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 October, 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 – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
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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 September 30, 2020, comprising the statement of financial position as of September 30, 2020 and the related statements of profit or loss and comprehensive income for three and nine-month periods then ended, and of changes in equity and of cash flows for the nine-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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Emphasis of matter
Restatement of corresponding figures
As mentioned in Note 2.1, due to the adoption of the accounting pronouncement NBC TG 06 (R3) – Arrendamentos, equivalent to 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 nine-month periods ended September 30, 2019 and cash flows for the nine-month period ended September 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 includes the individual and consolidated statements of value added (SVA) for the nine-month period ended September 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, October 28, 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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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 9/30/2020 | 11 |
1/1/2019 to 9/30/2019 | 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 9/30/2020 | 20 |
1/1/2019 to 9/30/2019 | 21 |
Statement of Value Added | 22 |
Comments on the Company`s Performance | 23 |
Notes to the Interim Financial Information | 47 |
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Number of Shares (thousand) | Current Quarter 9/30/2020 | |
Share Capital | ||
Common | 268,336 | |
Preferred | 0 | |
Total | 268,336 | |
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 09/30/2020 | Previous Year 12/31/2019 |
1 | Total Assets | 33,150,000 | 29,660,000 |
1.01 | Current Assets | 8,426,000 | 7,491,000 |
1.01.01 | Cash and Cash Equivalents | 3,290,000 | 2,863,000 |
1.01.03 | Accounts Receivable | 359,000 | 424,000 |
1.01.03.01 | Trade Receivables | 259,000 | 256,000 |
1.01.03.02 | Other Receivables | 100,000 | 168,000 |
1.01.04 | Inventories | 3,390,000 | 3,358,000 |
1.01.06 | Recoverable Taxes | 657,000 | 516,000 |
1.01.08 | Other Current Assets | 730,000 | 330,000 |
1.01.08.01 | Assets Held for Sale | 78,000 | 171,000 |
1.01.08.03 | Other | 652,000 | 159,000 |
1.01.08.03.01 | Financial Instruments - Derivatives | 233,000 | 45,000 |
1.01.08.03.02 | Dividends Receivables | 263,000 | 0 |
1.01.08.03.03 | Others assets | 156,000 | 114,000 |
1.02 | Noncurrent Assets | 24,724,000 | 22,169,000 |
1.02.01 | Long-term Assets | 3,635,000 | 3,158,000 |
1.02.01.04 | Accounts Receivable | 671,000 | 157,000 |
1.02.01.04.01 | Trade receivables, net | 43,000 | 1,000 |
1.02.01.04.02 | Other accounts receivable | 628,000 | 156,000 |
1.02.01.07 | Deferred Taxes | 274,000 | 285,000 |
1.02.01.09 | Receivables from related parties | 431,000 | 248,000 |
1.02.01.10 | Other Noncurrent Assets | 2,259,000 | 2,468,000 |
1.02.01.10.04 | Recoverable Taxes | 1,557,000 | 1,735,000 |
1.02.01.10.05 | Restricted deposits for legal proceedings | 611,000 | 639,000 |
1.02.01.10.06 | Financial Instruments - Fair Value Hegde | 2,000 | 2,000 |
1.02.01.10.07 | Other Noncurrent Assets | 89,000 | 92,000 |
1.02.02 | Investments | 10,277,000 | 7,750,000 |
1.02.02.01 | Investments in Associates | 10,277,000 | 7,750,000 |
1.02.02.01.02 | Investments in Subsidiaries | 10,277,000 | 7,750,000 |
1.02.03 | Property and Equipment, Net | 8,839,000 | 9,352,000 |
1.02.03.01 | Property and Equipment in Use | 5,049,000 | 5,774,000 |
1.02.03.02 | Leased Properties | 3,790,000 | 3,578,000 |
1.02.04 | Intangible Assets, net | 1,973,000 | 1,909,000 |
