are increasingly prepared for the huge challenges ahead.”
Peter Estermann – CEO of GPA
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I. OPERATING PERFORMANCE BY BUSINESS
Assaí:
2Q20 and 1H20
(1) To reflect the calendar effect, 10 bps was reduced in Assaí in 2Q20.
Another quarter of strong total sales growth (+26.4%), driven by the successful expansion of the banner, effective commercial activities and higher consumption at home during quarantine, given that sales to individual consumers more than offset the challenges faced by the food service segment in Brazil.
Gross revenue was R$ 9.0 billion in the quarter (+26.4%), up R$ 1.9 billion from the same period of the previous year, due to the strong performance of the 39 stores opened in the last 24 months, which are still in maturation period, but already account for around 24.0% of the banner's total sales.
‘Same-store’ sales posted significant growth of 10.0%, despite the strong comparison base (+8.1% in 2Q19), showing the format’s capacity to adapt and its resilience. The growth in sales to individual consumers and resellers since the start of the pandemic more than offset the lower demand from food service. The successful commercial campaigns, such as “Mothers’ Week,” “Groceries Festival” and “Cleaning and Personal Care Festival,” combined with the forging of partnerships with governments and NGOs for sale of food staple baskets, contributed to this strong growth.
In line with the banner’s plan to expand rapidly to other regions of Brazil, two stores were opened in the quarter, one in Mato Grosso do Sul and another in Maranhão. Sixteen (16) stores are under construction and should be inaugurated in the next semester, with three Extra Hiper stores in the process of conversion and 13 organic stores, in line with the initial expectation of opening stores for 2020, despite the pandemic scenario and the restrictions for construction of the sites.
Passaí cards amount to approximately 1.1 million since their launch, with over 740,000 active cards. Card penetration currently stands at 5.3%, reinforcing the value proposition for customers.
The rollout of credit and debit card POS machines under the Passaí brand was concluded in July 2020 and reached all of the banner's stores with great customer receptivity.
Gross profit was R$1.3 billion, with gross margin of 16.3%. This margin level is mainly due to the large portfolio of stores that still in the maturation curve, which means they have not yet captured the full potential of the banner's stores. A highly competitive price policy was maintained, despite the scenario of higher food inflation.
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Selling, general and administrative expenses came to R$ 747 million, corresponding to 9.1% of net sales, lower than revenue growth (-60 bps vs. 2Q19). The strategy to maintain its price policy during the quarter (which resulted in strong sales growth), contributed significantly to the dilution of fixed expenses and supported the consequent improvement in EBITDA margin.
Adjusted EBITDA continued presenting solid growth, to R$ 597 million in 2Q20 (+29.6%), with margin expansion of 30 bps when compared to the same period last year, reaching 7.3%.
(1) Operating income before interest, tax, depreciation and amortization. (2) Adjusted for Other Operating Income and Expenses.
Multivarejo:
2Q20
(1) Includes sales by Delivery and rental revenue from commercial centers.
(1) To reflect the calendar effect, 20 bps was reduced in Multivarejo in 2Q19.
Significant growth in ‘same-store’ sales excluding gas stations and drugstores (+20.3%), with all retail operations presenting a strong performance. The result in the quarter was driven mainly by: i) continuous improvements due to optimization of the store portfolio - which is increasingly adapted to the different demands of consumers and new consumption models; ii) strong recovery in Hypermarket - with the new value proposition of the non-food segment being the highlight; and iii) strong growth in e-commerce - a platform of strategic importance that offers profitable growth to the Company.
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Gross revenue grew 13.6% in the quarter while ‘same-store’ sales excluding gas stations and drugstores reached +20.3%, with strong performance in all retail formats and important growth of 11.6% in total food sales (+13.3% ‘same-store’ food sales). The highlights were: i) significant recovery in hypermarkets, with positive impact of the new value proposition of the non-food segment (+42.7 vs. 2Q19 and +51.5% ‘same-store’), ii) the accelerated growth in online food sales (+272%) and iii) the significant growth in the renovated stores. All operations, except gas stations and drugstores, benefitted from the stronger demand due to pandemic scenario, with market share gains in all months of the quarter. It is worth mentioning that the dynamic of lower customer traffic at stores with more complete baskets, continued during the observed period.
Highlights by banner:
● | Extra Hyper: Significant growth in ‘same-store’ sales of 22.4%, driven by the model’s strong alignment with consumers’ needs, that during the pandemic started to consume based on the one-stop-shop model (lower traffic in stores, but more complete baskets). The non-food segment registered solid growth, benefitted by its new value proposition (new agreements with suppliers, assortment more adherent to consumer demands and more optimized inventories). The sale of products related to remote work (chairs, desks, IT items), gifts during Mothers’ Day campaign (smartphones and other electronic devices) and items related to spending more time at home (home appliances, toys and games) were the highlights. |
● | Pão de Açúcar: Strong ‘same-store’ sales growth of 15.1% in 2Q20, driven by the excellent performance of 46 stores renovated for the next generation concept (+18.3% in the period). Renovated stores already represent 41% of banner’s total sales, and there is an intention to convert more ~10 stores in the following months. 2Q20 was also marked by successful and well-executed commercial initiatives, such as the wine campaign held in May that sold 230,000 bottles in a single day, as well as the “Off Price” and “My Discount” campaigns, which already represent around 30% of store sales. |
● | Mercado Extra: Consistent sales performance, with strong expansion of 17.4% in ‘same-store’ sales in 2Q20. The format’s growth outpaced the performance of stores not converted yet, despite the strong comparison base from last year. The neighborhood format proved successful and aligned with consumers who search for stores near their homes during the period of social isolation. |
● | Compre Bem: Strong ‘same-store’ sales, with significant growth of 53.1%. The stores converted during 2018 (which already had a strong comparison base) and converted in 2019 were the highlight. In addition to the continuous gain of new clients and increase in volumes, the banner continues to develop and in May 2020 started its food e-commerce operations in the interior of the São Paulo State, with delivery service performed by its brick-and-mortar stores. |
● | Proximity: Important ‘same-store’ sales growth of 25.6%, maintaining the strong double-digit growth already observed in recent quarters, despite the impacts caused by the new consumer standard during the pandemic. The Mini Extra and Minuto Pão de Açúcar formats reported a good performance and the convenience stores faced challenges related to the reduction in traffic (-37.8%). Highlight for campaigns related to private-label products and the “Pão de Açúcar Mais” and “Clube Extra” apps. The “Aliados” program expanded significantly its base and contributed positively to the format’s performance in the quarter. |
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Private-Label Brands: In 2Q20, there were important campaigns for Private-Label Brands, which continued to be one of the Company’s growth pillars, reaching penetration of 19.1%[1] in Multivarejo’s food sales(+160 bps vs. 2Q19 considering the new criteria).
Gross profit was R$ 1.9 billion in 2Q20, with margin of 25.7%. This is the second sequential quarter with significant improvement in gross margin (+60bps vs. 1Q20 and +170 bps vs. 4Q19), supported by successful commercial activities and strong reduction in shrinkage (+90 bps vs. 4Q19).
The gross margin comparison reported in 2Q20 vs 2Q19 reflects the impact of lower income from commercial centers during the pandemic and the higher participation of non-food products in sales (46% of Hypermarket sales in 2Q20 vs. 36% in 2Q19). Excluding these impacts, gross margin of food category would have increased 110 bps, benefitted by the reduction in food promoshare.
Selling, general and administrative expenses totaled R$ 1.4 billion, increasing only 2.0% when compared to 2Q19 and corresponding to 18.8% of net sales (-170 bps vs. 2Q19), due to the rigorous control of expenses without affecting service quality. The strong sales growth contributed to additional dilution of SG&A expenses. In the quarter, the main savings were in marketing (less investments in advertising and leaflet distribution), maintenance, utilities, Telecom/IT and administrative expenses.
Adjusted EBITDA grew 29.9%, reaching R$ 563 million, with margin of 7.7% (+110 bps from 2Q19 and +50 bps from 1Q20), supported by strong sales, operating efficiency gains and the strong dilution of expenses in the quarter.
This result shows the excellent management and great capacity to adapt of the various formats in a scenario of high uncertainties, which required rapid changes and resulted in benefits arising from the reduction of social activities and a higher consumption at home, but also important challenges for the gas station, drugstore and commercial center operations.
[1] Penetration of private-label brands considers the change in perimeter, with integration of all the product categories made by the Company directly in the stores (bakery, butchery, pizzas, etc). Based on the old perimeter, penetration would have reached 14.5%, a 220 bps increase compared to 2Q19.
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(1) Multivarejo does not include the result of other complementary businesses.
(2) Earnings before interest, tax, depreciation and amortization.
(3) Adjusted for Other Operating Income and Expenses.
Digital Ecosystem
Pioneer in e-commerce and loyalty programs, Multivarejo has consistently structured its physical and digital assets over the past few years. These assets, combined with a team-oriented culture, enabled fast adaptation to consumer evolutions, such as the personalization and complete dematerialization of promotions through apps or new e-commerce formats, facilitating the rollout of Express e-commerce and James Delivery in record time. The more than 20 million clients from our loyalty program make our database one of the most advanced regarding consumer knowledge in the country.
The unexpected scenario of the pandemic further accelerated the evolution of clients’ behavior and consumption, giving us more confident of the pertinence of the decisions taken and allowing us to build solid and resilient bases.
The strong performance of food e-commerce consolidated Multivarejo’s leadership position in the online food sales segment in Brazil. We have unique assets in the market, which combined with the group’s operating excellence, establish important competitive advantages and make the digital ecosystem an important growth lever.
● | Food e-commerce registered strong growth, and in the first half of 2020 already exceeded total sales for the year 2019 by 25%. In 2Q20, sales grew 272% vs the same period last year, driven by: i) higher number of clients; ii) expansion of Express model (which increased from 94 stores in 2Q19 to 291 stores in 2Q20); iii) inauguration of 2 new small distribution centers; and iv) expansion of James presence to 323 stores (vs. 18 in 2Q19). Currently, online sales account for 5.6% of Multivarejo food sales and 15.3% of Pão de Açúcar banner. E-commerce proved to be profitable and, in the quarter, presented EBITDA margin at higher levels than the average of food retail segment, mainly due to various operating improvement initiatives that resulted in higher productivity and greater business scalability. |
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● | Loyalty Apps registered over 13 million active downloads, up 42% from the same period last year - representing around 30% of Multivarejo sales and 40% of online sales. Thus, sales from loyal clients already represent 71% of Multivarejo’s total sales, reaching 90% of Pão de Açúcar sales and 62% of Extra sales. |
● | James Delivery registered strong sales growth of 1,200% in GMV, 962% in number of orders and 21% in average ticket when compared to 2Q19. In the Retail vertical, the increase was even stronger, reaching over 3,000% in GMV, 1,800% in number of orders, 66% in average ticket, with average spending per client increasing 166%. This growth was supported by customers’ increasing adherence to the platform, which was reinforced by structural initiatives, such as the successful launch of the new subscription platform “James Prime.” Other factors were the higher maturation and penetration in the cities already served, as well as the rollout of operations to new places, expanding the operation from 50 stores prior to the pandemic to 320 stores in over 20 cities. |
● | The foodtech Cheftime grew 856% vs 2Q19, driven by the acceleration of in-store presence through a greater number of items from the production center and the beginning of the incorporation of items produced in -store (rotisserie and cafeteria). The period was marked by the launch of the “Cheftime Restaurant,” a delivery service of ready-to-eat meals produced at Pão de Açúcar stores, combining Cheftime’s food expertise with the dark kitchens model and the James app. Cheftime Restaurant already can be found in São Paulo and Rio de Janeiro and has been reporting growth of 19% per week. Finally, the higher demand for convenience during the pandemic also contributed to a strong evolution of digital sales, which more than doubled its size. |
Three new small exclusive distribution centers should be opened in the following months, reinforcing our presence in strategic regions and enabling the group's expansion to unexplored regions. We also expect to expand our non-food product mix and launch a robust marketplace in the second semester of 2020. We continue to invest in technologies that improve customer experience and increase productivity and profitability. Therefore, the Company expects the online channel to reach R$ 1 billion2 in sales in 2020 (almost 3x higher than 2019) through expansion of its operating capacity.
2 It is a mere estimate and should not be understood or treated as guidance.
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Grupo Éxito:
2Q20
GPA acquired 96.57% of the capital stock of Grupo Éxito on November 27, 2019. Therefore, Grupo Éxito’s results are being considered in Consolidated GPA only in 2Q20. Growth and variations in relation to 2Q19 are merely for comparison purposes.
(1) To reflect the calendar effect, the following reductions were made in 2Q20: 0 bps in Grupo Éxito, with 0 bps in Colombia, 30 bps in Uruguay and -10 bps in Argentina.
(2) Includes the formats Surtimayorista, Malls, Aliados and Other Businesses. (3) Same store presented a growth with a constant currency
Gross revenue achieved R$ 5.8 billion in 2Q20, with growth of 17.0% in total sales, positively influenced by: i) growth of food sales in Colombia and Uruguay, ii) strong growth of online sales in all countries where the group operates and; on the other hand, pressured by: i) challenges related to the strong restrictions of movement of people, especially in Colombia and Argentina, and ii) the reduction of customer traffic in stores located at shopping malls in Uruguay.
The ‘same-store’ sales increased 6.0% in the quarter, mainly due to the strong performance of innovative formats. The 9 Éxito Wow stores grew +15.3%, and already account for 19.2% of Éxito’s banner total sales, and the 13 Carulla FreshMarket stores grew +27.6%, already representing 27.9% of Carulla’s banner total sales.
The highlights by country follow:
● | Colombia: ‘same-store’ sales grew 3.4% in constant currency, reflecting the reduced movement of people given the strong restrictions imposed by the government, as well as the postponement of a relevant commercial campaign (“Megaprima”) – that usually was conducted in brick-and-mortar stores but was “transferred” to the online format. There was an accelerated development of the omnichannel platform, whose traffic grew 4x when compared to the same quarter of last year. Currently, 90 stores support the delivery model in Colombia and 360 stores offer sales via WhatsApp and Click & Collect. Online sales already represent 14.7% of total sales in Colombia. |
● | Uruguay: consistent and strong growth of 13.1% in ‘same-store’ sales, driven by the very successful commercial activities (mainly in food segment sales) and the robust growth of the omnichannel platform. All banners reported positive performance, especially Devoto (+16.2%) and Disco (+12.9%) and there was significant growth of 58.3% in e-commerce. The development of omnichannel platform remains one of the strategic pillars of the operation in Uruguay, and the pick-up service at Devoto stores was launched in May. |
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● | Argentina: ‘same-store’ sales of 24.4% in 2Q20 amid a challenging economic scenario in the country. Sales were pressured by: i) strong restrictions on movement of people; ii) reduction in operating hours at stores imposed by the government and iii) prohibition on sales of non-food products in some regions. The positive highlight was the proximity format (+49.6%), benefited from the preference given to convenience formats during the pandemic. The online operations also continue to expand, and a Click & Collect service was launched in 2Q20. |
Gross profit was R$ 1.3 billion, up 22.2% compared to 2Q19, with margin of 24.7%, which is an extremely healthy margin for the group’s retail operations. Gross margin improved by 80 bps based on the pro forma results of the previous year, mostly explained by accounting reclassifications made in 2Q19 between the Selling, General and Administrative Expenses lines and costs. Excluding this effect, margin would be slightly under pressure given the performance of complementary businesses during the pandemic period.
Selling, general and administrative expenses were R$ 887 million, +1.6% vs. 2Q19, equivalent to 16.9% of net sales (vs. 19.8% in 2Q19) with the same impact of the accounting reclassifications made in 2Q19 that were already mentioned. Excluding this effect, there would still be a significant reduction of expenses as a percentage of net revenue due to the continuous focus on controlling expenses adopted by the Group.
Adjusted EBITDA was R$ 424 million (+29.2% vs. 2Q19), with margin of 8.1% (+70 bps vs. 2Q19). There was strong margin expansion despite the big challenges faced by complementary operations such as Malls, Tuya Credit Card and Puntos Colombia, some of which are consolidated by Equity Income (Tuya Credit Card/Puntos Colombia). Note that most of the provisioning for projected delinquency in the financial portfolio was already made in the first semester and the majority of commercial centers and shopping malls are going through a process of gradual reopening since the beginning of June.
Despite the scenario of uncertainties that endures and the recent increase in Covid-19 cases in Colombia, we maintain optimistic on the operations of Grupo Éxito and are working on various fronts to minimize the possible impacts from this scenario. Grupo Éxito should continue to contribute positively to GPA’s consolidated results in 2020, given the strong EBITDA growth already registered during the first semester (12.3%).
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(1) Earnings before interest, tax, depreciation and amortization.
(2) Adjusted for Other Operating Income and Expenses.
(3) Pro forma, for comparison purposes only.
II. EQUITY INCOME
Consolidated equity income amounted to R$ 30 million in 2Q20, an improvement of R$ 39 million from the same period last year. The line is composed of:
i) inflow of R$ 12 million related to the interest held in financial operations in Brazil (36% of FIC) and Colombia (50% of Tuya/Puntos Colombia)
ii) inflow of R$ 18 million related to the 34% stake in CDiscount (one of world’s largest e-commerce businesses), which reported significant growth in its marketplace and better performance of direct sales, as well as a more favorable product mix and operating improvements, contributing positively for 2Q20 results.
III. OTHER INCOME AND EXPENSES
Other Income and Expenses came to an expense of R$ 35 million in 2Q20, explained by expenses related to: i) the integration of Latin America assets and the restructuring of the Brazil operations (sale of 3 Pão de Açúcar stores, closure of 1 Drugstore and opening of 2 Assaí stores in the quarter) and ii) non-recurring impacts related to COVID-19, such as the need for more security at stores, purchasing of COVID-19 tests, financial aid for employees with children and higher expenses with hygiene and cleaning.
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Lastly, note that the asset monetization process will continue to produce positive effects in the coming quarters, and by the end of 2020 this line should become stable compared to the previous year in the Brazil perimeter, totaling around R$ 250 million.
IV. FINANCIAL RESULT
The net financial result of GPA Consolidated totaled and expense of R$ 473 million, representing 2.3% of net sales, stable when compared to same period last year.
Due to the adoption of IFRS 16, the financial result now includes Interest on lease liability, which came to an expense of R$ 250 million in the quarter.
Considering the net financial result (R$ 223 million), excluding the effect from Interest on lease liability, the main variations were:
● | Financial income: increase of R$ 31 million vs 2Q19 in cash and marketable securities profitability, reflecting the higher cash balance invested in the period. In Other financial revenues, there was a R$ 29 million lower contribution mainly explained by monetary restatement; |
● | Financial expenses (including the cost of selling receivables): increase of R$ 137 million from 2Q19, due to higher interest expenses caused by the increase of gross debt; |
● | Net effect from exchange variation: increase of R$ 52 million from 2Q19, resulting in an income of R$ 43 million, mainly due to the gain of R$ 24 million related to the effects from exchange variation on the dividends received from Grupo Éxito. |
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V. NET INCOME
Consolidated GPA ended 2Q20 with consolidated net income from controlling shareholders of R$ 333 million, and the net income of continuing operations stood at 4.2x higher than the previous year, adding up to R$ 274 million (strong growth of 322.0%)
The 2Q20 result showed the group’s operating improvement and the success of the strategies adopted, with important recovery at Multivarejo, solid performance at Assaí and consolidation of Grupo Éxito’s strong results, which more than offset the increase in depreciation and cost of debt.
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VI. NET DEBT
The calculation of the indicators in the following table excludes the lease liabilities related to IFRS 16.
(1) Adjusted EBITDA before IFRS 16 in the last 12 months.
Net debt adjusted by the balance of unsold receivables was R$ 9.2 billion for GPA Consolidated vs R$ 1.3 billion in 2Q19, which mainly reflects the funding operation for the acquisition of Grupo Éxito. The Company reduced its leverage in R$ 1.5 billion compared to 1Q20, due to the strong operating cash flow and the monetization of some non-core assets.
The net debt/adjusted EBITDA(1) ratio was 2.2x by the end of 2Q20, compared to 2.5x in 1Q20 and 0.4x in 2Q19, a level that is aligned with the Company’s expectations.
The Company ended 2Q20 with a solid financial position, with a cash balance of R$ 7.7 billion, equivalent to approximately 2x its short-term debt (vs. 120% in 1Q20 and 156% in 2Q19). Moreover, the balance of unsold receivables totaled R$ 202 million.
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VII. INVESTMENTS
Gross investments totaled R$ 536 million, of which: i) R$ 464 million in the Brazilian perimeter – supporting the opening of two Assaí stores in the quarter and the construction of another 16 stores that will open in the next quarters (13 organic and 3 conversions from Hiper) and ii) R$ 71 million in Grupo Éxito.
The Company's expansion, conversion and remodeling plan was maintained, but some delays or postponements may occur given the pandemic scenario. We expect to conclude 2020 with the opening of 19 Assaí stores (16 organic and 3 conversions), 38 renovations of Extra Super into Mercado Extra, 8 Pão de Açúcar renovations in the last generation of stores in Brazil. In Grupo Éxito we expect between 5 to 7 stores (from openings, conversions and remodeling), focused on innovative models Éxito WOW, Carulla FreshMarket and Surtimayorista by the end of the year.
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VIII. STORE PORTFOLIO CHANGES BY BANNER - BRAZIL
In the quarter, 2 Assaí stores were opened, totaling 169 stores of this banner. The Company continued to make adjustments to its portfolio by closing 3 Pão de Açúcar stores and 1 Drugstore.
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IX. CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet
39 |
Income Statement - 2Q20
(1) Consolidated includes results of other complementary businesses;
(2) Share of profit in an associate includes Cdiscount’s results in the Consolidated figures;
(3) Net income after non-controlling interest;
(4) Adjusted for Other Operating Income and Expenses.
40 |
Cash Flow – Consolidated (*)
41 |
X. BREAKDOWN OF SALES BY BUSINESS – BRAZIL
(1) Includes sales from Extra Supermercado, Mercado Extra, Extra Hiper and Compre Bem. (2) Includes sales by Mini Extra and Minuto Pão de Açúcar.
(3) Includes sales from Gas stations, Drugstores, Delivery and rental revenue from commercial centers. (4) GPA includes the result of James Delivery, Stix Fidelidade and Cheftime
XI. BREAKDOWN OF SALES (% of Net Sales) – BRAZIL
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2Q20 Results Conference Call and Webcast
Thursday, July 30, 2020
10:30 a.m. (Brasília) | 9:30 a.m. (New York) | 2:30 p.m. (London)
Conference call in Portuguese (original language)
+55 (11) 4210-1803 or +55 (11) 3181-8565
Conference call in English (simultaneous translation)
+1 (412) 717-9627 or +1 (844) 204-8942
Webcast: http://www.gpari.com.br
Replay
+55 11 3193-1012
Access code for audio in Portuguese: 1932275#
Access code for audio in English: 1779586#
http://www.gpari.com.br
Investor Relations Contacts
GPA Phone: 55 (11) 3886-0421 gpa.ri@gpabr.com www.gpari.com.br
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Disclaimer: Statements contained in this release relating to the business outlook of the Company, projections of operating/financial results, growth prospects of the Company and market and macroeconomic estimates are merely forecasts and are based on the beliefs, plans and expectations of Management in relation to the Company’s future. These expectations are highly dependent on changes in the market, Brazil’s general economic performance, the industry and international markets, and hence are subject to change.
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APPENDIX
Company’s Business:
Food – Brazil: Amounts reported refer to the sum of Assaí and Multivarejo operations.
Grupo Éxito: Amounts reported refer to Grupo Éxito’s operations in Colombia, Uruguay and Argentina. GPA acquired 96.57% of the capital stock of Grupo Éxito on November 27, 2019.
Consolidated: Amounts reported refer to the sum of the operations of Food – Brazil, Grupo Éxito, Cdiscount and other businesses of the Company.
Discontinued Activities: Refer to Via Varejo operations until May 2019 and other subsequent effects related to the write-off of investments.
EBITDA: EBITDA is calculated in accordance with Instruction 527 issued by the Securities and Exchange Commission of Brazil (CVM) on October 4, 2012.
Adjusted EBITDA: Measure of profitability calculated by excluding Other Operating Income and Expenses from EBITDA. Management uses this measure in its analyses as it believes it eliminates nonrecurring expenses and revenues and other nonrecurring items that could compromise comparability and analysis of results.
Earnings per Share: Diluted earnings per share are calculated as follows:
● | Numerator: profit in the year adjusted by dilutive effects of stock options granted by subsidiaries. |
● | Denominator: number of shares of each category adjusted to include potential shares corresponding to dilutive instruments (stock options), less the number of shares that could be bought back at the market, as applicable. |
Equity instruments that will or may be settled with the Company and its subsidiaries’ shares are only included in the calculation when their settlement has a dilutive impact on earnings per share.
44 |
‘same-store’ growth: ‘same-store’ growth, as mentioned in this document, is adjusted by the calendar effect in each period.
Growth and Changes: The growth and changes presented in this document refer to variations from the same period last year, except where stated otherwise.
Retail vertical: Corresponds to sales of James Delivery in the Pão de Açúcar, Extra and Minuto Pão de Açúcar operations.
45 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
1. | Corporate information |
Companhia Brasileira de Distribuição ("Company" or “CBD”), directly or through its subsidiaries (“Group” or “GPA”) is engaged in the retail of food, clothing, home appliances, electronics and other products through its chain of hypermarkets, supermarkets, specialized stores and department stores especially under the trade "Pão de Açúcar, “Minuto Pão de Açúcar”, "Extra Hiper ", “Extra Super/Mercado Extra”, “Minimercado Extra”, “Compre Bem”,“Assai”, and the neighborhood shopping mall brand “Conviva”. The Group’s headquarters are located in the city of São Paulo, State of São Paulo, Brazil.
On November 27, 2019, the Company acquired of Casino the control of Almacenes Éxito SA (“Éxito”), a Colombian company operating in this country under the supermarket and hypermarket flags Éxito, Carulla, Super Inter, Surtimax and Surtimayorista, in Argentina under the Libertad banner and in Uruguay having Disco and Devoto. Additionally, Éxito operates shopping centers in Colombia under the Viva brand. The operations of Éxito and its subsidiaries will be considered as an international operating segment Éxito Group in note 30. Further details of the acquisition can be seen in note 13 of these financial statements. The shares are traded on the Colombian Stock Exchange (CSE).
The Company's investments in retail activities in the electronics and e-commerce segments related to Via Varejo S.A. were presented as discontinued operations and were alienated in June 2019 (see note 12.3), and represented the stores under the brands “Ponto Frio” and “Casas Bahia", as well as the e-commerce platforms “CasasBahia.com,” “Extra.com”, “Pontofrio.com” and “Barateiro.com”.
The Company's shares are traded at the Corporate Governance level of the São Paulo Stock Exchange (B3 - Brasil, Bolsa, Balcão) called Novo Mercado, under the code “PCAR3”, and on the New York Stock Exchange (ADR level III ), under the code “CBD”.
The Company, through Wilkes Participações S.A. (“Wilkes”), and its ultimate parent company is Casino Guichard Perrachon (“Casino”), French company listed on Paris Stock Exchange.
1.1. | GPA in “Novo Mercado” |
On December 30, 2019, the Company's shareholders at the Extraordinary General Meeting approved the admission of the Company to the Novo Mercado of B3 SA - Brasil, Bolsa, Balcão (“B3”), the conversion of all preferred shares into common shares, in the proportion of one common share for each preferred share. On February 14, 2020, B3 approved the admission of GPA to the special listing segment “Novo Mercado”. On March 2, 2020 the conversion process of preferred shares into common shares was concluded and GPA started to trade on the Novo Mercado.
1.2. | Impacts of the pandemic on the Company's quarterly information |
The Company has been monitoring the progress of COVID-19 (Coronavirus) and its impacts on its operations. Several actions were taken by the administration, among which we highlight the creation of a crisis committee formed by the senior management, which takes decisions in line with the recommendations of the Ministry of Health, local authorities and professional associations.
The Company has adopted all possible measures to mitigate the transmission of the virus in stores, distribution centers and offices, such as: frequent cleaning, safety / protection items for employees, flexible working hours, adoption of telework, among other decisions.
46 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Since the beginning of the COVID-19 outbreak, our stores have remained open, in addition to the important evolution of our e-commerce formats. The Company has an important commitment to society to continue taking products to our consumers. We had no problems in supplying the industries that continued to supply our distribution centers and stores.
On March 10, 2020, the CVM issued circular letter CVM-SNC / SEP No. 02/2020, instructing publicly-held companies to carefully assess the impacts of COVID-19 on their businesses and report the main risks in the quarterly information and uncertainties arising from this analysis, observing the applicable accounting standards.
Accordingly, the Company carried out a complete analysis of the quarterly information, in addition to renewing the analyzes on the Company's operational continuity. The main themes evaluated were:
· | The Company revisited its budgets, used to estimate the recovery of store assets and intangible assets on December 31, 2019, and there is no relevant expectation of a decrease in revenues, and other lines of income statement, which show situations of loss of values recoverable from such assets. Due to the uncertainty regarding the end of the pandemic and its macroeconomic consequences, the Company assessed the existence of indicators of impairment for some of its assets and, consequently, revisited the asset recovery test (see Note 16) ; |
· | We assessed the realization of the balances of accounts receivable from credit card operators, customers, galleries in our stores, real estate rentals and understand that there is no need at this time to record additional provisions to those already registered; |
· | As for inventories, we do not foresee the need for adjustment for realization; |
· | Financial instruments already reflect the market assumptions in their valuation, and there are no additional exposures not disclosed in this quarterly information. The Company is not exposed to significant financing in US dollars; |
· | The Company does not, for the moment, foresee any additional needs for obtaining financing; and |
· | Finally, the costs necessary to adapt our stores to serve the public are highlighted in Note 27 - Other operating expenses, net. |
In summary, according to management's estimates and the monitoring of the impacts of the pandemic, there are no effects that should be recorded in the quarterly information, nor are there any effects on its operational continuity and / or Company estimates that would justify changes or registration of provisions, in addition to those already disclosed. The Company will continue to monitor and assess the impacts and, if necessary, make the necessary disclosures.
1.3. | Sale and Leaseback |
In accordance with Company´s strategy of asset monetization, material fact was disclosed on March 5, 2020, that the Company entered into a Sale and Leaseback transaction with investment funds administered by BRL Trust Distribuidora de Títulos e Valores Mobiliários S.A. and managed by TRX Gestora de Recursos Ltda., pursuant to the signing of a “Private Instrument of Commitment of Purchase and Sale of Real Estate Properties and Real Surface Law Institution”. The Instrument initially predicted for the sale of 43 properties of the Company, for the total amount of R$1,246.
47 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
· | On May 29, 2020, the Company concluded the sale of 5 of these properties, in the total amount of R$190 paid in cash by the buyer, excluding 2 property of non-relevant value from the total volume. |
· | On June 29, 2020, the Company concluded the sale of 7 more properties, in the total amount of R$313 received in cash. On the same date, the Company and TRX Gestora de Recursos Ltda. made an addition to the contract to define the sale of the rest of the 29 stores the Company received R$25 as a down. |
· | On July 22, the Company concluded the sale of another 16 properties for R$446. |
· | On July 30, 2020, a down payment of R$15 will be made for the sale of the remaining 13 properties, in the total amount of R$261, whose transfer will be completed by August 30, 2020. |
With this, GPA will have completed the sale of 41 properties to TRX funds, for a total amount of R$1,210. The gain related to the transaction concluded on July 22, 2020 is not recorded in this quarterly information.
Observed that the parties will enter into lease agreements for each of the Properties, on the closing date of the transaction, with a term of 15 years, renewable for the same period, ensuring the continuity of GPA operations in the Properties with sustainable financial conditions.
In addition, on December 23, 2019, the company signed a commitment to sell 6 properties (Pão de Açúcar stores) in the Sale and Leaseback modality to Rio Bravo Investimentos Distribuidora de Titulos e Valores Imobiliários Ltda. of a total amount of R$92, of which R$87 was paid upon signing the commitment. On June 29, 2020, the Company concluded the sale of 4 of the 6 stores, and received R$3 as the balance receivable from these stores. The parties will enter into lease agreements for the 4 properties, with a term of 10 years, renewable for the same period, ensuring the continuity of GPA operations in properties with sustainable financial conditions.
The impacts of these transaction described above, with TRX and Rio Bravo, on the Group's consolidated financial statements as of June 30, 2020 are as follows:
· | Recognition of an asset in relation to the right to use and a rental liability in the amount of, respectively, R$231 and R$337; |
· | Decrease in assets held for sale in R$386; |
· | Recognition of the result on the sale of these assets recorded in other operating income in the amount of R$64; |
· | Real estate assets not yet transferred to the buyer were classified as “assets held for sale” in accordance with IFRS 5, in the amount of R$476,6. |
2. | Basis of preparation |
The individual and consolidated interim financial information has been prepared in accordance with IAS 34 - Interim Financial Reporting issued by the International Accounting Standard Board (“IASB”) and CPC 21 (R1) - Interim Financial Reporting and presented consistently with the standards approved and issued by the Brazilian Securities and Exchange Commission (“CVM”) applicable to the preparation of interim financial information – ITR.
The individual and consolidated financial statements is being presented in millions of Brazilian Reais (“R$”), which is the reporting currency of the Company. The functional currency of associates and subsidiaries located abroad is the local currency of each jurisdiction.
48 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
The individual and consolidated interim financial information for the half ended June 30, 2020 were approved by the Board of Directors on July 29, 2020.
In June 14, 2019, the Company concluded the sale process of the subsidiary Via Varejo SA (see note 12.3). The Via Varejo's results in the statements of income and added value for the period ended June 30, 2019 are presented in a single line, considering the application of the technical pronouncement CPC 31/IFRS 5 - Non-current assets held for sale and Discontinued Operation. Changes in the balance sheet arising from Via Varejo up to the date of sale are presented in the respective consolidated cash flow line, in line with technical pronouncement CPC 31 / IFRS 5.
The information referring to the basis of consolidation, did not change significantly compared to that disclosed in the 2019 annual financial statements, in note 12.
3. | Significant accounting policies |
The significant accounting policies adopted by the Company in the preparation of the individual and consolidated interim financial information are consistent with those adopted and disclosed on Note 3 and each corresponding note of the financial statements for the year ended December 31, 2019 and therefore should be read in conjunction.
4. | Adoption of new standards, amendments and interpretations of standards issued by the CPC and published standards |
4.1. | Presentation of the retrospective effects of CPC 06 (R2)/IFRS 16 and Circular Letter SEP/nº2/2019 |
As disclosed in the Financial Statement for the year ended December 31, 2019, the Company opted for the adoption of the full retrospective approach as a transition method on January 1, 2019, with effects from the beginning of the first practicable period and, consequently, the comparative periods were restated considering: (i) use of the nominal incremental rate; (ii) present value of cash flows of full lease payments, without any exclusion of recoverable taxes (iii) term of improvements in third-party properties in which significant improvements were considered individually by contract on the decision to extend the contractual term reasonably certain.
According to the IFRIC meeting on November 26, 2019 on the lease term and amortization period for the improvements, the Company reassessed its assumptions about the extension of the lease agreements. The Company originally also considered the lease payment flow net of taxes when measuring the lease liability and restates the income statement for the period ended June 30, 2019 and the cash flows for the same period to allow comparison with the information financial statements presented on June 30, 2020.