1.02.04.01 | Intangible Assets | 1,973,000 | 1,909,000 |
1.02.04.01.02 | Intangible Assets | 1,403,000 | 1,296,000 |
1.02.04.01.03 | Intangible Right-of-use | 570,000 | 613,000 |
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Individual Interim Financial Information / Balance Sheet – Liabilities | ||||
R$ (in thousands) | ||||
Code | Description | Current Quarter 09/30/2020 | Previous Year 12/31/2019 | |
2 | Total Liabilities | 33,150,000 | 29,660,000 | |
2.01 | Current Liabilities | 8,137,000 | 9,218,000 | |
2.01.01 | Payroll and Related Taxes | 480,000 | 392,000 | |
2.01.02 | Trade payables, net | 3,762,000 | 5,022,000 | |
2.01.03 | Taxes and Contributions Payable | 326,000 | 203,000 | |
2.01.04 | Borrowings and Financing | 2,475,000 | 2,016,000 | |
2.01.05 | Other Liabilities | 1,094,000 | 1,585,000 | |
2.01.05.01 | Payables to Related Parties | 216,000 | 234,000 | |
2.01.05.02 | Other | 878,000 | 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 | 13,000 | 10,000 | |
2.01.05.02.08 | Financing Related to Acquisition of Assets | 42,000 | 127,000 | |
2.01.05.02.09 | Deferred Revenue | 30,000 | 60,000 | |
2.01.05.02.12 | Other Accounts Payable | 259,000 | 465,000 | |
2.01.05.02.17 | Lease Liability | 533,000 | 533,000 | |
2.02 | Noncurrent Liabilities | 11,922,000 | 9,502,000 | |
2.02.01 | Borrowings and Financing | 5,020,000 | 3,356,000 | |
2.02.02 | Other Liabilities | 5,940,000 | 5,182,000 | |
2.02.02.02 | Others | 5,940,000 | 5,182,000 | |
2.02.02.02.03 | Taxes payable in installments | 313,000 | 376,000 | |
2.02.02.02.07 | Other Accounts Payable | 247,000 | 33,000 | |
2.02.02.02.08 | Provision for Losses on Investments in Associates | 618,000 | 385,000 | |
2.02.02.02.09 | Lease Liability | 4,762,000 | 4,388,000 | |
2.02.04 | Provisions | 941,000 | 940,000 | |
2.02.06 | Deferred Revenue | 21,000 | 24,000 | |
2.03 | Shareholders’ Equity | 13,091,000 | 10,940,000 | |
2.03.01 | Share Capital | 6,865,000 | 6,857,000 | |
2.03.02 | Capital Reserves | 468,000 | 447,000 | |
2.03.02.04 | Stock Option | 461,000 | 440,000 | |
2.03.02.07 | Capital Reserve | 7,000 | 7,000 | |
2.03.04 | Earnings Reserve | 3,694,000 | 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 | 84,000 | -81,000 | |
2.03.04.14 | Settlement of Equity Instrument | -150,000 | -150,000 | |
2.03.05 | Retained Earnings/ Accumulated Losses | 576,000 | 0 | |
2.03.08 | Other comprehensive income | 1,488,000 | 107,000 | |
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Individual Interim Financial Information / Statement of Operations | ||||||||||||
R$ (in thousands) | ||||||||||||
Code | Description | Current Quarter 07/01/2020 to 09/30/2020 | Year to date current period 01/01/2020 to 09/30/2020 | Previous Quarter 07/01/2019 to 09/30/2019 | Year to date previous period 01/01/2019 to 09/30/2019 | |||||||
3.01 | Net operating revenue | 6,437,000 | 19,963,000 | 6,258,000 | 18,883,000 | |||||||
3.02 | Cost of sales | -4,721,000 | -14,767,000 | -4,691,000 | -13,819,000 | |||||||
3.03 | Gross Profit | 1,716,000 | 5,196,000 | 1,567,000 | 5,064,000 | |||||||
3.04 | Operating Income/Expenses | -1,051,000 | -3,955,000 | -1,226,000 | -4,114,000 | |||||||
3.04.01 | Selling Expenses | -1,048,000 | -3,257,000 | -1,090,000 | -3,380,000 | |||||||
3.04.02 | General and administrative expenses | -188,000 | -528,000 | -185,000 | -550,000 | |||||||
3.04.05 | Other Operating Expenses | -243,000 | -810,000 | -343,000 | -912,000 | |||||||
3.04.05.01 | Depreciation and Amortization | -262,000 | -769,000 | -238,000 | -701,000 | |||||||
3.04.05.03 | Other operating expenses, net | 19,000 | -41,000 | -105,000 | -211,000 | |||||||
3.04.06 | Share of Profit of associates | 428,000 | 640,000 | 392,000 | 728,000 | |||||||
3.05 | Profit from operations before net financial expenses | 665,000 | 1,241,000 | 341,000 | 950,000 | |||||||