49 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Statement of operation
Parent Company | Consolidated | |||||||
06.30.2019 | 06.30.2019 | |||||||
As originally presented | IFRS16 effects | Restated | As originally presented | IFRS16 effects | Restated | |||
Cost of sales | (9,130) | 2 | (9,128) | (20,174) | 2 | (20,172) | ||
Gross profit | 3,495 | 2 | (3,497) | 5,616 | 2 | 5,618 | ||
Operating income (expenses) | ||||||||
Selling expenses | (2,291) | 1 | (2,290) | (3,422) | 11 | (3,411) | ||
Depreciation and amortization | (474) | 11 | (463) | (663) | 7 | (656) | ||
Equity in earnings | 334 | 2 | 336 | (27) | - | (27) | ||
Other operation expenses, net | (107) | 1 | (106) | (123) | 1 | (122) | ||
Profit from operations before net financial expenses | 592 | 17 | 609 | 857 | 21 | 878 | ||
Net financial expenses | (476) | (37) | (513) | (562) | (39) | (601) | ||
Income before income tax and social | 116 | (20) | 96 | 295 | (18) | 277 | ||
Income tax and social contribution | 105 | 3 | 108 | (78) | 1 | (77) | ||
Net income from continued operations | 221 | (17) | 204 | 217 | (17) | 200 | ||
Net income from discontinued operations | 345 | (5) | 340 | 381 | (5) | 376 | ||
Net income for the period | 566 | (22) | 544 | 598 | (22) | 576 | ||
Attributable: | ||||||||
Controlling shareholders – continuing operations | 221 | (17) | 204 | 217 | (17) | 200 | ||
Controlling shareholders – discontinued operations | 345 | (5) | 340 | 349 | (5) | 344 | ||
Total of Controlling shareholders | 566 | (22) | 544 | 566 | (22) | 544 | ||
Non-controlling shareholders – discontinued operations | 32 | - | 32 | |||||
Total of non-controlling shareholders | 32 | - | 32 | |||||
Statement of Cash Flows
Parent Company | Consolidated | ||||||
06.30.2019 | 06.30.2019 | ||||||
As originally presented | IFRS16 effects | Restated | As originally presented | IFRS16 effects | Restated | ||
Net income for the period | 566 | (22) | 544 | 598 | (22) | 576 | |
Deferred income tax (note 20) | (4) | (5) | (9) | 66 | (4) | 62 | |
Loss (gain) on disposal of property, plant and equipment | 66 | 2 | 68 | 110 | 2 | 112 | |
Depreciation/ Amortization | 534 | (13) | 521 | 732 | (8) | 724 | |
Interest and inflation adjustments | 447 | 49 | 496 | 837 | 55 | 892 | |
Equity in earnings | (334) | (2) | (336) | 11 | - | 11 | |
Gain (loss) on write-off of lease liabilities | (68) | (3) | (71) | (91) | (3) | (94) | |
Payments of lease liability | (437) | (14) | (451) | (918) | (27) | (945) |
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Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
4.2. | Standards and interpretations adopted in 2020 and their impacts |
Pronouncement | Description | Applicable to annual periods starting in or after | ||
IFRS 3 / CPC 15 - Business comnination | Improves the definition of business, helping to determine whether the acquisition is from a group of assets or a business. | 01/01/2020 | ||
Review CPC 14 - Financial Instruments: Recognition, Measurement and Disclosure | Changes due to the edition of CPC 00 (Conceptual Structure) Change in the definition of business combination in CPC 15 Changing the definition of material omission or materially distorted disclosure Change in the name of CPC 06 (R2) to Leases. | 01/01/2020 | ||
Revision CPC 00 (R2) | Concepts and guidelines on presentation and disclosure, measurement bases, financial report objectives and useful information. | 01/01/2020 | ||
Revision CPC 16 | As a practical expedient, the lessee may choose not to assess whether a Covid-19 Related Benefit Granted to Tenant under a Lease Agreement is a modification of the lease. The Company does not use this practical expedient. | 01/01/2020 (Posted on 07/07/2020) |
(*) Applicable for acquisitions made as of January 1, 2020.
The adoption of these standards did not result in a material impact on the Company's individual and consolidated financial statements.
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Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
4.3. | Standards and interpretations already issued and not yet adopted |
The Company did not adopt the following new and revised IFRSs in advance, already issued and not yet in effect:
Pronouncement | Description | Applicable to annual periods starting in or after | ||
CPC 26 (R1) and IAS 8: Definition of material omission | Aligns the definition of omission in all standards defining what information is material if its omission, distortion or obscuration can reasonably influence decisions that the main users of the general purpose financial statements make based on these financial statements, which provide financial information about a specific report of the entity. | 01/01/2021 |
This change is not expected to have a significant impact on the Company's individual and consolidated financial statements.
5. | Main accounting judgments, estimates and assumptions |
The preparation of the individual and consolidated financial statements of the Company requires Management to make judgments, estimates and assumptions that impact the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the year; however, uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of the asset or liability impacted in future periods.
The significant assumptions and estimates used in the preparation of the individual and consolidated interim financial information for the half ended on June 30, 2020 were the same as those adopted in the individual and consolidated financial statements for the year ended December 31, 2019.
6. | Cash and cash equivalents |
The detailed information on cash and cash equivalents was presented in the annual financial statements for 2019, in note 6.
Parent Company | Consolidated | |||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |||
Cash and banks - Brazil | 73 | 171 | 146 | 249 | ||
Cash and banks - Abroad (*) | 115 | 84 | 2,390 | 3,109 | ||
Short-term investments - Brazil (**) | 2,868 | 2,608 | 5,159 | 4,471 | ||
Short-term investments - Abroad (***) | - | - | 41 | 125 | ||
3,056 | 2,863 | 7,736 | 7,954 |
(*) As of June 30, 2020, they refer to (i) funds from the Éxito group, of which R$105 in Argentine pesos, R$255 in Uruguay pesos and R$1,778 in Colombian pesos; (ii) Company funds invested in the abroad, in dollars in the amount of R$138 and R$114 in Colombian pesos.
(**) Short-term investments as June 30, 2020 refer substantially to highly liquid investments accruing interest corresponding to a weighted average rate of 92.52% (89.94% on December 31, 2019) of the Interbank deposit Certificate ("CDI").
(***) Refers to amounts deposited abroad, in local currency equivalent to R$8 in Argentina, R$29 in Uruguay and R$4 in Colombia.
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Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
7. | Trade receivables |
The detailed information on trade receivables was presented in the annual financial statements for 2019, in note 7.
Parent Company | Consolidated | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||
Credit card companies | 96 | 24 | 149 | 42 | |
Credit card companies - related parties (note 11.2) | 42 | 13 | 52 | 24 | |
Sales vouchers | 95 | 70 | 537 | 446 | |
Private label credit card | 28 | 56 | 43 | 70 | |
Receivables from related parties (note 11.2) | 26 | 21 | 12 | 12 | |
Receivables from suppliers | 61 | 74 | 76 | 166 | |
Allowance for doubtful accounts (note 7.1) | (5) | (1) | (48) | (32) | |
343 | 257 | 821 | 728 | ||
Current | 328 | 256 | 805 | 727 | |
Noncurrent | 15 | 1 | 16 | 1 |
7.1. | Allowance for doubtful accounts |
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
At the beginning of the period | (1) | (1) | (32) | (5) | |
Allowance booked for the period | (19) | (11) | (40) | (259) | |
Write-off of receivables | 15 | 11 | 30 | 278 | |
Deconsolidation Via Varejo | - | - | - | (18) | |
Conversion currency adjustment | - | - | (6) | - | |
At the end of the period | (5) | (1) | (48) | (4) |
Below is the aging list of consolidated gross receivables, by maturity period:
Overdue receivables - Consolidated | ||||||
Total | Not overdue | <30 days | 30-60 days | 61-90 days | >90 days | |
06.30.2020 | 869 | 736 | 86 | 23 | 4 | 20 |
12.31.2019 | 760 | 609 | 79 | 21 | 5 | 46 |
53 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
8. | Other receivables |
The detailed information on cash and cash equivalents was presented in the annual financial statements for 2019, in note 8.
Parent Company | Consolidated | ||||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||||
Accounts receivable from insurers | 38 | 68 | 42 | 72 | |||
Receivable from sale of subsidiaries | 77 | 83 | 77 | 83 | |||
Rental receivable | 34 | 42 | 150 | 113 | |||
Accounts receivable - Via Varejo | 192 | 49 | 192 | 49 | |||
Assets sale | 173 | 15 | 184 | 128 | |||
Other | 103 | 80 | 186 | 143 | |||
Allowance for doubtful other receivables (note 8.1) | (11) | (13) | (13) | (15) | |||
606 | 324 | 818 | 573 | ||||
Current | 126 | 168 | 304 | 381 | |||
Noncurrent | 480 | 156 | 514 | 192 | |||
8.1. | Allowance for doubtful accounts |
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
At the beginning of the period | (13) | (14) | (15) | (16) | |
Write-off of receivables | 2 | 2 | 2 | 6 | |
Deconsolidation Via Varejo | - | - | - | (4) | |
At the end of the period | (11) | (12) | (13) | (14) |
9. | Inventories |
The detailed information on inventories was presented in the annual financial statements for 2019, in note 9.
Parent Company | Consolidated | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||
Stores | 2,186 | 2,240 | 4,549 | 4,698 | |
Distribution centers | 1,255 | 1,149 | 1,640 | 1,583 | |
Inventories – Éxito Group | - | - | 2,881 | 2,248 | |
Real Estate Inventory – Éxito Group | - | - | 165 | 190 | |
Real estate inventories | - | - | 1 | 1 | |
Losses with obsolescence and losses (note 9.1) | (35) | (31) | (98) | (95) | |
3,406 | 3,358 | 9,138 | 8,625 | ||
54 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
9.1. | Allowance for losses on inventory obsolescence and damages |
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
At the beginning of the period | (31) | (31) | (95) | (65) | |
Additions | (37) | (2) | (34) | (47) | |
Write-offs | 33 | 5 | 35 | 58 | |
Conversion currency adjustment | - | - | (4) | - | |
Deconsolidation Via Varejo | - | - | - | 7 | |
At the end of the period | (35) | (28) | (98) | (47) |
10. | Recoverable taxes |
The detailed information on recoverable taxes was presented in the annual financial statements for 2019, in note 10.
Parent Company | Consolidated | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||
ICMS (note 10.1) | 1,404 | 1,420 | 2,629 | 2,621 | |
PIS/COFINS | 359 | 462 | 608 | 854 | |
Social Security Contribution - INSS | 365 | 291 | 399 | 321 | |
Income tax and Social Contribution (*) | 85 | 61 | 695 | 407 | |
Other | 8 | 17 | 19 | 49 | |
Other taxes – Éxito Group | - | - | 109 | 77 | |
Total | 2,221 | 2,251 | 4,459 | 4,329 | |
Current | 514 | 516 | 1,742 | 1,627 | |
Noncurrent | 1,707 | 1,735 | 2,717 | 2,702 | |
(*) Includes Éxito’s amount of R$582 (R$340 on December 31, 2019).
10.1. | ICMS expectation schedule (net of provision for non realization in the consolidated) |
In | Parent Company | Consolidated |
Up to one year | 180 | 499 |
From 1 to 2 years | 198 | 485 |
From 2 to 3 years | 163 | 455 |
From 3 to 4 years | 157 | 426 |
From 4 to 5 years | 153 | 168 |
More than 5 years | 553 | 596 |
1,404 | 2,629 |
55 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
For credits that cannot be offset immediately, the Company’s Management understands that in future realization is probable based on a technical recovering study, on the expectation of future growth and the offset against debts deriving from its operations. These studies were prepared and periodically revised based on information extracted from strategic planning previously approved by the Company’s Board of Directors. For the interim financial information as of June 30, 2020, Management has implemented monitoring controls over the progress of the plan annually established, assessing and including new elements that contribute to the realization of ICMS tax credits, as shown above.
11. | Related parties |
11.1 | Management and Advisory Committees compensation |
The expenses related to management compensation (officers appointed pursuant to the Bylaws including members of the Board of Directors and advisory committees) for the half ended on June 30, 20120 and 2019, were as follows:
In thousands of Brazilian reais
Base salary | Variable compensation | Stock option plan | Total | ||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||
Board of directors (*) | 8,728 | 7,924 | - | - | 2,028 | 338 | 10,756 | 8,262 | |||
Executive officers | 15,542 | 17,206 | 5,588 | 6,688 | 6,231 | 9,491 | 27,361 | 33,385 | |||
Fiscal Council | 72 | - | - | - | - | - | 72 | - | |||
24,342 | 25,130 | 5,588 | 6,688 | 8,259 | 9,829 | 38,189 | 41,647 |
(*) Includes the compensation of the Board of Directors’ advisory committees (Human Resources and Compensation, Audit, Finance, Sustainable Development and Corporate Governance).
56 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
11.2. | Balances and transactions with related parties. |
The detailed information on related parties was presented in the annual financial statements for 2019, in note 11.
Parent company | ||||||||||||||
Balances | Transactions | |||||||||||||
Trade receivables | Other assets | Trade payables | Other liabilities | Revenues (expenses) | ||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||
Controlling shareholders: | ||||||||||||||
Casino | - | - | - | - | - | - | - | 24 | (43) | (30) | ||||
Euris | - | - | - | - | - | - | 2 | 1 | (2) | (1) | ||||
Helicco | - | - | - | - | - | - | - | - | - | (1) | ||||
Subsidiaries: | - | |||||||||||||
Éxito | - | - | - | - | - | - | - | - | 6 | - | ||||
Novasoc Comercial | - | - | 65 | 54 | - | - | - | - | 1 | 1 | ||||
Sendas Distribuidora | 16 | 8 | 278 | 83 | 7 | 11 | - | 2 | 35 | 38 | ||||
SCB Distribuição e Comércio | 2 | 5 | 9 | 8 | 1 | - | - | - | - | - | ||||
Via Varejo | - | - | - | - | - | - | - | - | - | (31) | ||||
Stix Fidelidade | - | - | 28 | - | (28) | - | ||||||||
Cheftime | - | - | 14 | 4 | - | - | 1 | - | - | - | ||||
James Intermediação | - | - | 71 | 4 | - | - | 5 | - | 52 | - | ||||
Cnova Brasil | - | - | - | - | (1) | |||||||||
GPA M&P | - | - | - | - | - | - | 12 | 14 | - | - | ||||
GPA Logistica | - | - | 76 | 68 | 4 | 2 | 65 | 61 | - | 1 | ||||
Bellamar | - | - | 1 | 1 | - | - | - | - | - | - | ||||
Associates | - | |||||||||||||
FIC | 42 | 13 | 28 | 25 | 9 | 22 | - | - | 30 | 41 | ||||
Other related parties | ||||||||||||||
Greenyellow do Brasil Energia e Serviços Ltda(“Greenyellow”) | - | - | - | - | - | - | 120 | 132 | (21) | (22) | ||||
Casino Group | 8 | 8 | 1 | - | - | 1 | - | - | (5) | - | ||||
Others | - | - | 1 | 1 | - | - | - | - | - | - | ||||
Total | 68 | 34 | 544 | 248 | 49 | 36 | 205 | 234 | 26 | (5) | ||||
57 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Consolidated | |||||||||||||||||
Balances | Transactions | ||||||||||||||||
Trade receivables | Other assets | Trade payables | Other liabilities | Revenues (expenses) | |||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||
Controlling shareholders | |||||||||||||||||
Casino | - | - | - | 5 | - | - | - | 24 | (43) | (30) | |||||||
Euris | - | - | - | - | - | - | 3 | 1 | (3) | (1) | |||||||
Helicco Participações | - | - | - | - | - | - | - | - | - | (1) | |||||||
Associates | |||||||||||||||||
FIC | 52 | 24 | 36 | 36 | 17 | 39 | - | - | 67 | 74 | |||||||
Puntos Colombia | - | - | 29 | 28 | - | - | 55 | 43 | (54) | - | |||||||
Tuya | - | - | 39 | 26 | - | - | - | - | 11 | - | |||||||
Other related parties | |||||||||||||||||
Greenyellow | - | - | - | - | - | - | 122 | 134 | (36) | (22) | |||||||
Casino Group | 12 | 12 | 14 | 8 | - | 1 | 20 | 13 | (15) | - | |||||||
Others | - | - | 1 | 1 | - | - | - | - | - | - | |||||||
Total | 64 | 36 | 119 | 104 | 17 | 40 | 200 | 215 | (74) | 20 | |||||||
58 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
12. | Investments in subsidiaries and associates |
12.1. | Consolidation basis |
The detailed information on consolidation, have not changed significantly was presented in the annual financial statements for 2019, in note 12.1.
12.2. | Breakdown of investments |
Parent Company | |||||
Sendas | Bellamar | CompreBem | Others | Total (*) | |
Balances at 12.31.2019 | 7,095 | 299 | 277 | (306) | 7,365 |
Share of profit of subsidiaries and associates | 285 | 51 | (15) | (100) | 221 |
Dividends and interest of own capital | - | (11) | - | - | (11) |
Stock options | 3 | - | - | - | 3 |
Capital increase | - | - | 54 | - | 54 |
Property and equipment | 57 | - | - | 7 | 64 |
Others movements | (8) | - | - | - | (8) |
Share of other comprehensive income | 1,544 | - | - | (137) | 1,407 |
Balances at 06.30.2020 | 8,976 | 339 | 316 | (536) | 9,095 |
Sendas | Via Varejo | Bellamar | Compre Bem | Others | Total (*) | |
Balances at 12.31.2018 | 4,091 | - | 207 | 75 | (234) | 4,139 |
Share of profit of subsidiaries and associates | 367 | 16 | 32 | (14) | (65) | 336 |
Investment write-off Via Varejo | - | (1,361) | - | - | (492) | (1,853) |
Dividends and interest on own capital | (50) | - | (9) | - | - | (59) |
Stock options | 3 | 3 | - | - | - | 6 |
Capital increase | - | - | - | 142 | - | 142 |
Capital increase with property and equipment | 67 | - | - | - | - | 67 |
Share of other comprehensive income | - | - | - | - | 5 | 5 |
Assets held for sale and discontinued operations | - | 1,342 | - | - | 492 | 1,834 |
Balances at 06.30.2019 - restated | 4,478 | - | 230 | 203 | (294) | 4,617 |
(*) Includes the effects of on the provision for losses on investments in associates in Luxco of R$568 on June, 30 2020 (R$339 on June 30, 2019).
Consolidated | ||
06.30.2020 | 06.30.2019 | |
Balances in the beginning of the period | 363 | (76) |
Share of profit of associates – Continuing operations | (36) | (27) |
Share of profit of associates – Discontinued operations | - | 16 |
Share of other comprehensive income | (51) | 5 |
Capital increase | 19 | - |
Dividends and interest on own capital – continuing operations | (15) | (9) |
Dividends and interest on own capital - discontinued operations | - | (3) |
Assets held for sale and discontinued operations | - | (13) |
Balances at the end of the period | 280 | (107) |
59 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
12.3. | Sale of investment in Via Varejo |
The Company concluded the sale process started on November 23, 2016, through an auction on June 14, 2019 held at B3 SA - Brasil, Bolsa, Balcão, for the price of R$4.90 reais per share, totaling R$2,300, in line with its long-term strategy of focusing on the development of the food sector. The gain from the sale of R$398, net of income tax of R$199 (see note 20) and related costs, was presented in the result of discontinued operations (see note 32).