3.06 | Net Financial expenses | -257,000 | -709,000 | -238,000 | -751,000 | |||||||
3.07 | Income (loss) before income tax and social contribution | 408,000 | 532,000 | 103,000 | 199,000 | |||||||
3.08 | Income tax and social contribution | -69,000 | -52,000 | 69,000 | 177,000 | |||||||
3.08.01 | Current | -63,000 | -42,000 | 52,000 | 207,000 | |||||||
3.08.02 | Deferred | -6,000 | -10,000 | 17,000 | -30,000 | |||||||
3.09 | Net Income from continued operations | 339,000 | 480,000 | 172,000 | 376,000 | |||||||
3.10 | Net Income (loss) from discontinued operations | 47,000 | 101,000 | -19,000 | 321,000 | |||||||
3.10.01 | Net Income (loss) from Discontinued Operations | 47,000 | 101,000 | -19,000 | 321,000 | |||||||
3.11 | Net Income for the period | 386,000 | 581,000 | 153,000 | 697,000 | |||||||
3.99.01 | Basic Earnings per Share | |||||||||||
3.99.01.01 | ON | 1.40742 | 2.16900 | 0.57331 | 2.61174 | |||||||
3.99.02 | Diluted Earnings per Share | |||||||||||
3.99.02.01 | ON | 1.40567 | 2.16631 | 0.57203 | 2.60691 | |||||||
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Individual Interim Financial Information / Statement of Comprehensive Income | ||||||||
R$ (in thousands) | ||||||||
Code | Description | Current Quarter 07/01/2020 to 09/30/2020 | Year to date current period 01/01/2020 to 09/30/2020 | Previous Quarter 07/01/2019 to 09/30/2019 | Year to date previous period 01/01/2019 to 09/30/2019 | |||
4.01 | Net income for the Period | 386,000 | 581,000 | 153,000 | 697,000 | |||
4.02 | Other Comprehensive Income | 85,000 | 1,378,000 | -48,000 | -44,000 | |||
4.02.02 | Foreign Currency Translation | 69,000 | 1,368,000 | -15,000 | -10,000 | |||
4.02.04 | Fair Value of Trade Receivables | -1,000 | -1,000 | 1,000 | -6,000 | |||
4.02.05 | Cash Flow Hedge | 16,000 | 10,000 | -52,000 | -52,000 | |||
4.02.06 | Income Tax Related to Other Comprehensive Income | 0 | 0 | 18,000 | 24,000 | |||
4.02.08 | Other Comprehensive Income | 1,000 | 1,000 | 0 | 0 | |||
4.03 | Total Comprehensive Income for the Period | 471,000 | 1,959,000 | 105,000 | 653,000 | |||
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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 09/30/2020 | Year to date previous period 01/01/2019 to 09/30/2019 |
6.01 | Net Cash Operating Activities | -679,000 | -1,370,000 |
6.01.01 | Cash Provided by the Operations | 964,000 | 932,000 |
6.01.01.01 | Net Income for the Period | 581,000 | 697,000 |
6.01.01.02 | Deferred Income Tax and Social Contribution (Note 20) | 10,000 | -25,000 |
6.01.01.03 | Gain (Losses) on Disposal of Property and equipments | -177,000 | 49,000 |
6.01.01.04 | Depreciation/Amortization | 865,000 | 788,000 |
6.01.01.05 | Interest and Inflation Adjustments | 671,000 | 740,000 |
6.01.01.06 | Adjustment to Present Value | -1,000 | 1,000 |
6.01.01.07 | Share of Profit (Loss) of Subsidiaries and Associates (Note 12) | -640,000 | -728,000 |
6.01.01.08 | Provision for Risks | 49,000 | 29,000 |
6.01.01.10 | Share-based Payment | 21,000 | 25,000 |
6.01.01.11 | Allowance for Doubtful Accounts (Note 8.1) | 32,000 | 13,000 |
6.01.01.13 | Allowance for obsolescence and damages (Note 9.1) | 8,000 | -5,000 |
6.01.01.14 | Other Operating Expenses | -232,000 | 39,000 |
6.01.01.15 | Deferred Revenue | -41,000 | -17,000 |
6.01.01.16 | Loss or gain on lease liabilities | -182,000 | -76,000 |
6.01.01.18 | Gain in disposal of subsidiaries | 0 | -598,000 |
6.01.02 | Changes in Assets and Liabilities | -1,643,000 | -2,302,000 |
6.01.02.01 | Accounts Receivable | -80,000 | 45,000 |
6.01.02.02 | Inventories | -40,000 | 175,000 |
6.01.02.03 | Recoverable Taxes | 84,000 | -95,000 |
6.01.02.04 | Other Assets | -26,000 | -86,000 |
6.01.02.05 | Related Parties | -445,000 | -196,000 |