The Company ceased to exercise control over Via Varejo during the month of June 2019. As of June 30, 2020, certain relationships previously existing between the Company and Via Varejo were in force when it was part of the Group and was a related party, mainly i) Corporate guarantees granted by the Company to guarantee obligations in operational agreements under the responsibility of Via Varejo, with maturities and performance terms to be met by that company over time, in the amount of up to R $ 2 billion, the Company has already taken steps with Via Varejo so that such guarantees are formally extinguished, without prejudice to the discussions it has been having with Via Varejo on the subject , ii) Operational agreement on the use of GPA brands used by Via Varejo, iii) shareholdings held, respectively, by GPA, Via Varejo and Itaú Unibanco in Financeira Itaú CBD SA Credit, Financing and Investment (“FIC”), and iv) Maintenance of s reimbursement obligations on the part of the Company regarding passive and active superveniences arising from facts that trigger legal proceedings prior to the acquisition of Globex in 2010, as disclosed in Note 21.6, when Globex merged with Casas Bahia in the same year. Said guarantee obligation will continue as long as the processes covered by such guarantee have not ended.
13. | Business Combinations and Goodwil |
Information regarding the business combination and goodwill was disclosed in the 2019 annual financial statements, in note 13.
13.1. | Acquisition of Almacenes Éxito - Colombia |
On June 26, 2019, following a recommendation from the Company's controlling shareholder, it was presented to the GPA Board of Directors a transaction through which GPA launched a tender offer over the shares of Grupo Exito aiming at the simplification of the structure of the Casino in Latin America, a significant improvement in governance of the Company and an increase in the basis of potential investors.
The transactions under common control are not provided for in IFRS, Company evaluated the purpose of the transaction, which did not have a purpose of merely corporate reorganization, which have been treated at cost historically by the Company, but the acquisition of Éxito Group differed from a reorganization because it had a commercial substance, being carried out at market value validated by evaluation committees, involved a public offering launched by GPA, through its subsidiary Sendas Distribuidora SA (“Sendas”), to acquire, in cash, up to the totality of Éxito’s shares, a listed company located in Colombia. Due to the economic substance, the Company has elected an accounting policy election and recorded this transaction as a business combination pursuant to CPC 15R/IFRS 3R.
The transaction also involved the acquisition by Casino of the Éxito’s indirect equity interest in GPA at the price of R$113 reais per share; and the migration of GPA to the Novo Mercado, B3's highest governance segment, with the conversion of all GPA preferred shares into common shares at a 1 to 1 ratio.
60 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
On July 23, 2019, a material fact informed that the Board of Directors of GPA, based on the favorable recommendation from the Special Independent Committee and within range of price originally endorsed by GPA's executive board, proposing that its operational subsidiary Sendas Distribuidora to launch a tender offer, in cash, to acquire up to all of the shares of Éxito, for the price of 18,000 Colombian pesos per share (equivalent to R$21.68 reais on the date of purchase).
Continuing the transaction, on September 12, 2019, the Board of Directors and the Éxito’s general shareholders' meeting approved the sale of its indirect equity interest in GPA to Casino in the terms disclosed.
Since in this transaction the Company was exposed to Colombian pesos (“COP”) during the tender offer period, on July 24, 2019, the financial committee approved the realization of a cash flow hedge, via NDFs (Non Deliverable Forward), to mitigate this exposure (see note 18).
On November 27, 2019, the tender offer was settled, and shareholders representing 96.57% of Éxito's capital stock accepted the terms proposed. This adhesion represented a disbursement by Sendas of 7,780 billion Colombian pesos, amount equivalent to R$9.5 billion (taking into account the exchange rate of December 31, 2019). On the same date, previously to the settlement of the tender offer, subsidiaries of Casino acquired all of the shares of GPA held directly and indirectly by Éxito for the price, net of debt, of US$1,161 million (equivalent to R$4.9 billion based on the exchange rate on the date of the transaction).
Context of the acquisition
Almacenes Éxito S.A. operates more than 650 stores in Colombia, Uruguay and Argentina, in addition to shopping centers, having also a significant investment in a loyalty and financial company, in addition to its own brands with successful participation.
The Company started to consolidate Éxito's as of December 1, 2019, when it obtained control of the company, consolidating one month of the income statement in 2019.
Determination of the consideration transferred by the acquisition
The amounts were transferred in cash in the net amount of R$9,413 this amount is already net of cash flow hedge made to protect the exchange variation between Reais and Colombian pesos of part of the price between the beginning and the end of the offer in the amount of R$145, and dividends (R$42) related to the year of 2018 whose payment was scheduled for January 2020.
11.30.2019 | |
Cash disbursement | 9,268 |
Cash flow hedge adjustment | 145 |
9,413 | |
Dividends related to 2018 | (42) |
Total consideration transferred | 9,371 |
61 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Fair values of identifiable assets acquired and liabilities assumed
The fair values of identifiable acquired assets and liabilities acquired from Éxito, on the date of the business combination, are as follows:
Balance on 11.30.2019 after preliminary purchase price allocation | |
Assets: | |
Cash and cash equivalents | 6,062 |
Trade receivables, net | 416 |
Inventories, net | 2,765 |
Recoverable taxes | 477 |
Other current assets | 342 |
Deferred income tax and social contribution | 1,282 |
Related parties | 137 |
Other noncurrent assets | 112 |
Investments in associates | 465 |
Investment properties | 2,789 |
Property and equipment, net | 6,954 |
Intangible assets, net | 2,661 |
24,462 | |
Liabilities: | |
Payroll and related taxes | 283 |
Trade payables, net | 4,545 |
Taxes and contributions payables | 219 |
Borrowings and financing | 2,546 |
Lease liabilities | 277 |
Other current liabilities | 998 |
Noncurrent borrowings and financing | 2,060 |
Deferred income tax and social contribution | 1,657 |
Provisions for contingencies | 103 |
Noncurrent lease liabilities | 1,540 |
Other noncurrent liabilities | 28 |
14,256 | |
Net assets | 10,206 |
(-) Attributed to non-controlling shareholders | (2,522) |
Net assets | 7,684 |
a) | Tradename - The Company identified the main banners of Éxito operations, represented by the store formats operated in Colombia under the brands Surtimax, Super Inter, Éxito and Carulla, in Argentina Libertad brand and in Uruguay Disco. In addition it were evaluated the own brands for products as Éxito, Bronzini, and Carulla. Tradenames have an indefinite useful life. |
b) | Investment properties and stores - Éxito Group has real estate assets operated through the rental of galleries and shopping mall activities. Such assets have high commercial relevance, located in privileged areas. Additionally, were evaluated a group of stores operated by Éxito that were considered significant. |
62 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
c) | Investment Tuya – the Company evaluated Tuya shares at market value. |
d) | Leases - Leases contracts were recalculated using the incremental borrowing rate at the date of acquisition. |
The fair value of the interest of non-controlling shareholders was measured using the interest held by them, at fair value on the date of the business combination, as shown below:
11.30.2019 | |
Total consideration transferred - 96.57% | 9,371 |
Company at Fair value 100% | 9,706 |
Non-controlling interest Fair value | 335 |
Preliminary goodwill identified
As a result of: (i) measurement of the total consideration transferred by the acquisition Éxito control, (ii) measurement of the non-controlling interest, and (iii) measurement of identifiable assets and liabilities at fair value, the Company recorded goodwill, in the amount of R$1,687.
The goodwill for expected future profitability of R$1,687 arising from the acquisition consists mainly of synergies and economies of scale. Goodwill is not deductible for tax purposes, except on the sale of the investment and is shown below:
11.30.2019 | |
Fair value of net assets acquired | 10,206 |
(-) Attributed to non-controlling shareholders | (2,187) |
8,019 | |
Remaining non-controlling interest | (335) |
7,684 | |
Total consideration transferred for the acquisition of control of Éxito | 9,371 |
Goodwill resulting from acquisition of the controlling interest of Éxito | 1,687 |
The Company continued the process of identifying intangible assets and liabilities in purchase price allocating, identifying other items whose information collection process, discussion with management and understanding of the Colombian market had not been completed until the disclosure date of this interim financial information. Among the assets we can mention mainly the added value of investments, the evaluation of the market value of real estate and the evaluation of the brand.
Goodwill is disclosed in the consolidated balance sheet in the subgroup of intangible assets. In the Sendas subsidiary, Éxito's direct parent company, goodwill is in the investment subgroup, in the same group of non-current assets.
63 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
14. | Investment property |
The detailed information on property and equipment, have not changed significantly and was presented in the annual financial statements for 2019, in note 14.
Consolidated | ||||||
Balance at 12.31.2019 | Additions | Depreciation | Assets held for sale and discontinued operations (*) |
Transfers | Balance at 06.30.2020 | |
Land | 533 | - | - | 106 | - | 639 |
Buildings | 2,320 | 2 | (30) | 464 | 14 | 2,770 |
Construction in progress | 10 | 5 | - | 2 | (2) | 15 |
Total | 2,863 | 7 | (30) | 572 | 12 | 3,424 |
Consolidated | |||||||
Balance at 06.30.2020 | Balance at 12.31.2019 | ||||||
Cost | Accumulated depreciation | Net | Cost | Accumulated depreciation | Net | ||
Land | 639 | - | 639 | 533 | - | 533 | |
Buildings | 2,924 | (154) | 2,770 | 2.412 | (92) | 2.320 | |
Construction in progress | 15 | - | 15 | 10 | - | 10 | |
Total | 3,578 | (154) | 3,424 | 2.955 | (92) | 2.863 |
15. | Property and equipment |
The detailed information on intangible assets was presented in the annual financial statements for 2019, in note 15.
Parent Company | ||||||||
Balance at 12.31.2019 | Additi-ons | Remeasu-rement | Depre-ciation | Write-offs | Transfers (*) | Balance at 06.30.2020 | ||
Land | 904 | - | - | - | 4 | (188) | 720 | |
Buildings | 1,026 | 1 | - | (17) | (10) | (131) | 869 | |
Leasehold improvements | 2,091 | 46 | - | (113) | (7) | (41) | 1,976 | |
Machinery and equipment | 975 | 38 | - | (85) | (20) | 51 | 959 | |
Facilities | 249 | 1 | - | (18) | (1) | (8) | 223 | |
Furniture and fixtures | 377 | 19 | - | (31) | - | 5 | 370 | |
Construction in progress | 119 | 196 | - | - | - | (232) | 83 | |
Others | 33 | 8 | - | (6) | - | (4) | 31 | |
Total | 5,774 | 309 | - | (270) | (34) | (548) | 5,231 | |
Lease – right of use: | ||||||||
Buildings | 3,578 | 100 | 219 | (208) | (66) | (5) | 3,618 | |
3,578 | 100 | 219 | (208) | (66) | (5) | 3,618 | ||
Total | 9,352 | 409 | 219 | (478) | (100) | (553) | 8,849 | |
(*) Of this amount, R$404 are transfers to held for sale (see note 32), R$85 for intangibles and R$64 for capital increase with fixed assets (see note 12).
64 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Parent Company | ||||||||
Balance at 12.31.2018 | Additi-ons | Remeasu-rement | Depre-ciation | Write-offs | Transfers
| Balance at 06.30.2019 | ||
Restated | ||||||||
Land | 991 | - | - | - | (6) | (16) | 969 | |
Buildings | 1,179 | 3 | - | (21) | - | (7) | 1,154 | |
Leasehold improvements | 2,033 | 14 | - | (100) | (17) | 139 | 2,069 | |
Machinery and equipment | 861 | 56 | - | (82) | 1 | 66 | 902 | |
Facilities | 275 | 11 | - | (19) | (1) | 2 | 268 | |
Furniture and fixtures | 357 | 21 | - | (29) | (7) | 19 | 361 | |
Construction in progress | 115 | 277 | - | - | - | (298) | 94 | |
Others | 32 | 13 | - | (7) | - | (5) | 33 | |
Total | 5,843 | 395 | - | (258) | (30) | (100) | 5,850 | |
Lease – right of use: | ||||||||
Buildings | 3,420 | 4 | 163 | (190) | (51) | - | 3,346 | |
Equipment | 1 | - | - | (1) | - | - | - | |
3,421 | 4 | 163 | (191) | (51) | - | 3,346 | ||
Total | 9,264 | 399 | 163 | (449) | (81) | (100) | 9,196 | |
Parent Company | |||||||||||
Balance at 06.30.2020 | Balance at 12.31.2019 | ||||||||||
Cost | Accumulated depreciation | Net | Cost | Accumulated depreciation | Net | ||||||
Land | 720 | - | 720 | 904 | - | 904 | |||||
Buildings | 1,450 | (581) | 869 | 1,659 | (633) | 1,026 | |||||
Leasehold improvements | 3,802 | (1,826) | 1,976 | 3,859 | (1,768) | 2,091 | |||||
Machinery and equipment | 2,511 | (1,552) | 959 | 2,445 | (1,470) | 975 | |||||
Facilities | 557 | (334) | 223 | 582 | (333) | 249 | |||||
Furniture and fixtures | 1,013 | (643) | 370 | 992 | (615) | 377 | |||||
Construction in progress | 83 | - | 83 | 119 | - | 119 | |||||
Others | 147 | (116) | 31 | 143 | (110) | 33 | |||||
Total | 10,283 | (5,052) | 5,231 | 10,703 | (4,929) | 5,774 | |||||
Lease – right of use: | |||||||||||
Buildings | 6,686 | (3,068) | 3,618 | 6,461 | (2,883) | 3,578 | |||||
Equipment | 37 | (37) | - | 37 | (37) | - | |||||
6,723 | (3,105) | 3,618 | 6,498 | (2,920) | 3,578 | ||||||
Total | 17,006 | (8,157) | 8,849 | 17,201 | (7,849) | 9,352 |
65 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Consolidated | |||||||||
Balance at 12.31.2019 | Additions | Remeasure-ment | Depreciation | Write-offs | Transfers (*) | Foreign Currency translation adjustment | Balance at 06.30.2020 | ||
Land | 3,770 | 38 | - | - | (195) | (186) | 483 | 3,910 | |
Buildings | 3,210 | 37 | - | (69) | (386) | (85) | 277 | 2,984 | |
Leasehold improvements | 4,441 | 376 | - | (209) | 239 | (60) | 70 | 4,857 | |
Machinery and equipment | 2,281 | 124 | - | (214) | (22) | 56 | 129 | 2,354 | |
Facilities | 580 | 17 | - | (34) | (25) | (5) | 13 | 546 | |
Furniture and fixtures | 1,007 | 49 | - | (94) | (2) | 28 | 57 | 1,045 | |
Construction in progress | 275 | 329 | - | - | (5) | (344) | 23 | 278 | |
Other | 74 | 11 | - | (14) | - | 3 | 1 | 75 | |
Total | 15,638 | 981 | - | (634) | (396) | (593) | 1,053 | 16,049 | |
Lease – right of use: | |||||||||
Buildings | 7,023 | 587 | 1,308 | (443) | (213) | - | 414 | 8,676 | |
Equipment | 45 | 11 | (7) | (7) | - | - | 7 | 49 | |
Land | 3 | - | - | - | - | - | 1 | 4 | |
7,071 | 598 | 1,301 | (450) | (213) | - | 422 | 8,729 | ||
Total | 22,709 | 1,579 | 1,301 | (1,084) | (609) | (593) | 1,475 | 24,778 | |
(*) Of this amount, R$487 are transfers to held for sale (see note 32) and R$88 to intangibles.
66 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Consolidated | |||||||||
Balance at 12.31.2018 | Additions | Remeasure-ment | Depreciation | Write-offs | Transfers | Assets held for sale and discontinued operations | Balance at 06.30.2019 | ||
Restated | |||||||||
Land | 1,366 | 57 | - | - | (6) | 9 | - | 1,426 | |
Buildings | 1,773 | 72 | - | (30) | 1 | 37 | (1) | 1,852 | |
Leasehold improvements | 3,843 | 176 | - | (158) | (24) | 215 | (63) | 3,989 | |
Machinery and equipment | 1,308 | 121 | - | (122) | (6) | 112 | (34) | 1,379 | |
Facilities | 501 | 31 | - | (29) | (3) | 27 | (24) | 503 | |
Furniture and fixtures | 595 | 45 | - | (46) | (8) | 48 | (16) | 618 | |
Construction in progress | 176 | 385 | - | - | (1) | (492) | 63 | 131 | |
Other | 59 | 15 | - | (12) | (1) | 6 | (4) | 63 | |
Total | 9,621 | 902 | - | (397) | (48) | (38) | (79) | 9,961 | |
Lease – right of use: | |||||||||
Buildings | 4,422 | 71 | 367 | (243) | (69) | (633) | 530 | 4,445 | |
Equipment | 9 | - | - | (2) | 7 | ||||
4,431 | 71 | 367 | (245) | (69) | (633) | 530 | 4,452 | ||
Total | 14,052 | 973 | 367 | (642) | (117) | (671) | 451 | 14,413 | |
67 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Consolidated | |||||||||||
Balance at 06.30.2020 | Balance at 12.31.2019 | ||||||||||
Cost | Accumulated depreciation | Net | Cost | Accumulated depreciation | Net | ||||||
Land | 3,910 | - | 3,910 | 3,770 | - | 3,770 | |||||
Buildings | 4,103 | (1,119) | 2,984 | 4,279 | (1,069) | 3,210 | |||||
Leasehold improvements | 7,673 | (2,816) | 4,857 | 7,065 | (2,624) | 4,441 | |||||
Machinery and equipment | 5,282 | (2,928) | 2,354 | 4,864 | (2,583) | 2,281 | |||||
Facilities | 1,060 | (514) | 546 | 1,065 | (485) | 580 | |||||
Furniture and fixtures | 2,422 | (1,377) | 1,045 | 2,196 | (1,189) | 1,007 | |||||
Construction in progress | 278 | - | 278 | 275 | - | 275 | |||||
Other | 275 | (200) | 75 | 256 | (182) | 74 | |||||
25,003 | (8,954) | 16,049 | 23,770 | (8,132) | 15,638 | ||||||
Lease – right of use: | |||||||||||
Buildings | 12,778 | (4,102) | 8,676 | 10,655 | (3,632) | 7,023 | |||||
Equipment | 139 | (90) | 49 | 128 | (83) | 45 | |||||
Land | 7 | (3) | 4 | 6 | (3) | 3 | |||||
12,924 | (4,195) | 8,729 | 10,789 | (3,718) | 7,071 | ||||||
Total | 37,927 | (13,149) | 24,778 | 34,559 | (11,850) | 22,709 |
15.1. | Capitalized borrowing costs |
The amount of consolidated capitalized borrowing costs for the semester ended June 30, 2020 was R$5 (R$8 in the semester ended June 30, 2019).The rate used to determine the borrowing costs eligible for capitalization was 140.78% (102.16% on June 30, 2019) from CDI, corresponding to the effective interest rate on the Company’s borrowings.