6.01.02.06 | Restricted Deposits for Legal Proceeding | 24,000 | -58,000 |
6.01.02.07 | Trade Payables | -1,257,000 | -2,063,000 |
6.01.02.08 | Payroll and Related Taxes | 89,000 | 25,000 |
6.01.02.09 | Taxes and Social Contributions Payable | 55,000 | -32,000 |
6.01.02.10 | Payments of provision for risk | -86,000 | -69,000 |
6.01.02.11 | Deferred Revenue | 12,000 | 13,000 |
6.01.02.12 | Other Payables | 16,000 | 70,000 |
6.01.02.13 | Income Tax and Social contribution,paid | 0 | -90,000 |
6.01.02.15 | Received Dividends and Interest on own capital | 11,000 | 59,000 |
6.02 | Net Cash of Investing Activities | 246,000 | 1,787,000 |
6.02.02 | Acquisition of Property and Equipment (Note 15.2) | -541,000 | -683,000 |
6.02.03 | Increase in Intangible Assets (Note 16.2) | -68,000 | -99,000 |
6.02.04 | Sales of Property and Equipment | 855,000 | 58,000 |
6.02.08 | Cash received from subsidiary sale | 0 | 2,511,000 |
6.03 | Net Cash of Financing Activities | 860,000 | -2,000 |
6.03.01 | Capital Increase | 8,000 | 25,000 |
6.03.02 | Proceeds from Borrowings and Financing (Note 17.2) | 3,130,000 | 1,098,000 |
6.03.03 | Payments of Borrowings and Financing (Note 17.2) | -1,411,000 | -225,000 |
6.03.05 | Payment of Dividends and Interest on own Capital | -156,000 | -229,000 |
6.03.07 | Acquisition of companies | 0 | -19,000 |
6.03.09 | Payment of lease liability | -711,000 | -652,000 |
6.05 | Increase (Decrease) in Cash and Cash Equivalents | 427,000 | 415,000 |
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 | 3,290,000 | 3,350,000 |
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Individual Interim Financial Information / Statement of Changes in Shareholders' Equity 01/01/2020 to 09/30/2020 | ||||||||||
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 | 8,000 | 21,000 | 165,000 | -2,000 | 0 | 192,000 | |||
5.04.01 | Capital Increases | 8,000 | 0 | 0 | 0 | 0 | 8,000 | |||
5.04.03 | Share based expenses | 0 | 18,000 | 0 | 0 | 0 | 18,000 | |||
5.04.08 | Share based expenses of Subsidiaries | 0 | 3,000 | 0 | 0 | 0 | 3,000 | |||
5.04.11 | Hyperinflationary economy effect | 0 | 0 | 165,000 | 0 | 0 | 165,000 | |||
5.04.12 | Others | 0 | 0 | 0 | -2,000 | 0 | -2,000 | |||
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 578,000 | 1,381,000 | 1,959,000 | |||
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 581,000 | 0 | 581,000 | |||
5.05.02 | Other Comprehensive Income | 0 | 0 | 0 | -3,000 | 1,381,000 | 1,378,000 | |||
5.05.02.04 | Foreign currency translation | 0 | 0 | 0 | -3,000 | 1,371,000 | 1,368,000 | |||
5.05.02.06 | Defined benefit plan | 0 | 0 | 0 | 0 | 1,000 | 1,000 | |||
5.05.02.07 | Fair value of trade receivables | 0 | 0 | 0 | 0 | -1,000 | -1,000 | |||
5.05.02.08 | Cash Flow Hedge | 0 | 0 | 0 | 0 | 10,000 | 10,000 | |||
5.07 | Closing Balance | 6,865,000 | 468,000 | 3,694,000 | 576,000 | 1,488,000 | 13,091,000 | |||
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Individual Interim Financial Information / Statement of Changes in Shareholders' Equity 01/01/2019 to 09/30/2019 | |||||||||||||||
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 | 25,000 | 25,000 | -137,000 | -42,000 | 18,000 | -111,000 | ||||||||
5.04.01 | Capital Increases | 25,000 | 0 | 0 | 0 | 0 | 25,000 | ||||||||
5.04.03 | Share based expenses | 0 | 21,000 | 0 | 0 | 0 | 21,000 | ||||||||
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 | 4,000 | 0 | 0 | 0 | 4,000 | ||||||||
5.04.09 | Desconsolidation Via Varejo | 0 | 0 | 0 | -5,000 | 18,000 | 13,000 | ||||||||
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 697,000 | -44,000 | 653,000 | ||||||||
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 697,000 | 0 | 697,000 | ||||||||
5.05.02 | Other Comprehensive Income | 0 | 0 | 0 | 0 | -44,000 | -44,000 | ||||||||
5.05.02.04 | Foreign currency translation | 0 | 0 | 0 | 0 | -10,000 | -10,000 | ||||||||
5.05.02.07 | Fair value of trade receivables | 0 | 0 | 0 | 0 | -6,000 | -6,000 | ||||||||
5.05.02.08 | Cash Flow Hedge | 0 | 0 | 0 | 0 | -52,000 | -52,000 | ||||||||
5.05.02.09 | Income taxes related to other comprehensive income | 0 | 0 | 0 | 0 | 24,000 | 24,000 | ||||||||
5.06 | Internal Changes of Shareholders’ Equity | 0 | 0 | -4,000 | 0 | 0 | -4,000 | ||||||||
5.06.05 | Transactions with Non-controlling Interests | 0 | 0 | -4,000 | 0 | 0 | -4,000 | ||||||||
5.07 | Closing Balance | 6,850,000 | 438,000 | 2,921,000 | 655,000 | -92,000 | 10,772,000 | ||||||||
12 |
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ITR – Interim Financial Information – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Individual Interim Financial Information / Statement of Value Added | |||||||
R$ (in thousands) | |||||||
Code | Description | Year to date current period 01/01/2020 to 09/30/2020 | Year to date previous period 01/01/2019 to 09/30/2019 | ||||
7.01 | Revenues | 22,857,000 | 20,556,000 | ||||
7.01.01 | Sales of Goods, Products and Services | 21,874,000 | 20,490,000 | ||||
7.01.02 | Other Revenues | 979,000 | 79,000 | ||||
7.01.04 | Allowance for/Reversal of Doubtful Accounts | 4,000 | -13,000 | ||||
7.02 | Products Acquired from Third Parties | -17,370,000 | -16,185,000 | ||||
7.02.01 | Costs of Products, Goods and Services Sold | -14,334,000 | -13,827,000 | ||||
7.02.02 | Materials, Energy, Outsourced Services and Other | -3,036,000 | -2,358,000 | ||||
7.03 | Gross Value Added | 5,487,000 | 4,371,000 | ||||
7.04 | Retention | -865,000 | -788,000 | ||||
7.04.01 | Depreciation and Amortization | -865,000 | -788,000 | ||||
7.05 | Net Value Added Produced | 4,622,000 | 3,583,000 | ||||
7.06 | Value Added Received in Transfer | 906,000 | 1,170,000 | ||||
7.06.01 | Share of Profit of Subsidiaries and Associates | 640,000 | 728,000 | ||||
7.06.02 | Financial Revenue | 165,000 | 121,000 | ||||
7.06.03 | Other | 101,000 | 321,000 | ||||
7.07 | Total Value Added to Distribute | 5,528,000 | 4,753,000 | ||||
7.08 | Distribution of Value Added | 5,528,000 | 4,753,000 | ||||
7.08.01 | Personnel | 2,441,000 | 2,324,000 | ||||
7.08.01.01 | Direct Compensation | 1,401,000 | 1,454,000 | ||||
7.08.01.02 | Benefits | 478,000 | 446,000 | ||||
7.08.01.03 | Government Severance Indemnity Fund for Employees (FGTS) | 156,000 | 141,000 | ||||
7.08.01.04 | Other | 406,000 | 283,000 | ||||
7.08.02 | Taxes, Fees and Contributions | 1,608,000 | 820,000 | ||||
7.08.02.01 | Federal | 869,000 | 318,000 | ||||
7.08.02.02 | State | 570,000 | 313,000 | ||||
7.08.02.03 | Municipal | 169,000 | 189,000 | ||||
7.08.03 | Value Distributed to Providers of Capital | 898,000 | 912,000 | ||||
7.08.03.01 | Interest | 859,000 | 892,000 | ||||
7.08.03.02 | Rentals | 39,000 | 20,000 | ||||
7.08.04 | Value Distributed to Shareholders | 581,000 | 697,000 | ||||
7.08.04.01 | Interest on shareholders' equity | 0 | 174,000 | ||||
7.08.04.03 | Retained Earnings/ Accumulated Losses for the Period | 581,000 | 523,000 | ||||
13 |
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ITR – Interim Financial Information – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information /Balance Sheet - Assets | |||||
R$ (in thousands) | |||||
Code | Description | Current Quarter 09/30/2020 | Previous Year 12/31/2019 | ||
1 | Total Assets | 63,240,000 | 58,475,000 | ||
1.01 | Current Assets | 20,819,000 | 19,968,000 | ||
1.01.01 | Cash and Cash Equivalents | 7,283,000 | 7,954,000 | ||
1.01.03 | Accounts Receivable | 1,082,000 | 1,108,000 | ||
1.01.03.01 | Trade Receivables | 717,000 | 727,000 | ||
1.01.03.02 | Other Receivables | 365,000 | 381,000 | ||
1.01.04 | Inventories | 9,870,000 | 8,631,000 | ||
1.01.06 | Recoverable Taxes | 1,791,000 | 1,692,000 | ||