15.2. | Additions to intangible assets for cash flow presentation purposes |
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Restated | |||||
Additions | 409 | 399 | 1,579 | 973 | |
Lease | (100) | (4) | (598) | (72) | |
Capitalized borrowing costs | (1) | (3) | (5) | (16) | |
Intangible assets financing - Additions | (304) | (304) | (845) | (679) | |
Intangible assets financing - Payments | 394 | 333 | 989 | 794 | |
Total | 398 | 421 | 1,120 | 1,000 |
15.3.Other | information |
At June 30, 2020, the Company and its subsidiaries recorded in the cost of sales the amount of R$62 in the parent company (R$58 at June 30, 2019) and R$130 in consolidated (R$68 at June 30, 2019) related to the depreciation of machinery, buildings and facilities related to the distribution centers.
68 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
16. | Intangible assets |
The detailed information on 16. Intangible assets was presented in the annual financial statements for 2019, in note 16.
Parent Company | ||||||
Balance at 12.31.2019 | Additions | Amortization | Write-offs | Transfers | Balance at 06.30.2020 | |
Goodwill | 501 | - | - | - | 1 | 502 |
Commercial rightsl | 46 | - | - | - | - | 46 |
Software and implementation | 749 | 44 | (63) | (1) | 85 | 814 |
1,296 | 44 | (63) | (1) | 86 | 1,362 | |
Lease-right of use: | ||||||
Right of use Paes Mendonça (*) | 557 | - | (18) | - | (1) | 538 |
Software | 56 | - | (10) | - | - | 46 |
613 | - | (28) | - | (1) | 584 | |
Total | 1,909 | 44 | (91) | (1) | 85 | 1,946 |
Consolidated | |||||||
Balance at 12.31.2019 | Additions | Amorti-zation | Write-off | Foreign currency translation adjustment | Transfers | Balance at 06.30.2020 | |
Goodwill | 2,875 | - | - | - | 203 | - | 3,078 |
Brands | 2,672 | - | (1) | - | 509 | - | 3,180 |
Commercial rights | 167 | 6 | - | - | 6 | - | 179 |
Software | 890 | 79 | (82) | (1) | 14 | 89 | 989 |
6,604 | 85 | (83) | (1) | 731 | 89 | 7,426 | |
Lease-right of use: | |||||||
Right of use Paes Mendonça (**) | 780 | - | (22) | - | - | (1) | 757 |
Software | 56 | 1 | (10) | - | - | - | 47 |
836 | 1 | (32) | - | - | - | 805 | |
Total | 7,440 | 86 | (115) | (1) | 732 | 88 | 8,230 |
(*) Related to leases and operations agreements of some stores. The Company has the contractual right to operate these stores for 30 years.
At the parent company, the accumulated cost balance on June 30, 2020 is R$3,647 (R$3,720 on December 31, 2019) and accumulated amortization R$1,701 (R$1,811 on December 31, 2019). In the consolidated, the balance of the accumulated cost on June 30, 2020 is R$10,431 (R$9,698 on December 31, 2019) and accumulated amortization R$2,201 (R$2,258 on December 31, 2019).
69 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
16.1. | Test for recovery of intangibles of indefinite useful life, including Goodwill |
Goodwill and intangible assets were tested for impairment as of December 31, 2019 according to the method described in note 15 property and equipment, in the financial statements for the year ended December 31, 2019.
On June 30, 2020, the Company revised the plan used to assess the impairment for operations in Brazil. The recoverable amount is determined by means of a calculation based on the value in use, based on cash projections from financial budgets, which were reviewed and approved by Senior Management for the next three years, considering the premises updated for June 30, 2020.The discount rate applied to cash flow projections is 8.1% on June 30, 2020 (8.4% on December 31, 2019), and cash flows that exceed the three-year period are extrapolated using a growth rate of 3.9% on June 30, 2020 (4.8% on December 31, 2019). As a result of this analysis, there was no need to record a provision for impairment of these assets. See considerations regarding the effects of the COVID-19 pandemic in note 1.2.
In the same way, in relation to the Éxito Group, the projections used for the impairment tests for the financial statements of December 31, 2019 were revisited and updated and the need to recognize impairment of assets was not identified.
16.2. | Additions to intangible assets for cash flow presentation purposes: |
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Additions | 44 | 60 | 86 | 173 | |
Intangible assets financing - Addition | - | - | - | (23) | |
Intangible assets financing - Payments | - | - | 2 | 47 | |
Total | 44 | 60 | 88 | 197 |
70 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
17. | Borrowings and financing |
The detailed information on borrowings and financing was presented in the annual financial statements for 2019, in note 18.
17.1. | Debt breakdown |
Parent Company | Consolidated | ||||||||
Weighted average rate | 06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |||||
Debentures and promissory note | |||||||||
Debentures and Certificate of Agribusiness Receivables (note 17.4) |
CDI + 1.33% per year | 4,929 | 3,978 | 11,576 | 11,863 | ||||
4,929 | 3,978 | 11,576 | 11,863 | ||||||
Borrowings and financing | |||||||||
Local currency | |||||||||
BNDES | 4.04% per year | 4 | 4 | 23 | 27 | ||||
Working capital | CDI + 2.08% per year | 1,271 | 509 | 2,175 | 1,008 | ||||
Working capital | TR + 9.80 % per year | 14 | 15 | 92 | 99 | ||||
Swap contracts (note 17.7) | CDI + 0.03% per year | (2) | (2) | (13) | (12) | ||||
Borrowing cost | (16) | (9) | (31) | (22) | |||||
1,271 | 517 | 2,246 | 1,100 | ||||||
Foreign currency (note 17.5) | |||||||||
Working capital | USD + 2.99% per year | 1,175 | 845 | 1,453 | 846 | ||||
Working capital | IBR 3M + 3.7% | - | - | 2,298 | 323 | ||||
Working capital - Argentina | Pre: 31.10% | - | 34 | - | |||||
Credit letter | - | - | 6 | 12 | |||||
Swap contracts (note 17.7) | CDI + 0.72% per year | (334) | (15) | (407) | (15) | ||||
Swap contracts (note 17.7) | IBR 3M + 3.74% | - | - | (14) | (19) | ||||
NDF Contracts - Derivatives | - | - | - | (1) | |||||
Borrowing cost | - | - | - | (1) | |||||
841 | 830 | 3,370 | 1,145 | ||||||
Total | 7,041 | 5,325 | 17,192 | 14,108 | |||||
Current assets | 334 | 45 | 437 | 73 | |||||
Noncurrent assets | 2 | 2 | 13 | 13 | |||||
Current liabilities | 2,064 | 2,016 | 4,328 | 3,488 | |||||
Noncurrent liabilities | 5,313 | 3,356 | 13,314 | 10,706 |
71 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
17.2. | Changes in borrowings |
Parent Company | Consolidated | ||
At December 31, 2019 | 5,325 | 14,108 | |
Additions - working capital | 2,731 | 5,390 | |
Accrued interest | 149 | 412 | |
Accrued swap | (305) | (377) | |
Mark-to-market | (5) | (4) | |
Monetary and exchange rate changes | 306 | 376 | |
Borrowing costs | 5 | 26 | |
Interest paid | (85) | (362) | |
Payments | (1,081) | (2,620) | |
Swap paid | 1 | 8 | |
Adjustment in conversion to presentation currency | - | 235 | |
At June 30, 2020 | 7,041 | 17,192 | |
Parent Company | Consolidated | ||
At December 31, 2018 | 4,561 | 5,286 | |
Additions - working capital | 1,099 | 3,246 | |
Accrued interest | 160 | 297 | |
Accrued swap | 4 | 20 | |
Mark-to-market | (1) | (2) | |
Monetary and exchange rate changes | 3 | - | |
Borrowing costs | 4 | 5 | |
Interest paid | (138) | (277) | |
Payments | (7) | (2,384) | |
Swap paid | (2) | (11) | |
Deconsolidation Via Varejo | (218) | (77) | |
At June 30, 2019 | 5,465 | 6,103 |
17.3. | Maturity schedule of noncurrent borrowings and financing including derivatives recognized in non-current assets and liabilities |
Year | Parent Company | Consolidated | |
From 1 to 2 years | 3,319 | 5,812 | |
From 2 to 3 years | 1,503 | 3,646 | |
From 3 to 4 years | 169 | 3,010 | |
From 4 to 5 years | 169 | 449 | |
After 5 years | 168 | 443 | |
Subtotal | 5,328 | 13,360 | |
Borrowing costs | (17) | (59) | |
Total | 5,311 | 13,301 |
72 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
17.4. | Debentures, Promissory Note and Certificate of Agribusiness Receivables |
Date | Parent Company | Consolidated | |||||||||
Type | Issue Amount | Outstanding debentures (units) | Issue | Maturity | Annual financial charges | Unit price (in reais) | 06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |
14th Issue of Debentures – CBD and CRA | No preference | 1,080 | 1,080,000 | 04/17/17 | 04/13/20 | 96.00% of CDI | - | - | 1,091 | - | 1,091 |
15th Issue of Debentures – CBD | No preference | 800 | 800,000 | 01/17/18 | 01/15/21 | 104.75% of CDI | 1,017 | 813 | 821 | 813 | 821 |
16th Issue of Debentures – CBD (1st serie) | No preference | 700 | 700,000 | 09/11/18 | 09/10/21 | 106% of CDI | 1,010 | 707 | 712 | 707 | 712 |
16th Issue of Debentures – CBD (2nd serie) | No preference | 500 | 500,000 | 09/11/18 | 09/12/22 | 107.4% of CDI | 1,010 | 505 | 508 | 505 | 508 |
17th Issue of Debentures – CBD | No preference | 2,000 | 2,000,000 | 01/06/20 | 01/06/23 | CDI + 1.45% per year | 1,024 | 2,048 | 2,048 | ||
4th Issue of Promissory Notes – CBD | No preference | 800 | 800 | 01/10/19 | 01/09/22 | 105.75% of CDI | 1,081,078 | 865 | 849 | 865 | 849 |
1th Issue of Promissory Notes – Sendas (1nd serie) | No preference | 50 | 1 | 07/04/19 | 07/03/20 | CDI + 0.72% per year | 52,630,285 | - | - | 53 | 52 |
1th Issue of Promissory Notes – Sendas (2nd serie) | No preference | 50 | 1 | 07/04/19 | 07/05/21 | CDI + 0.72% per year | 52,630,285 | - | - | 53 | 52 |
1th Issue of Promissory Notes – Sendas (3nd serie) | No preference | 50 | 1 | 07/04/19 | 07/04/22 | CDI + 0.72% per year | 52,630,285 | - | - | 53 | 52 |
1th Issue of Promissory Notes – Sendas (4nd serie) | No preference | 250 | 5 | 07/04/19 | 07/04/23 | CDI + 0.72% per year | 52,630,285 | - | - | 263 | 258 |
1th Issue of Promissory Notes – Sendas (5nd serie) | No preference | 200 | 4 | 07/04/19 | 07/04/24 | CDI + 0.72% per year | 52,630,285 | - | - | 211 | 206 |
1th Issue of Promissory Notes – Sendas (6nd serie) | No preference | 200 | 4 | 07/04/19 | 07/04/25 | CDI + 0.72% per year | 52,630,285 | - | - | 211 | 206 |
1th Issue of Debentures – Sendas (1nd serie) | No preference | 2,000 | 2,000,000 | 09/04/19 | 08/20/20 | CDI + 1.60% per year | 20 | - | - | 40 | 1,001 |
1th Issue of Debentures – Sendas (2nd serie) | No preference | 2,000 | 2,000,000 | 09/04/19 | 08/20/21 | CDI + 1.74% per year | 876 | - | - | 1,752 | 2,044 |
1th Issue of Debentures – Sendas (3nd serie) | No preference | 2,000 | 2,000,000 | 09/04/19 | 08/20/22 | CDI + 1.95% per year | 1,018 | - | - | 2,037 | 2,046 |
1th Issue of Debentures – Sendas (4nd serie) | No preference | 2,000 | 2,000,000 | 09/04/19 | 08/20/23 | CDI + 2.20% per year | 1,019 | - | - | 2,037 | 2,047 |
Borrowing cost | (9) | (3) | (72) | (82) | |||||||
4,929 | 3,978 | 11,576 | 11,863 | ||||||||
Current liabilities | 870 | 1,130 | 1,014 | 2,287 | |||||||
Noncurrent liabilities | 4,059 | 2,848 | 10,562 | 9,576 |
73 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
17.5. | Borrowings in foreign currencies |
On June 30, 2020 GPA had loans in foreign currencies (US dollar and Colombian pesos) to strengthen its working capital, maintain its cash strategy, lengthening its debt profile and make investments.
17.6.Guarantees |
The Company has signed promissory notes for some loan contracts.
17.7.Swap | contracts |
The Company use swap transactions for 100% of its borrowings denominated in US dollars and fixed interest rates, exchanging these obligations for Real linked to CDI (floating) interest rates. These contracts have the same debt due date and protect the interest and principal and are signed, with the same economic group. The weighted average annual rate of CDI in June 2020 was 4.60% (6.32% in June 30, 2019).
17.8.Financial | covenants |
In connection with the debentures and promissory notes and for a portion of borrowings denominated in foreign currencies, GPA is required to maintain certain debt financial covenants. These ratios are quarterly calculated based on consolidated financial statements of the Company prepared in accordance with accounting practices adopted in Brazil, as follows: (i) net debt (debt minus cash and cash equivalents and trade accounts receivable) should not exceed the amount of equity and (ii) consolidated net debt/EBITDA ratio should be lower than or equal to 3.25. At June 30, 2020, GPA was in compliance with these covenants.
17.9.Issuance | of debentures |
In the first quarter of 2020, occurred the 17th issue of simple debentures, not convertible into shares, in a single series with a nominal value of R$1,000 each, with a maturity of 3 years, in the total amount of R$2,000. Such resources will be used to strengthen working capital and extend the debt profile.
17.10. | Credit lines |
On June 30, 2020 the Company has a pre-approved a credit line of R$250.
74 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
18. | Financial instruments |
The detailed information on financial instruments was presented in the annual financial statements for 2019, in note 19.
The main financial instruments and their carrying amounts in the interim financial information, by category, are as follows:
Parent Company | Consolidated | ||||
Carrying amount | Carrying amount | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||
Financial assets: | |||||
Amortized cost | |||||
Related parties - assets | 544 | 248 | 119 | 104 | |
Trade receivables and other receivables | 792 | 531 | 1,363 | 924 | |
Others assets | - | - | 46 | 51 | |
Fair value through profit or loss | |||||
Cash and cash equivalents | 3,056 | 2,863 | 7,736 | 7,954 | |
Financial instruments – Fair value hedge | 336 | 47 | 460 | 86 | |
Others assets | - | - | 2 | 2 | |
Fair value through other comprehensive income | |||||
Trade receivables with credit card companies and sales vouchers | 157 | 50 | 276 | 377 | |
Others assets | - | - | 28 | 19 | |
Financial liabilities: | |||||
Other financial liabilities - amortized cost | |||||
Related parties -liabilities | (205) | (234) | (200) | (215) | |
Trade payables | (4,220) | (5,022) | (12,211) | (14,887) | |
Financing for purchase of assets | (49) | (127) | (101) | (231) | |
Debentures and promissory notes | (4,929) | (3,978) | (11,576) | (11,863) | |
Borrowings and financing | (1,259) | (503) | (4,505) | (1,347) | |
Lease liability | (4,988) | (4,921) | (10,518) | (8,667) | |
Fair value through profit or loss | |||||
Loans and financing (Hedge accounting) | (1,189) | (861) | (1,545) | (945) | |
Financial instruments – Fair Value Hedge | - | (30) | (23) | (47) | |
Disco del Uruguay put option (18.3) | - | - | (565) | (466) |
The fair value of other financial liabilities detailed in table above approximates the carrying amount based on the existing terms and conditions. The borrowings and financing measured at amortized cost, the related fair values of which differ from the carrying amounts, are disclosed in note 18.3.
18.1. | Considerations on risk factors that may affect the business of the Company and its subsidiaries |
(i) | Capital risk management |
The main objective of the Company’s capital management is to ensure that the Company sustains its credit rating and a well-defined equity ratio, in order to support businesses and maximize shareholder value. The Company manages the capital structure and makes adjustments taking into account changes in the economic conditions.
75 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
There were no changes as to objectives, policies or processes during the half ended on June 30, 2020. The capital structure is presented as follows:
Parent Company | Consolidated | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||
Cash and cash equivalents | 3,056 | 2,863 | 7,736 | 7,954 | |
Financial instruments – Fair value hedge | 336 | 17 | 437 | 39 | |
Borrowings and financing | (7,377) | (5,342) | (17,626) | (14,155) | |
Other liabilities with related parties (*) | (238) | (124) | (238) | (124) | |
Net debt | (4,223) | (2,586) | (9,691) | (6,286) | |
Shareholders’ equity | (12,566) | (10,940) | (15,620) | (13,511) | |
Net debt to equity ratio | 34% | 24% | 62% | 47% |
(*) Represents the trade payable to Greenyellow related purchase of equipment.
(ii) | Liquidity risk management |
The Company manages liquidity risk through the daily analysis of cash flows, control of maturities of financial assets and liabilities.
The table below summarizes the payment flow of the Company’s financial liabilities as of June 30, 2020.
a) Parent Company
Up to 1 Year | 1 – 5 years | More than 5 years | Total | |
Borrowings and financing | 1,225 | 1,155 | 374 | 2,754 |
Debentures and promissory note | 940 | 4,284 | - | 5,224 |
Derivative financial instruments | (326) | (2) | - | (328) |
Lease liability | 1,028 | 3,249 | 6,166 | 10,443 |
Trade payables | 4,220 | - | - | 4,220 |
Total | 7,087 | 8,686 | 6,540 | 22,313 |
b) Consolidated
Up to 1 Year | 1 – 5 years | More than 5 years | Total | |
Borrowings and financing | 3,364 | 2,796 | 472 | 6,632 |
Debentures and promissory note | 1,269 | 11,239 | 314 | 12,822 |
Derivative financial instruments | (385) | (14) | (3) | (402) |
Lease liability | 1,776 | 6,682 | 11,143 | 19,601 |
Trade payables | 12,211 | - | - | 12,211 |
Total | 18,235 | 20,703 | 11,926 | 50,864 |
76 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
(iii) | Derivative financial instruments |
Consolidated | ||||||
Notional value | Fair value | |||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |||
Swap with hedge | ||||||
Hedge object (debt) | 1,158 | 955 | 1,545 | 944 | ||
Long position (buy) | ||||||
Prefixed rate | TR+9.80% per year | 127 | 127 | 92 | 99 | |
US$ + fixed | USD+2.99% per year | 1,031 | 828 | 1,453 | 846 | |
1,158 | 955 | 1,545 | 945 | |||
Short position (sell) | ||||||
CDI + 0.67% per year | (1,158) | (955) | (1,125) | (917) | ||
Hedge position - asset | - | - | 420 | 57 | ||
Hedge position - liability | - | - | - | (29) | ||
Net hedge position | - | - | 420 | 28 |
Realized gains and losses and unrealized gains and losses on these contracts during the half ended on June 30, 2020 are recorded as financial income (expenses), net and the balance receivable at fair value is R$437 (balance payable of R$28 as of December 31, 2019), recorded in line item “Financial Instruments – Fair Value Hedge” in the assets and “Borrowings and financing” in the liabilities.