1.01.08 | Other Current Assets | 793,000 | 583,000 | ||
1.01.08.01 | Assets Held for Sale | 110,000 | 223,000 | ||
1.01.08.03 | Other | 683,000 | 360,000 | ||
1.01.08.03.01 | Financial Instruments - Derivatives | 323,000 | 73,000 | ||
1.01.08.03.03 | Others assets | 360,000 | 287,000 | ||
1.02 | Noncurrent Assets | 42,421,000 | 38,507,000 | ||
1.02.01 | Long-term Assets | 4,653,000 | 4,321,000 | ||
1.02.01.04 | Accounts Receivable | 726,000 | 193,000 | ||
1.02.01.04.01 | Trade receivables, net | 48,000 | 1,000 | ||
1.02.01.04.02 | Other accounts receivable | 678,000 | 192,000 | ||
1.02.01.07 | Deferred Taxes | 339,000 | 337,000 | ||
1.02.01.09 | Receivables from related parties | 109,000 | 104,000 | ||
1.02.01.10 | Other Noncurrent Assets | 3,389,000 | 3,687,000 | ||
1.02.01.10.04 | Recoverable Taxes | 2,442,000 | 2,702,000 | ||
1.02.01.10.05 | Restricted deposits for legal proceedings | 760,000 | 795,000 | ||
1.02.01.10.06 | Financial Instruments - Fair Value Hegde | 14,000 | 13,000 | ||
1.02.01.10.07 | Other Noncurrent Assets | 173,000 | 177,000 | ||
1.02.02 | Investments | 4,440,000 | 3,660,000 | ||
1.02.02.01 | Investments in Associates | 816,000 | 609,000 | ||
1.02.02.02 | Investment properties | 3,624,000 | 3,051,000 | ||
1.02.03 | Property and Equipment, Net | 26,438,000 | 24,290,000 | ||
1.02.03.01 | Property and Equipment in Use | 18,195,000 | 17,219,000 | ||
1.02.03.02 | Leased Properties | 8,243,000 | 7,071,000 | ||
1.02.04 | Intangible Assets, net | 6,980,000 | 6,236,000 | ||
1.02.04.01 | Intangible Assets | 6,980,000 | 6,236,000 | ||
1.02.04.01.02 | Intangible Assets | 6,192,000 | 5,400,000 | ||
1.02.04.01.03 | Intangible Right-of-use | 788,000 | 836,000 | ||
14 |
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ITR – Interim Financial Information – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Balance Sheet - Liabilities | ||||
R$ (in thousands) | ||||
Code | Description | Current Quarter 09/30/2020 | Previous Year 12/31/2019 | |
2 | Total Liabilities | 63,240,000 | 58,475,000 | |
2.01 | Current Liabilities | 22,951,000 | 23,135,000 | |
2.01.01 | Payroll and Related Taxes | 1,290,000 | 980,000 | |
2.01.02 | Trade payables, net | 11,971,000 | 14,887,000 | |
2.01.03 | Taxes and Contributions Payable | 797,000 | 531,000 | |
2.01.04 | Borrowings and Financing | 6.177,000 | 3,488,000 | |
2.01.05 | Other Liabilities | 2.716,000 | 3,249,000 | |
2.01.05.01 | Payables to Related Parties | 194,000 | 215,000 | |
2.01.05.02 | Other | 2.522,000 | 3,034,000 | |
2.01.05.02.01 | Dividends and interest on own capital | 14,000 | 168,000 | |
2.01.05.02.07 | Pass-through to Third Parties | 34,000 | 164,000 | |
2.01.05.02.08 | Financing Related to Acquisition of Assets | 128,000 | 231,000 | |
2.01.05.02.09 | Deferred Revenue | 268,000 | 365,000 | |
2.01.05.02.11 | Other Payables | 581,000 | 466,000 | |
2.01.05.02.12 | Other Accounts Payable | 466,000 | 703,000 | |
2.01.05.02.17 | Lease liability | 1,031,000 | 937,000 | |
2.02 | Noncurrent Liabilities | 24,047,000 | 21,792,000 | |
2.02.01 | Borrowings and Financing | 11,217,000 | 10,706,000 | |
2.02.02 | Other Liabilities | 10,441,000 | 8,560,000 | |
2.02.02.02 | Others | 10,441,000 | 8,560,000 | |
2.02.02.02.03 | Taxes payable in installments | 314,000 | 376,000 | |
2.02.02.02.07 | Other Accounts Payable | 288,000 | 68,000 | |
2.02.02.02.08 | Provision for Losses on Investments in Associates | 618,000 | 386,000 | |
2.02.02.02.09 | Lease Liability | 9,221,000 | 7,730,000 | |
2.02.03 | Deferred taxes | 1,037,000 | 1,195,000 | |
2.02.04 | Provisions | 1,330,000 | 1,305,000 | |
2.02.04.01 | Tax, Social Security, Labor and Civil Provisions | 1,330,000 | 1,305,000 | |
2.02.06 | Deferred Revenue | 22,000 | 26,000 | |
2.03 | Shareholders’ Equity | 16,242,000 | 13,548,000 | |
2.03.01 | Share Capital | 6,865,000 | 6,857,000 | |
2.03.02 | Capital Reserves | 468,000 | 447,000 | |
2.03.02.04 | Stock Option | 461,000 | 440,000 | |
2.03.02.07 | Capital Reserve | 7,000 | 7,000 | |
2.03.04 | Earnings Reserve | 3,694,000 | 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 | 84,000 | -81,000 | |
2.03.04.14 | Settlement of Equity Instrument | -150,000 | -150,000 | |
2.03.05 | Retained Earnings/ Accumulated Losses | 576,000 | 0 | |
2.03.08 | Other comprehensive income | 1,488,000 | 107,000 | |
2.03.09 | Non-Controlling interests | 3,151,000 | 2,608,000 | |
15 |
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ITR – Interim Financial Information – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Operations | ||||||||
R$ (in thousands) | ||||||||
Code | Description | Current Quarter 07/01/2020 to 09/30/2020 | Year to date current period 01/01/2020 to 09/30/2020 | Previous Quarter 07/01/2019 to 09/30/2019 | Year to date previous period 01/01/2019 to 09/30/2019 | |||
3.01 | Net operating revenue | 21,289,000 | 61,737,000 | 13,524,000 | 39,314,000 | |||
3.02 | Cost of sales | -16,678,000 | -48,466,000 | -10,642,000 | -30,814,000 | |||
3.03 | Gross Profit | 4,611,000 | 13,271,000 | 2,882,000 | 8,500,000 | |||
3.04 | Operating Income/Expenses | -3,638,000 | -11,081,000 | -2,427,000 | -7,167,000 | |||
3.04.01 | Selling Expenses | -2,604,000 | -7,589,000 | -1,705,000 | -5,116,000 | |||
3.04.02 | General and administrative expenses | -517,000 | -1,526,000 | -279,000 | -803,000 | |||
3.04.05 | Other Operating Expenses | -608,000 | -2,021,000 | -461,000 | -1,239,000 | |||
3.04.05.01 | Depreciation and Amortization | -575,000 | -1,680,000 | -341,000 | -997,000 | |||
3.04.05.03 | Other operating expenses, net | -33,000 | -341,000 | -120,000 | -242,000 | |||
3.04.06 | Share of Profit of associates | 91,000 | 55,000 | 18,000 | -9,000 | |||
3.05 | Profit from operations before net financial expenses | 973,000 | 2,190,000 | 455,000 | 1,333,000 | |||
3.06 | Net Financial expenses | -487,000 | -1,386,000 | -164,000 | -765,000 | |||
3.07 | Income (loss) before income tax and social contribution | 486,000 | 804,000 | 291,000 | 568,000 | |||
3.08 | Income tax and social contribution | -106,000 | -212,000 | -119,000 | -196,000 | |||
3.08.01 | Current | -253,000 | -543,000 | -34,000 | -112,000 | |||
3.08.02 | Deferred | 147,000 | 331,000 | -85,000 | -84,000 | |||
3.09 | Net Income from continued operations | 380,000 | 592,000 | 172,000 | 372,000 | |||
3.10 | Net Income (loss) from discontinued operations | 47,000 | 101,000 | -19,000 | 357,000 | |||
3.10.01 | Net Income (loss) from Discontinued Operations | 47,000 | 101,000 | -19,000 | 357,000 | |||
3.11 | Net Income for the period | 427,000 | 693,000 | 153,000 | 729,000 | |||
3.11.01 | Attributable to Controlling Shareholders - continued operations | 386,000 | 581,000 | 153,000 | 697,000 | |||
3.11.02 | Attributable to Non-controlling Shareholders | 41,000 | 112,000 | 0 | 32,000 | |||
3.99.01 | Basic Earnings per Share | |||||||
3.99.01.01 | ON | 1.40742 | 2.16900 | 0.57331 | 2.61174 | |||
3.99.02 | Diluted Earnings per Share | |||||||
3.99.02.01 | ON | 1.40567 | 2.16631 | 0.57203 | 2.60691 | |||
16 |
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ITR – Interim Financial Information – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Comprehensive Income | ||||||||
R$ (in thousands) | ||||||||
Code | Description | Current Quarter 07/01/2020 to 09/30/2020 | Year to date current period 01/01/2020 to 09/30/2020 | Previous Quarter 07/01/2019 to 09/30/2019 | Year to date previous period 01/01/2019 to 09/30/2019 | |||
4.01 | Net income for the Period | 427,000 | 693,000 | 153,000 | 729,000 | |||
4.02 | Other Comprehensive Income | 97,000 | 1,870,000 | -48,000 | -44,000 | |||
4.02.02 | Foreign Currency Translation | 81,000 | 1,859,000 | -15,000 | -10,000 | |||