The effects of hedge at fair value through the result of the semester ended on June 30, 2020 resulted in a gain of R$414 (loss of R$6 on June 30, 2019).
18.2. | Sensitivity analysis of financial instruments |
According to the Management’s assessment, the most probable scenario is what the market has been estimating through market curves (currency and interest rates) of B3, on the maturity dates of each transaction.
Therefore, in the probable scenario (I), there is no impact on the fair value of financial instruments. For scenarios (II) and (III), for the sensitivity analysis effect, according to CVM rules, a deterioration of 25% and 50% was taken into account, respectively, on risk variables, up to one year of the financial instruments.
For the probable scenario, weighted exchange rate was R$5.46 on the due date, and the weighted interest rate weighted was 2.07% per year.
In case of derivative financial instruments (aiming at hedging the financial debt), changes in scenarios are accompanied by respective hedges, indicating effects are not significant.
The Company disclosed the net exposure of the derivatives financial instruments, corresponding to financial instruments and certain financial instruments in the sensitivity analysis table below, to each of the scenarios mentioned.
77 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Market projection | ||||||||||
Operations | Risk (CDI variation) | Balance at 06.30.2020 | Scenario I | Scenario II | Scenario III | |||||
Fair value hedge of fixed rate | CDI + 0.03% per year | (79) | (210) | (213) | (216) | |||||
Fair value hedge of exchange rate | CDI + 0.72% per year | (1,046) | (1,095) | (1,101) | (1,112) | |||||
Debentures | CDI + 1.33% per year | (11,648) | (11,939) | (12,012) | (12,085) | |||||
Bank loans | CDI + 2.08% per year | (2,175) | (2,229) | (2,243) | (2,257) | |||||
Total borrowings and financing exposure | (14,948) | (15,473) | (15,569) | (15,670) | ||||||
Cash and cash equivalents (*) | 92.52% of CDI | 5,159 | 5,269 | 5,296 | 5,324 | |||||
Net exposure | (9,789) | (10,204) | (10,273) | (10,346) | ||||||
Net effect - loss | (415) | (484) | (557) |
(*) Weighted average
The Éxito Group's sensitivity test considers the economic environment in which the company operates. In scenario I, the observable rates are used. In scenario II it is considered on increase of 10% and in scenario III it is a decrease of 10%.
Scenario I: Reference Bank Index in Colombia (IBR) available 2.223%.
Scenario II: 0.2223% increase in IBR and for Libor at 90 days an increase of 0.016225%
Scenario III: 0.2223% decrease in IBR and for Libor at 90 days a decrease of 0.016225%
Maket projection | ||||||||
Transactions | Balance 06.30.2020 | Scenario I | Scenario II | Scenario III | ||||
Bank loans and swap | 2,321 | 2,264 | 2,254 | 2,247 |
18.3. | Fair value measurements |
The Company discloses the fair value of financial instruments measured at fair value and of financial instruments measured at amortized cost, the fair value of which differ from the carrying amount, in accordance with CPC 46 (“IFRS13”), which refer to the requirements of measurement and disclosure.
The fair values of cash and cash equivalents, trade receivables and trade payables are equivalent to their carrying amounts.
The table below presents the fair value hierarchy of financial assets and liabilities measured at fair value and of financial instruments measured at amortized cost, the fair value of which is disclosed in the financial statements:
78 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Carrying amount | Fair value | ||
06.30.2020 | 06.30.2020 | Level | |
Financial assets and liabilities | |||
Trade receivables with credit card companies and sales vouchers | 276 | 276 | 2 |
Swaps of annual rate between currencies | 407 | 407 | 2 |
Swaps of annual rate | 2 | 2 | 2 |
Forward between Currencies | 28 | 28 | 2 |
Borrowings and financing (FVPL) | (1,545) | (1,545) | 2 |
Borrowings and financing and debentures (amortized cost) | (16,081) | (15,042) | 2 |
Disco Del Uruguay put option (*) | (565) | (565) | 3 |
Total | (17,478) | (16,439) |
(*) Non-controlling shareholders of Disco del Uruguay S.A. Éxito Group’s subsidiary have a exercisable put option based on a formula that uses data such as net income, EBITDA - earnings before interest, taxes, depreciation and amortization and net debt, in addition to fixed amounts determined in the contract and the exchange variation applicable for conversion to the functional currency. This put option was presented in “Acquisition of minority interest” in current liabilities.
There were no changes between the fair value measurements levels in the half ended on June 30, 2020.
Cross-currency and interest rate swaps and borrowings and financing are classified in level 2 since the fair value of such financial instruments was determined based on readily observable market inputs, such as expected interest rate and current and future foreign exchange rate.
79 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
18.4. | Consolidated position of derivative transactions |
The Company and its subsidiaries have derivative contracts with the following financial institutions: Itaú BBA, Bradesco, Tokyo Bank, Scotiabank, Credit Agricole Corporate, Bogotá Bank, BBVA, BNP, BBVA, Davivenda, Bancolombia, HSBC and Corficolombia.
The consolidated position of outstanding derivative financial instruments are presented in the table below:
Consolidated | ||||
Risk | Reference value | Due date | 06.30.2020 | 03.31.2019 |
Debt | ||||
USD - BRL | US$ 210 | 2020 | 334 | 16 |
USD - BRL | US$ 50 | 2021 | 73 | - |
Interest rate - BRL | R$ 21 | 2026 | 2 | 2 |
Interest rate - BRL | R$ 106 | 2027 | 11 | 10 |
Derivatives - Fair value hedge - Brazil | 420 | 28 | ||
Debt | ||||
USD - COP | US$ 53 | 2020 | 19 | 20 |
USD - COP | US$ 3 | 2022 | 2 | 1 |
Interest rate - COP | COP 49,950 | 2020 | (1) | (1) |
Interest rate - COP | COP 126,879 | 2021 | (3) | (1) |
17 | 19 | |||
Trade payables | ||||
EUR - COP | EUR 5 | 2020 | - | - |
USD - COP | USD 41 | 2020 | - | (8) |
- | (8) | |||
Derivatives – Éxito Group | 17 | 11 |
80 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
19. | Taxes and contributions payable and taxes payable in installments |
The detailed information on taxes and contributions payable and taxes payable in installments was presented in the annual financial statements for 2019, in note 20.
19.1. Taxes and contributions payable and taxes payable in installments
Parent Company | Consolidated | |||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |||
Taxes payable in installments - Law 11,941/09 | 325 | 354 | 326 | 355 | ||
Taxes payable in installments – PERT | 159 | 162 | 159 | 162 | ||
ICMS | 65 | 50 | 105 | 96 | ||
PIS and COFINS | 16 | 4 | 24 | 7 | ||
Provision for income tax and social contribution | - | - | 187 | - | ||
Withholding Income Tax | 3 | 1 | 5 | 1 | ||
INSS | 7 | 1 | 13 | 6 | ||
Other | 7 | 7 | 24 | 60 | ||
Taxes – Éxito Group | - | - | 395 | 220 | ||
582 | 579 | 1,238 | 907 | |||
Current | 243 | 203 | 898 | 531 | ||
Noncurrent | 339 | 376 | 340 | 376 | ||
19.2. Maturity schedule of taxes payable in installments in noncurrent liabilities:
Parent Company and Consolidated | |
From 1 to 2 years | 71 |
From 2 to 3 years | 69 |
From 3 to 4 years | 117 |
From 4 to 5 years | 8 |
After 5 years | 75 |
340 |
81 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
20. | Income tax and social contribution |
20.1. Income tax and social contribution expense reconciliation
The detailed information on income tax and social contribution was presented in the annual financial statements for 2019, in note 21.
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Restated | Restated | ||||
Income before income tax and social contribution | 133 | 96 | 331 | 277 | |
Expense of income tax and social contribution at the nominal rate | (32) | (23) | (122) | (120) | |
Tax penalties | (6) | (5) | (6) | (6) | |
Share of profit of associates | 55 | 84 | 4 | (3) | |
Interest on own capital (*) | - | 57 | - | 57 | |
Tax benefits | - | 7 | 10 | 15 | |
Other permanent differences | - | (12) | 2 | (20) | |
Effective income tax and social contribution | 17 | 108 | (112) | (77) | |
Income tax and social contribution for the period: | |||||
Current | 21 | 155 | (290) | (78) | |
Deferred | (4) | (47) | 178 | 1 | |
Deferred income tax and social contribution expense | 17 | 108 | (112) | (77) | |
Effective rate | 12.78% | -112.50% | 33.84% | 27.80% |
CBD does not pay social contribution based on a final favorable court decision in the past, therefore its nominal rate is 25%.
(*) Effect of income tax on interest on own capital paid.
82 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
20.2. | Breakdown of deferred income tax and social contribution |
Parent Company | |||||||
06.30.2020 | 12.31.2019 | ||||||
Asset | Liability | Net | Asset | Liability | Net | ||
Tax losses and negative basis of social contribution | 151 | - | 151 | 140 | - | 140 | |
Provision for risks | 225 | - | 225 | 212 | - | 212 | |
Goodwill tax amortization | - | (123) | (123) | - | (123) | (123) | |
Mark-to-market adjustment | - | (8) | (8) | - | (4) | (4) | |
Intangible, property and equipment | - | (159) | (159) | - | (149) | (149) | |
Unrealized gains with tax credits | - | (98) | (98) | - | (101) | (101) | |
Net leasing of the right to use | 281 | - | 281 | 252 | - | 252 | |
Other | 11 | - | 11 | 58 | - | 58 | |
Deferred income tax and social contribution assets (liabilities) | 668 | (388) | 280 | 662 | (377) | 285 | |
Compensation | (388) | 388 | - | (377) | 377 | - | |
Deferred income tax and social contribution assets (liabilities), net | 280 | - | 280 | 285 | - | 285 |
Consolidated | |||||||
06.30.2020 | 12.31.2019 | ||||||
Asset | Liability | Net | Asset | Liability | Net | ||
Tax losses and negative basis of social contribution | 636 | - | 636 | 538 | - | 538 | |
Provision for risks | 372 | - | 372 | 321 | - | 321 | |
Goodwill tax amortization | - | (627) | (627) | - | (604) | (604) | |
Mark-to-market adjustment | - | (7) | (7) | - | (7) | (7) | |
Intangible, property and equipment | - | (1,172) | (1,172) | - | (967) | (967) | |
Unrealized gains with tax credits | 97 | (259) | (162) | 82 | (322) | (240) | |
Net leasing of the right to use | 433 | - | 433 | 353 | - | 353 | |
Cash flow hedge | - | (72) | (72) | - | (80) | (80) | |
Other | 56 | - | 56 | 100 | - | 100 | |
Presumed tax on equity - Éxito | 234 | - | 234 | 192 | - | 192 | |
Deferred income tax and social contribution assets (liabilities) | 1,828 | (2,137) | (309) | 1,586 | (1,980) | (394) | |
Compensation | (1,466) | 1,466 | - | (1,232) | 1,232 | - | |
Deferred income tax and social contribution assets (liabilities), net | 362 | (671) | (309) | 354 | (748) | (394) |
(*) Originating mainly from the added value of Éxito. See note nº13.
83 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
The Company estimates to recover these deferred tax assets as follows:
Parent Company | Consolidated | |
Year | ||
Up to one year | 151 | 308 |
From 1 to 2 years | 93 | 194 |
From 2 to 3 years | 40 | 194 |
From 3 to 4 years | 40 | 219 |
From 4 to 5 years | 40 | 203 |
Above 5 years | 304 | 710 |
668 | 1,828 |
20.3.Changes | in deferred income tax and social contribution |
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Restated | Restated | ||||
At the beginning of the period | 285 | 266 | (394) | (225) | |
Effects on net income: | |||||
Expense for the period – continuing operations | (4) | (47) | 178 | 1 | |
Expense for the period – discontinued operations | - | - | - | (122) | |
Income tax related to OCI - discontinued operations | - | 54 | - | 316 | |
Effects on net equity: | - | ||||
Income tax on other comprehensive income - Continued operations | - | 2 | - | 3 | |
Conversion currency adjustment | - | - | (92) | - | |
Assets held for sale and discontinued operations | - | - | - | 122 | |
Other | (1) | - | (1) | (2) | |
At the end of the period | 280 | 275 | (309) | 93 |
84 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
21. | Provision for contingencies |
Detailed information on the provision for legal claims was presented in the 2019 annual financial statements, in note 22.
The provision for contingencies is estimated by the Company’s management, supported by its legal counsel. The provision was recognized in an amount considered sufficient to cover probable losses.
21.1.Parent | Company |
Tax | Social security and labor | Civil and Regulatory | Total | |
Balance at December 31, 2019 | 617 | 236 | 87 | 940 |
Additions | 14 | 52 | 27 | 93 |
Payments | (2) | (35) | (31) | (68) |
Reversals | (15) | (29) | (13) | (57) |
Monetary adjustment | 2 | 14 | 8 | 24 |
Balance at June 30, 2020 | 616 | 238 | 78 | 932 |
Tax | Social security and labor | Civil and Regulatory | Total | |
Balance at December 31, 2018 | 679 | 231 | 77 | 987 |
Additions | 91 | 57 | 22 | 170 |
Payments | (2) | (25) | (12) | (39) |
Reversals | (120) | (45) | (14) | (179) |
Monetary adjustment | 10 | 14 | 9 | 33 |
Balance at June 30, 2019 | 658 | 232 | 82 | 972 |
21.2.Consolidated |
Tax | Social security and labor | Civil and Regulatory | Total | |
Balance at December 31, 2019 | 841 | 319 | 145 | 1,305 |
Additions | 15 | 58 | 39 | 112 |
Payments | (6) | (36) | (42) | (84) |
Reversals | (17) | (35) | (22) | (74) |
Monetary adjustment | 3 | 18 | 9 | 30 |
Foreign currency translation adjustment | 15 | 3 | 3 | 21 |
Balance at June 30, 2020 | 851 | 327 | 132 | 1,310 |
Tax | Social security and labor | Civil and Regulatory | Total | |
Balance at December 31, 2018 | 828 | 291 | 116 | 1,235 |
Additions | 107 | 369 | 114 | 590 |
Payments | (2) | (296) | (66) | (364) |
Reversals | (237) | (144) | (62) | (443) |
Monetary adjustment | 9 | 48 | 15 | 72 |
Deconsolidation Via Varejo | 111 | 28 | 6 | 145 |
Balance at June 30, 2019 | 816 | 296 | 123 | 1,235 |
85 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
21.3. | Tax |
As per prevailing legislation, tax claims are subject to monetary indexation, which refers to an adjustment to the provision based on tax to the indexation rates used by each tax jurisdiction. In all cases, both the interest charges and fines, when applicable, were computed and fully provisioned with respect to unpaid amounts.
The main provisioned tax claims are as follows:
ICMS |
The Federal Supreme Court ("STF") on October 16, 2014 decided that ICMS taxpayers that trade products included in the “basked of food staples” have no right to fully utilize the ICMS credits. The Company, with the assistance of its legal counsel, decided to record a provision for this matter amounting to R$48 as of June 30, 2020 (R$50 as of December 31, 2019) since this claim was considered a “probable” loss. The amounts accrued represent Management’s best estimate of the probable cash disbursement to settle this claim. On May 9, 2019, the STF upheld the previous understanding and did not comply with the request for modulation of the effects of the decision. However, such a decision did not have a major impact on the Company's financial information, since the amount was already provisioned in its entirety.
Additionally, there are cases assessed by São Paulo State tax authorities related to the refund of ICMS over tax substitution without proper compliance with accessory tax obligations introduced by CAT Administrative Rule 17. Considering recent court decisions occurred in 2020, the Company accrued R$274 (R$268 in December 31, 2019) representing the best estimation of probable loss evaluated by management based on documentation evidence aspect of the claims.
Supplementary Law 11/2001 |
The Company claims in court the eligibility to not pay the contributions provided for by Supplementary Law 110/2001, referring to the FGTS (Government Severance Indemnity Fund for Employees) costs. The accrued amount as of June 30, 2020 is R$99 (R$96 in December 31, 2019).
Other contingent tax claims |
Other tax claims remained, which, according to the analysis of its legal advisors, were provisioned by the Company. These refer to: (i) challenge on the non-application of the Accident Prevention Factor - FAP; (ii) challenge on the State Finance Department on the ICMS tax rate calculated on electric energy bills; (iii) undue credit (iv) no social charges on benefits granted to its employees, due to an unfavorable decision in the Court (v) other minor issues. The amount accrued for these matters as of June 30, 2020 is R$340 (R$349 as of December 31, 2019).
Éxito Group
The subsidiary Éxito and its subsidiaries discuss tax issues related to value added tax, property tax and industry and commerce taxes in the amount of R$90 on June 30, 2020 (R$78 as of December 31, 2019).
86 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
21.4. | Labor |
The Company and its subsidiaries are parties to various labor lawsuits mainly due to termination of employees in the ordinary course of business. At June 30, 2020, the Company recorded a provision of R$327 (R$319 as of December 31, 2019. Management, with the assistance of its legal counsel, assessed these claims and recorded a provision for losses when reasonably estimable, based on past experiences in relation to the amounts claimed.
21.5.Civil, | regulatory and others |
The Company and its subsidiaries are parties to civil lawsuits at several court levels (indemnities and collections, among others) and at different courts. The Company’s management records provisions in amounts considered sufficient to cover unfavorable court decisions, when its legal counsel considers the loss as probable.
Among these lawsuits, we point out the following:
· | The Company and its subsidiaries are parties to various lawsuits requesting the renewal of rental agreements and the review of the current rent paid. The Company recognizes a provision for the difference between the amount originally paid by the stores and the amounts claimed by the adverse party in the lawsuit, when internal and external legal counsel consider that it is probable that the rent amount will be changed by the company. As of June 30, 2020, the amount accrued for these lawsuits is R$50 (R$68 as of December 31, 2019), for which there are no escrow deposits. |
· | The Company and its subsidiaries are parties to legal claims related to penalties applied by regulatory agencies, from the Federal, State and Municipal Administrations, among which includes Consumer Protection Agencies (Procon), National Institute of Metrology, Standardization and Industrial Quality (INMETRO) and Municipalities and some lawsuits involving contract terminations with suppliers. Company supported by its legal counsel, assessed these claims, and recorded a provision according to probable cash expending and estimative of loss .On June 30, 2020 the amount of this provision is R$27 (R$24 on December 31, 2019). |
· | The subsidiary Éxito and its subsidiaries respond to certain lawsuits related to civil liability cases, lawsuits for rental conditions and other matters in the amount of R$16 on June 30, 2020 (R$17 on December 31, 2019). |
· In relation to the provisioned amounts remaining for other civil jurisdiction matters on June 30, 2020, it is R$39 (R$36 on December 31, 2019).
Total civil lawsuits and others as of June 30, 2020 amount to R$132 (R$145 as of December 31, 2019).
87 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
21.6. | Non-accrued contingent liabilities |
The Company has other litigations which have been analyzed by the legal counsel and considered as possible loss and, therefore, have not been accrued. The possible litigations updated balance without indemnization from shareholders is of R$11,038 as June 30, 2020 (R$10,829 in December 31, 2019), and are mainly related to:
· | INSS (Social Security Contribution) – GPA was assessed for non-levy of payroll charges on benefits granted to its employees, among other matters, for which possible loss amounts to R$458, as June 30, 2020 (R$453 as of December 31, 2019). The lawsuits are under administrative and court discussions. |
· | IRPJ, withholding income tax - IRRF, CSLL, tax on financial transactions - IOF, withholding income tax on net income – GPA has several assessment notices regarding offsetting proceedings, rules on the deductibility of provisions, payment divergences and overpayments; fine for failure to comply with accessory obligations, among other less significant taxes. The amount involved is R$1,047 as of June 30, 2020 (R$1,055 as of December 31, 2019). |
· | COFINS, PIS and IPI – the Company has been challenged about offsets of IPI credits acquired from third parties with a final and an-appeal over the decision, fine for failure to comply with accessory obligations, disallowance of COFINS and PIS credits, among others less significant taxes. These lawsuits await decision at the administrative and court levels. The amount involved in these assessments is R$1,998 in June 30, 2020 (R$2,022 as of December 31, 2019). |
· | ICMS – GPA received tax assessment notices by the State tax authorities regarding: (i) utilization of electric energy credits; (ii) purchases from suppliers considered not qualified in the State Finance Department registry; (iii) levied on its own operation of merchandise purchase (own ICMS)) – article 271 of ICMS by-law; (iv) resulting from sale of extended warranty, (v) resulting from financed sales; and (vi) among other matters. The total amount of these assessments is R$6,868, as of June 30, 2020 (R$6,773 as of December 31, 2019), which await a final decision at the administrative and court levels. |
· | Municipal service tax - ISS, Municipal Real Estate Tax (“IPTU”), rates, and others – these refer to assessments on withholdings of third parties, IPTU payment divergences, fines for failure to comply with accessory obligations, ISS and sundry taxes, in the amount of R$177 in June 30, 2020 (R$123 as of December 31, 2019), which await decision at the administrative and court levels. |
· | Other litigations – these refer to administrative proceedings and lawsuits in which the Company claims the renewal of rental agreements and setting of rents according to market values and actions in the civil court, special civil court, Consumer Protection Agency - PROCON (in many States), Institute of Weights and Measure - IPEM, National Institute of Metrology, Standardization and Industrial Quality - INMETRO and National Health Surveillance Agency - ANVISA, among others, amounting to R$407 in June 30, 2020 (R$403 as of December 31, 2019). |
· | The subsidiary Éxito and its subsidiaries have an amount of R$83 of lawsuits with probability of possible losses on June 30, 2020 (R$72 as of December 31,2019), mostly related to tax matters. |
The Company has litigations related to challenges by tax authorities on the income tax payment, for which, based on management and legal assessment, the Company has the right of indemnization from its former and current shareholders, related to years from 2007 to 2013, under allegation that had improper deduction of goodwill amortizations. These assessments amount R$1,423 in June 30, 2020 (R$1,409 in December 31, 2019).
88 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
The Company is responsible for the legal processes of GLOBEX prior to the association with Casas Bahia (Via Varejo). As of June 30, 2020, the amount involved in tax proceedings is R$451 (R$484 as of December 31, 2019).
The Company engages external attorneys to represent it in the tax assessments, whose fees are contingent upon a percentage to be applied to the amount of success in the final outcome of these lawsuits. This percentage may vary according to qualitative and quantitative factors of each claim, and as of June 30, 2020 the estimated amount, in case of success in all lawsuits, is approximately R$204 (R$205 as of December 31, 2019).
21.7.Restricted | deposits for legal proceedings |
The Company is challenging the payment of certain taxes, contributions and labor-related obligations and has made judicial deposits in the corresponding amounts, as well as escrow deposits related to the provision for legal proceedings.
Parent Company | Consolidated | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||
Tax | 134 | 172 | 200 | 242 | |
Labor | 424 | 424 | 465 | 474 | |
Civil and other | 34 | 43 | 67 | 79 | |
Total | 592 | 639 | 732 | 795 |
21.8. | Guarantees |
Consolidated | ||||||||
Lawsuits | Property and equipment | Letter of Guarantee | Total | |||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |||
Tax | 750 | 843 | 10,300 | 9,162 | 11,050 | 10,005 | ||
Labor | - | - | 776 | 539 | 776 | 539 | ||
Civil and other | 9 | 11 | 530 | 469 | 539 | 480 | ||
Total | 759 | 854 | 11,606 | 10,170 | 12,365 | 11,024 |
The cost of guarantees (letters of guarantee and guarantee insurance) is approximately 0.52% per year of the amount of the lawsuits and is recorded as expense.
89 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
21.9. | Deduction of ICMS from the calculation basis for PIS and COFINS |
Since the adoption of the non cumulative regime to calculate PIS and COFINS, the Group has challenged the right to deduct ICMS taxes from the calculation basis for PIS and COFINS. On March 15, 2017, the Supreme Court ruled that ICMS should be excluded from the calculation basis of PIS and COFINS.
Since the decision of the Supreme Court on March 15, 2017, the proceedings have been brought forward by our legal advisors without any change in management's judgment, but without the final decision on the appeal filed by the prosecution. The Company and its advisors estimate that the decision on this appeal will not limit the right of the lawsuit filed by the Company, however, the elements of the lawsuit are still pending decision and do not allow the recognition of assets related to the credits to be raised since filing of the lawsuit in 2003. The subsidiaries that had the final and unappealable process recorded in 2019 the amount of R$368, of which R$176 in the financial result. The Company also estimates the potential value of the credits in the amount of R$1,198.
In addition, based on an association agreement signed between GPA and the Klein family after the formation of Via Varejo, GPA has the legal right to obtain the refund of tax credits from Via Varejo resulting from the exclusion of ICMS from the calculation bases of PIS and COFINS, related to the operations of the subsidiary Globex (former corporate name of Via Varejo) for the periods between 2003 and 2010. Via Varejo was unappealable in May 2020.
In the period ended June 30, 2020, Via Varejo had the final and unappealable process. CBD has already recognized, based on the documentation analyzed so far, R$158 of credit for the period it is legally entitled to, according to the association agreement. The credit is recognized in the net result of discontinued operations. Pending a complete justification to be provided by Via Varejo on the credits underlying this right, today the Company still has a remaining unrecorded right of R$350.
21.10. | Arbitration Península |
On September 12, 2017, the Company received a notice from the Brazil-Canada Chamber of Commerce regarding a request for arbitration (“Proceeding”) filed by Banco Ourinvest S.A., a financial institution, in its capacity as fund manager and acting in the exclusively interest of the quotaholders of Fundo de Investimento Imobiliário Península ("Península and the “Proceeding").
The Proceeding aims to discuss the calculation of the rental fees and other operational matters related to the stores owned by Peninsula, which are under several lease agreements and contracts entered into between the Company and Peninsula during 2005 (the "Agreements"). The Agreements assure to CBD the rent of the stores for a period of twenty (20) years, which may be extended for an additional 20-year term, at CBD’s discretion, and rules the calculation of the rental fees.
The Proceeding refers to certain terms and conditions of the Agreements and does not affect the continuity of the leasing of the stores, which are contractually assured. The amounts on which the Company is exposed can not be determined with reasonable certainty based on the current stage of the arbitral process. Management assessed the arbitration as possible loss, based on the opinion provided by the external legal counsel.
90 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
22. | Lease liability |
22.1.Leasing | obligations |
The detailed information on leasing obligations were presented in the annual financial statements for 2019, in note 23.1.
Lease liability amounted to R$10,518 as of June 30, 2020 (R$8,667 as of December 31, 2019), as shown in the table below:
Parent Company | Consolidated | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||
Lease liability –minimum rental payments: | |||||
Up to 1 year | 518 | 533 | 943 | 937 | |
1 - 5 years | 1,682 | 1,663 | 3,691 | 2,936 | |
Over 5 years | 2,788 | 2,725 | 5,884 | 4,794 | |
Present value of lease agreements | 4,988 | 4,921 | 10,518 | 8,667 | |
Future charges | 5,455 | 5,466 | 9,083 | 8,007 | |
Future value of lease agreements | 10,443 | 10,387 | 19,601 | 16,674 |
The interest expense on lease liability is presented in note 28. The incremental interest rate of the Company and its subsidiaries at the date of signing of the agreements was 10.16% in the quarter ended June 30, 2020 (13.01% as of June 30, 2019).
22.2.Movement | of leasing liability |
Parent Company | Consolidated | ||
At December 31, 2019 | 4,921 | 8,667 | |
Additions | 100 | 598 | |
Remeasurement | 219 | 1,301 | |
Accrued interest | 263 | 462 | |
Payments | (484) | (848) | |
Anticipated lease contract closure | (22) | (114) | |
Transfer to subsidiary | (9) | - | |
Conversion currency adjustment | - | 452 | |
At June 30, 2020 | 4,988 | 10,518 | |
Current | 518 | 943 | |
Noncurrent | 4,470 | 9,575 | |
|
91 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Parent Company | Consolidated | ||
At December 31, 2018 | 4,670 | 5,787 | |
Additions | 4 | 72 | |
Remeasurement | 163 | 367 | |
Accrued interest | 269 | 505 | |
Exchange and monetary variation | - | 1 | |
Payments | (451) | (945) | |
Anticipated lease contract closure | (71) | (94) | |
Liabilities related to assets held for sale and discontinued operations (note 31) | - | 136 | |
At June 30, 2019 | 4,584 | 5,829 | |
Current | 438 | 531 | |
Noncurrent | 4,146 | 5,298 |
22.3.Lease | expense on variable rents, low value assets and short-term agreements |
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Expenses (income) for the period: | Restated | Restated | |||
Variable (0.1% to 4.5% of sales) | 32 | 14 | 44 | 15 | |
Sublease rentals (*) | (78) | (95) | (86) | (104) |
(*) Refers to lease agreements receivable from commercial shopping malls.
23. | Deferred revenue |
The deferred revenue recorded by Company and its subsidiaries as a liability for the anticipation of amounts received from business partners on exclusivity in the intermediation of additional or extended warranty services, and the amounts for the rental of back lights for exhibition of products from its suppliers, they are recognized in the income for the year by proving the provision of service in the sale of these guarantees to business partners.
The detailed information on deferred revenue was presented in the annual financial statements for 2019, in note 24.
Parent Company | Consolidated | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||
Future revenue agreement | 17 | 10 | 107 | 10 | |
Additional or extended warranties | 14 | 16 | 14 | 16 | |
Services rendering agreement - Allpark | 9 | 9 | 9 | 9 | |
Revenue from credit card operators and banks | 14 | 42 | 61 | 84 | |
Back lights | - | - | 74 | 142 | |
Gift Card | 5 | 6 | 77 | 99 | |
Others | 1 | 1 | 47 | 31 | |
60 | 84 | 389 | 391 | ||
Current | |||||
Noncurrent | 40 | 60 | 368 | 365 | |
20 | 24 | 21 | 26 |
92 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
24. | Shareholders’ equity |
The detailed information on shareholders’ equity were presented in the annual financial statements for 2019, in note 25.
24.1.Capital | stock |
The subscribed and paid-up capital as of June 30, 2020 is represented by 268,049 (267,997 as of December 31, 2019) thousands of registered shares with no par value. On March 2, the process of converting preferred shares into common shares was completed and GPA started trading on the Novo Mercado
The Company is authorized to increase its capital stock up to the limit of 400,000 thousands of shares, regardless of any amendment to the Company’s Bylaws, upon resolution of the Board of Directors, which will establish the terms and conditions.
At the Board of Directors’ Meetings held on February 19, 2020, March 24, 2020 and May 13, 2020, it was approved a capital increase of R$2 (R$32 on December 31, 2019) through the issuance of 52 thousands common shares (1,152 thousands of preferred shares on December 31,2019). On June 30, 2020, the capital stock is R$ 6,859 (R$ 6,857 on December 31, 2019).
24.2.Stock | option plan for common shares current |
06.30.2020 | |||||||
Number of options (in thousands) | |||||||
Series granted | Grant date | 1st date of exercise | Exercise price at the grant date |
Granted | Exercised | Cancelled | Total in effect |
Series B4 | 05/31/17 | 05/31/20 | 0.01 | 537 | (225) | (55) | 257 |
Series C4 | 05/31/17 | 05/31/20 | 56.78 | 537 | (222) | (57) | 258 |
Series B5 | 05/31/18 | 05/31/21 | 0.01 | 594 | (131) | (41) | 422 |
Series C5 | 05/31/18 | 05/31/21 | 62.61 | 594 | (127) | (44) | 423 |
Series B6 | 05/31/19 | 05/31/22 | 0.01 | 434 | (5) | (19) | 410 |
Series C6 | 05/31/19 | 05/31/22 | 70.62 | 331 | (5) | (20) | 306 |
3,027 | (715) | (236) | 2,076 |
The changes of the quantity of exercised options, the weighted average of the exercise price, and the weighted average of the remaining term are presented at the chart below:
Options | Weighted average of exercise price | Weighted average of remaining contractual term | |
in thousands | R$ | ||
At December 31, 2019 | 2,153 | 30.25 | 1.50 |
Cancelled during the period | (16) | 38.90 | |
Exercised during the period | (61) | 28.03 | |
Outstanding at the end of the period | 2,076 | 30.24 | 1.04 |
At June 30, 2020 | 2,076 | 30.24 | 1.04 |
The recorded amounts at the Parent Company and Consolidated’s statement of operations at the June 30, 2020 were R$12 (R$27 at the December 31, 2019).
93 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
24.3. | Other comprehensive income |
Foreign exchange variation of investment abroad
Cumulative effect of exchange gains and losses on the translation of assets, liabilities and profit (loss) of (i) Euros to Brazilian reais, corresponding to the investment in subsidiary Cnova N.V generating a loss of R$142 and (ii) Colombian pesos to Reais, corresponding to the investment by CBD Sendas in the subsidiary Éxito generating a gain of R$1.144. The total effect in the Parent Company was R$1,302 (R$151 on December 31, 2019).
25. | Revenue from the sale of goods and/or services |
The detailed information on revenue from the sale of goods and/or services were presented in the annual financial statements for 2019, in note 26.
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Gross sales | |||||
Goods | 14,717 | 13,597 | 43,950 | 27,959 | |
Services rendered | 199 | 188 | 784 | 210 | |
Sales returns and cancellations | (103) | (95) | (177) | (123) | |
14,813 | 13,690 | 44,557 | 28,046 | ||
Taxes on sales | (1,287) | (1,065) | (4,109) | (2,256) | |
Net operating revenues | 13,526 | 12,625 | 40,448 | 25,790 |
26. | Expenses by nature |
The detailed information on expenses by nature were presented in the annual financial statements for 2019, in note 27.
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Restated | Restated | ||||
Cost of inventories | (9,399) | (8,505) | (30,486) | (19,379) | |
Personnel expenses | (1,560) | (1,648) | (3,621) | (2,457) | |
Outsourced services | (239) | (236) | (531) | (332) | |
Functional expenses | (582) | (698) | (1,337) | (973) | |
Selling expenses | (491) | (476) | (1,029) | (662) | |
Other expenses | (324) | (220) | (771) | (304) | |
(12,595) | (11,783) | (37,775) | (24,107) | ||
Cost of sales | (10,046) | (9,128) | (31,781) | (20,172) | |
Selling expenses | (2,209) | (2,290) | (4,985) | (3,411) | |
General and administrative expenses | (340) | (365) | (1,009) | (524) | |
(12,595) | (11,783) | (37,775) | (24,107) | ||
94 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
27. | Other operating expenses, net |
The detailed information on other operating expenses, net were presented in the annual financial statements for 2019, in note 28.
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Restated | Restated | ||||
Tax installments and other tax risks | (28) | (61) | (39) | (71) | |
Restructuring expenses (*) | (189) | (48) | (278) | (50) | |
Losses on disposals of fixed assets (**) | 241 | 3 | 209 | (1) | |
Covid-19 spending on prevention(***) | (82) | - | (198) | - | |
Others | (2) | - | (2) | - | |
Total | (60) | (106) | (308) | (122) |
(*) amounts related to restructuring expenses in Brazilian operations and expenses in the acquisition of Éxito Group.
(**) The result of fixed assets was mainly impacted by the Sale and Leaseback operations in the amount of R$64 (see note 1.3), the sale of 3 stores in the city of Curitiba in the amount of R $ 68 and the partial sale of 1 non-core property in the city of São Paulo in the amount of R$138 (see note 32).
(***) Expenses incurred as a result of the pandemic refer to the purchase of individual protection and store adaptation items, overtime expenses, expenses with internal and external communication, incremental expenses with transportation and cleaning services and sanitation.
28. | Financial income (expenses), net |
The detailed information on financial income (expenses), net, net were presented in the annual financial statements for 2019, in note 29.
Parent Company | Consolidated | ||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||
Restated | Restated | ||||
Finance expenses: | |||||
Cost of debt | (146) | (162) | (394) | (185) | |
Cost of discounting receivables | (35) | (53) | (58) | (77) | |
Monetary restatement loss | (102) | (64) | (208) | (67) | |
Interest on lease liability | (260) | (259) | (462) | (323) | |
Other finance expenses | (42) | (41) | (138) | (53) | |
Total financial expenses | (585) | (579) | (1,260) | (705) | |
Financial income: | |||||
Income from short term investments | 48 | 8 | 127 | 10 | |
Monetary restatement gain | 82 | 54 | 227 | 89 | |
Other financial income | 3 | 4 | 7 | 5 | |
Total financial income | 133 | 66 | 361 | 104 | |
Total | (452) | (513) | (899) | (601) |
The gains or losses on derivative financial instruments are recorded as cost of debt and disclosed in Note 18.
95 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
29. | Earnings per share |
The information on earnings per share was presented in the annual financial statements for 2019, in note 30.
The table below presents the determination of net income available to holders of common shares and the weighted average number of common shares outstanding used to calculate basic and diluted earnings (loss) per share in each reporting period. After the migration process to the new market, the Company has a single class of shares and is restating 2019 with this consideration.
06.30.2020 | 06.30.2019 | ||
Restated | |||
Basic numerator | |||
Net income allocated to common shareholders – continued operations | 150 | 200 | |
Net income allocated to common shareholders - discontinued operations | 54 | 344 | |
Net income allocated to common shareholders | 204 | 544 | |
Basic denominator (millions of shares) | |||
Weighted average of shares | 268 | 267 | |
Basic earnings per millions of shares (R$) – continued operations | 0.54146 | 0.75011 | |
Basic earnings per millions of shares (R$) - discontinued operations | 0.20165 | 1.29019 | |
Basic earnings per millions of shares (R$) - total | 0.74311 | 2.04031 | |
Diluted numerator | |||
Net income allocated to common shareholders – continued operations | 150 | 200 | |
Net income allocated to common shareholders - discontinued operations | 54 | 344 | |
Net income allocated to common shareholders | 204 | 544 | |
Diluted denominator | |||
Weighted average of shares (in millions) | 268 | 267 | |
Stock option | 1 | 1 | |
Diluted weighted average of shares (millions) | 269 | 268 | |
Diluted earnings per millions of shares (R$) – continued operations | 0.54044 | 0.74905 | |
Diluted earnings per millions of shares (R$) – discontinued operations | 0.20127 | 1.28847 | |
Diluted earnings per millions of shares (R$) – total | 0.74171 | 2.03752 | |
96 |
30. | Segment information |
The information on segment information was presented in the annual financial statements for 2019, in note 31.
Management considers the following segments:
· | Food retail – includes the banners “Pão de Açúcar”, “Extra Hiper”, “Extra Supermercado” / “Mercado Extra”, “Minimercado Extra”, “Minuto Pão de Açúcar”, “Posto Extra, “ Compre Bem”, “Drogaria Extra” and “GPA Malls”. |
· | Cash & Carry – includes the brand “ASSAÍ”. |
· | Éxito Group - includes the company Éxito (Colômbia) and its subsidiaries Libertad (Argentina) and Disco Del Uruguay (Uruguay). Éxito operates the brands Surtimax, Super Inter, and Carulla. |
The electronics and electronic commerce segments were sold and are presented as discontinued operations on June 30, 2019. The other businesses are composed of the results of James, Cheftime, Stix and Cnova N.V. Both segments are maintained in this note for purposes of reconciliation with the consolidated financial statements.
The eliminations of the result and balance sheet are presented within the segment itself.
The debentures for the acquisition of Éxito and the interest on them were considered in the Éxito Group, as well as other expenses related to the acquisition.
Information on the Company’s segments as of June 30, 2020 is included in the table below:
97 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
Description | Retail | Cash & Carry | Éxito Group | Assets held for sale and discontinued operations | Others businesses | Total | |||||||||||
06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | 06.30.2020 | 06.30.2019 | ||||||
Restated | Restated | Restated | Restated | ||||||||||||||
Net operating revenue | 14,064 | 12,931 | 16,029 | 12,859 | 10,331 | - | - | - | 24 | - | 40,448 | 25,790 | |||||
Gross profit | 3,575 | 3,559 | 2,550 | 2,059 | 2,535 | - | - | - | 7 | - | 8,667 | 5,618 | |||||
Depreciation and amortization | (524) | (472) | (233) | (184) | (339) | - | - | - | (3) | - | (1,099) | (656) | |||||
Share of profit of subsidiaries and associates | 51 | 38 | - | - | (41) | - | - | - | (46) | (65) | (36) | (27) | |||||
Operating income | 460 | 323 | 733 | 628 | 137 | - | - | - | (100) | (73) | 1,230 | 878 | |||||
Net financial expenses | (453) | (507) | (127) | (94) | (318) | - | - | - | (1) | - | (899) | (601) | |||||
Profit(loss) before income tax and social contribution | 7 | (184) | 606 | 534 | (181) | - | - | - | (101) | (73) | 331 | 277 | |||||
Income tax and social contribution | 1 | 98 | (198) | (175) | 83 | - | - | - | 2 | - | (112) | (77) | |||||
Net income (loss) for continued operations | 8 | (86) | 408 | 359 | (98) | - | - | - | (99) | (73) | 219 | 200 | |||||
Net income (loss) for discontinued operations | 54 | 340 | - | - | (1) | - | - | 36 | 1 | - | 54 | 376 | |||||
Net income (loss) of year end | 62 | 254 | 408 | 359 | (98) | - | - | 36 | (99) | (73) | 273 | 576 | |||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | ||||||
Current assets | 8,695 | 8,002 | 5,775 | 5,290 | 6,621 | 6,590 | - | - | 64 | 10 | 21,155 | 19,892 | |||||
Noncurrent assets | 15,483 | 15,568 | 7,814 | 7,475 | 18,585 | 15,030 | - | - | 49 | 26 | 41,931 | 38,099 | |||||
Current liabilities | 9,295 | 11,557 | 3,600 | 4,317 | 8,593 | 7,252 | - | - | 106 | 9 | 21,594 | 23,135 | |||||
Noncurrent liabilities | 11,967 | 9,725 | 3,379 | 2,295 | 10,524 | 9, 324 | - | - | 2 | 1 | 25,872 | 21,345 | |||||
Shareholders' equity | 2,916 | 2,288 | 6,610 | 6,153 | 6,089 | 5,044 | - | - | 5 | 26 | 15,620 | 13,511 |
98 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
The Company and its subsidiaries operate primarily as a retailer of food, clothing, home appliances and other products. Total revenues are composed of the following brands:
06.30.2020 | 06.30.2019 | ||
Assai | 16,029 | 12,859 | |
Extra / Compre Bem | 8,421 | 7,627 | |
Pão de Açúcar | 3,671 | 3,317 | |
Proximidade | 762 | 606 | |
Éxito Group | 10,331 | - | |
Stations / Drugstores / Delivery | 1,209 | 1,367 | |
Other business | 25 | 14 | |
Total net operating revenue | 40,448 | 25,790 |
31. | Non cash transactions |
During the half ended June 30, 2020, the Company had transactions that did not represent cash disbursements and, therefore, were not presented in the cash flow statements, as follows:
· Purchase of fixed assets not paid yet as note 15.2;
· Purchase of intangible assets not paid yet as per note 16.2;
· Deferred income tax as per note 20;
· Additions of provisions for contingencies as per note 21.
32. | Non current assets held for sale and discontinued operations |
32.1.Ongoing | transaction to dispose of Via Varejo subsidiary |
The detailed information about assets held for sale and discontinued operations were presented in the annual financial statements of 2019, in note 33.
Parent Company | Consolidated | |||||||
06.30.2020 | 12.31.2019 | 12.31.2019 | 12.31.2019 | |||||
Property/lands held for sale | 448 | 171 | 554 | 171 | ||||
Éxito real estate enterprises | - | - | 32 | 47 | ||||
Assets held for sale and discontinued operations | 448 | 171 | 586 | 218 |
The company and subsidiaries entered into a Sale and Leaseback agreement, as detailed in note 1.3. The variation in the period is mainly due to the signing of this contract. In addition, the Company entered into a land purchase and sale agreement on September 29, 2018 for R$200, the sale of which was not recognized under IFRS 15 due to the contractual characteristics of long-term payment and title transfer in a future date to be defined by the buyer. In the period ended June 30, 2020, the Company transferred the deed (legal title), at the buyer's request, in accordance with and as provided for in the contract, certain registrations that make up 78% of the land were transferred and recognized a gain of R$138 (see note 27) recorded in the result line with fixed assets. The transaction resulted in the recognition of an amount receivable of R$158, presented in note 8, maturing in September 2023, for which the Company obtained bank guarantee as a guarantee of receipt of such amount.
99 |
Companhia Brasileira de Distribuição | |
Notes to the interim financial information | |
June 30, 2020 | |
(In millions of Brazilian reais, unless otherwise stated) |
As disclosed in notes 12.3, on June 14, 2019, the sale of Via Varejo S.A. (“VV”) was concluded, the date on which control of the subsidiary was exercised by its new controlling shareholders.
Below is Via Varejo's summary cash flow statement for the comparative period:
Cash flow: | 05.31.2019 |
Cash flow provided by (used in) operating activities | (2,640) |
Net cash provided by (used in) investing activities | (234) |
Net cash provided by (used in) financing activities | (651) |
Cash variation in the period | (3,525) |
The breakdown of profit from discontinued operations presented in the Company's consolidated income statements is as follows:
Income statement | 06.30.2020 | 05.31.2019 | |
Restated | |||
Net operating revenue | - | 10,527 | |
Profit before income tax and social contribution | - | 169 | |
Income tax and social contribution | - | (119) | |
Profit for the period | - | 50 | |
Other results from discontinued operations | 54 | (83) | |
Gain on the sale of discontinued operations (note 12.3) | - | 409 | |
Profit from discontinued operations presented in the consolidated income statement of the Company | 54 | 376 | |
Attributable: | |||
Controlling shareholders of the Company | 54 | 344 | |
Participation of non-controlling shareholders | - | 32 |
Additionally a reclassification was made of incurred costs on Parent Company basically related to indemnity costs of contingences form prior periods to acquisition, paid to Via Varejo. Under IFRS 5, such costs were reclassified to discontinued activities in the amount of R$54 on June 30, 2019 (R$83 on June 30, 2019). The amount of R$54 includes the amount of R$158 corresponding to the right of GPA to receive from Via Varejo the refund of the ICMS exclusion benefit from the PIS and COFINS base of its former subsidiary Globex, after the judgment in these proceedings has become final, referring to the period of 2007 and 2010 (see note 21.9).
100 |
Other information deemed as relevant by the Company
Shareholder position - 06/30/2020 | |||||||
SHAREHOLDERS 'POSITION OF THE COMPANY'S CONTROLLERS, UP TO THE LEVEL OF INDIVIDUAL | |||||||
COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO (Publicly held company) | Shareholding at 06/30/2020 (In units) Total | ||||||
Shareholder | Common Shares | Preferred Shares | Total | ||||
Number | % | Number | % | Number | % | ||
Wilkes Participações S/A | 94,019,178 | 35.08% | 0 | 0.00% | 94,019,178 | 35.08% | |
Jean-Charles Naouri* | 1 | 0.00% | 0 | 0.00% | 1 | 0.00% | |
Geant International BV* | 9,423,742 | 3.52% | 0 | 0.00% | 9,423,742 | 3.52% | |
Segisor* | 5,600,050 | 2.09% | 0 | 0.00% | 5,600,050 | 2.09% | |
Casino Guichard Perrachon* | 2 | 0.00% | 0 | 0.00% | 2 | 0.00% | |
King LLC* | 852,000 | 0.32% | 0 | 0.00% | 852,000 | 0.32% | |
Helicco Participações Ltda. | 581,600 | 0.22% | 0 | 0.00% | 581,600 | 0.22% | |
BlackRock, Inc.* | 17,767,984 | 6.63% | 0 | 0.00% | 17,767,984 | 6.63% | |
Board of Directors | 563,805 | 0.21% | 0 | 0.00% | 563,805 | 0.21% | |
Board of Executive Officers | 188,536 | 0.07% | 188,536 | 0.07% | |||
Fiscal Council | 37,078 | 0.01% | 0 | 0.00% | 37,078 | 0.01% | |
Treasury Shares | 239,060 | 0.09% | 0 | 0.00% | 239,060 | 0.09% | |
Others | 138,776,461 | 51.77% | 0 | 0.00% | 138,776,461 | 51.77% | |
Total | 268,049,496 | 100.00% | 0 | 0.00% | 37,078 | 100.00% | |
(*) Non-resident company. | |||||||
DISTRIBUTION OF THE SOCIAL CAPITAL OF THE LEGAL ENTITY (SHAREHOLDER OF THE COMPANY), UP TO THE LEVEL OF THE INDIVIDUAL | |||||||
WILKES PARTICIPAÇÕES S.A | Shareholding (In units) | ||||||
Shareholder/Quotaholder | Common Shares | Preferred Shares | Total | ||||
Number | % | Number | Number | % | Number | ||
Casino Guichard Perrachon* | 2 | 0.00% | 0 | 0.00% | 2 | 0.00% | |
Segisor* | 223,698,566 | 100.00% | 0 | 0.00% | 223,698,566 | 100.00% | |
Treasury Shares | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | |
TOTAL | 223,698,568 | 100.00% | 0 | 0.00% | 223,698,568 | 100.00% | |
(*) Non-resident company. | |||||||
DISTRIBUTION OF THE SOCIAL CAPITAL OF THE LEGAL ENTITY (SHAREHOLDER OF THE COMPANY), UP TO THE LEVEL OF THE INDIVIDUAL | |||||||
SEGISOR | Shareholding (In units) | ||||||
QUOTAHOLDER | QTD QUOTAS | % | AÇÕES PN | % | Quantidade | % | |
Casino Guichard Perrachon* | 1,774,479,286 | 100.00% | 0 | 0.00% | 1,774,479,286 | 100.00% | |
TOTAL | 1,774,479,286 | 100.00% | 0 | 0% | 1,774,479,286 | 100.00% | |
101 |
Other information deemed as relevant by the Company | |||||||
DISTRIBUTION OF THE SOCIAL CAPITAL OF THE LEGAL ENTITY (SHAREHOLDER OF THE COMPANY), UP TO THE LEVEL OF THE INDIVIDUAL | |||||||
ONPER INVESTIMENTOS 2015 S.L. | Shareholding (In units) | ||||||
SHAREHOLDER | AÇÕES ON | % | AÇÕES PN | % | Number | % | |
ALMANACENES ÉXITO S.A.* | 3,000 | 100.00% | 0 | 0.00% | 3,000 | 100.00% | |
TOTAL | 3,000 | 100.00% | 0 | 0.00% | 3,000 | 100.00% | |
DISTRIBUTION OF THE SOCIAL CAPITAL OF THE LEGAL ENTITY (SHAREHOLDER OF THE COMPANY), UP TO THE LEVEL OF THE INDIVIDUAL | |||||||
ALMANACENES ÉXITO S.A. | Posição em (em unidades) | ||||||
SHAREHOLDER* | AÇÕES ON | % | AÇÕES PN | % | Quantidade | % | |
Sendas | 432.256.668 | 96.57% | 0 | 0.00% | 432.256.668 | 96.57% | |
Minority | 15.347.648 | 3.43% | 0 | 0.00% | 15.347.648 | 3.43% | |
TOTAL | 447.604.316 | 100.00% | 0 | 0.00% | 447.604.316 | 100.00% | |
CONSOLIDATED SHAREHOLDING OF CONTROLLING PARTIES AND MANAGEMENT AND OUTSTANDINGSHARES | Shareholding at 06/30/2020 (In units) Total | ||||||
Shareholder | Common Shares | Preferred Shares | |||||
Number | % | Number | Number | % | Number | ||
Controlling parties | 110,476,573 | 41.21% | - | - | 110,476,573 | 41.21% | |
Management | |||||||
Board of Directors | 563,805 | 0.21% | - | - | 563,805 | 0.21% | |
Board of Executive Officers | 188,536 | 0.07% | - | - | 188,536 | 0.07% | |
Fiscal Council | 37,078 | 0.01% | - | - | 37,078 | 0.01% | |
Treasury Shares | 239,060 | 0.09% | - | - | 239,060 | 0.09% | |
Other Shareholdersas | 156,544,445 | 58.40% | - | - | 156,544,445 | 58.40% | |
Total | 268,049,496 | 100.00% | - | - | 268,049,496 | 100.00% | |
Outstanding Shares | 157,333,864 | 58.70% | - | - | 157,333,864 | 58.70% | |
CONSOLIDATED SHAREHOLDING OF CONTROLLING PARTIES AND MANAGEMENT AND OUTSTANDINGSHARES | Shareholding at 06/30/2019 (In units) Total | ||||||
Shareholder | Common Shares | Preferred Shares | |||||
Number | % | Number | Number | % | Number | ||
Controlling parties | 99,619,230 | 99.94% | 10,857,343 | 6.49% | 110,476,573 | 41.36% | |
Management | |||||||
Board of Directors | - | 0.00% | 563,804 | 0.34% | 563,804 | 0.21% | |
Board of Executive Officers | - | 0.00% | 35,815 | 0.02% | 35,815 | 0.01% | |
Treasury Shares | - | 0.00% | 232,586 | 0.14% | 232,586 | 0.09% | |
Other Shareholdersas | 60,621 | 0.06% | 155,709,663 | 93.02% | 155,770,284 | 58.32% | |
Total | 99,679,851 | 100.00% | 167,399,211 | 100.00% | 267,079,062 | 100.00% | |
Outstanding Shares | 60,621 | 0.06% | 156,083,802 | 93.38% | 156,369,903 | 58.55% |
[1] Penetration of private-label brands considers the change in perimeter, with integration of all the product categories made by the Company directly in the stores (bakery, butchery, pizzas, etc). Based on the old perimeter, penetration would have reached 14.5%, a 220 bps increase compared to 2Q19.
102 |
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO | ||
Date: July 30, 2020 | By: /s/ Peter Estermann Name: Peter Estermann Title: Chief Executive Officer | |
By: /s/ Christophe José Hidalgo Name: Christophe José Hidalgo Title: Investor Relations Officer |
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.