4.02.04 | Fair Value of Trade Receivables | -1,000 | -1,000 | 1,000 | -16,000 | |||
4.02.05 | Cash Flow Hedge | 16,000 | 11,000 | -52,000 | -52,000 | |||
4.02.06 | Income Tax Related to Other Comprehensive Income | 0 | 0 | 18,000 | 34,000 | |||
4.02.08 | Other Comprehensive Income | 1,000 | 1,000 | 0 | 0 | |||
4.03 | Total Comprehensive Income for the Period | 524,000 | 2,563,000 | 105,000 | 685,000 | |||
4.03.01 | Attributable to Controlling Shareholders | 471,000 | 1,959,000 | 105,000 | 653,000 | |||
4.03.02 | Attributable to Non-Controlling Shareholders | 53,000 | 604,000 | 0 | 32,000 | |||
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ITR – Interim Financial Information – September 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 09/30/2020 | Year to date previous period 01/01/2019 to 09/30/2019 | |
6.01 | Net Cash Operating Activities | -1,250,000 | -3,718,000 | |
6.01.01 | Cash Provided by the Operations | 2,837,000 | 2,832,000 | |
6.01.01.01 | Net Income for the Period | 693,000 | 729,000 | |
6.01.01.02 | Deferred Income Tax and Social Contribution (Note 20) | -331,000 | 148,000 | |
6.01.01.03 | Gain (Losses) on Disposal of Property and equipments | -8,000 | 102,000 | |
6.01.01.04 | Depreciation/Amortization | 1,892,000 | 1,100,000 | |
6.01.01.05 | Interest and Inflation Adjustments | 1,312,000 | 1,238,000 | |
6.01.01.06 | Adjustment to Present Value | -1,000 | 1,000 | |
6.01.01.07 | Share of Profit (Loss) of Subsidiaries and Associates (Note 12) | -55,000 | -7,000 | |
6.01.01.08 | Provision for Risks | 74,000 | 187,000 | |
6.01.01.10 | Share-based Payment | 21,000 | 29,000 | |
6.01.01.11 | Allowance for Doubtful Accounts (Note 7.1) | 71,000 | 261,000 | |
6.01.01.13 | Allowance for obsolescence and damages (Note 9.1) | 1,000 | -11,000 | |
6.01.01.14 | Other Operating Expenses | -232,000 | 18,000 | |
6.01.01.15 | Deferred Revenue | -284,000 | -265,000 | |
6.01.01.16 | Loss or gain on lease liabilities | -316,000 | -100,000 | |
6.01.01.18 | Gain in disposal of subsidiaries | 0 | -598,000 | |
6.01.02 | Changes in Assets and Liabilities | -4,087,000 | -6,550,000 | |
6.01.02.01 | Accounts Receivable | -119,000 | -39,000 | |
6.01.02.02 | Inventories | -747,000 | -377,000 | |
6.01.02.03 | Recoverable Taxes | 263,000 | -299,000 | |
6.01.02.04 | Other Assets | -62,000 | -268,000 | |
6.01.02.05 | Related Parties | -15,000 | -93,000 | |
6.01.02.06 | Restricted Deposits for Legal Proceeding | 32,000 | -38,000 | |
6.01.02.07 | Trade Payables | -3,725,000 | -4,768,000 | |
6.01.02.08 | Payroll and Related Taxes | 249,000 | -52,000 | |
6.01.02.09 | Taxes and Social Contributions Payable | 151,000 | 50,000 | |
6.01.02.10 | Payments of provision for risk | -116,000 | -396,000 | |
6.01.02.11 | Deferred Revenue | 160,000 | 15,000 | |
6.01.02.12 | Other Payables | -172,000 | -118,000 | |
6.01.02.13 | Income Tax and Social contribution,paid | -1,000 | -179,000 | |
6.01.02.15 | Received Dividends and Interest on own capital | 15,000 | 12,000 | |
6.02 | Net Cash of Investing Activities | -488,000 | 463,000 | |
6.02.01 | Capital Increase/Decrease on Subsidiaries | -31,000 | 0 | |
6.02.02 | Acquisition of Property and Equipment (Note 15.2) | -1,709,000 | -1,681,000 | |
6.02.03 | Increase in Intangible Assets (Note 16.2) | -142,000 | -241,000 | |
6.02.04 | Sales of Property and Equipment | 1,406,000 | 59,000 | |
6.02.08 | Cash received from subsidiary sale | 0 | 2,326,000 | |
6.02.09 | Net cash from discontinueted subsidiaries | -12,000 | 0 | |
6.03 | Net Cash of Financing Activities | 639,000 | 7,831,000 | |
6.03.01 | Capital Increase | 8,000 | 25,000 | |
6.03.02 | Proceeds from Borrowings and Financing (Note 17.2) | 5,912,000 | 11,957,000 | |
6.03.03 | Payments of Borrowings and Financing (Note 17.2) | -3,732,000 | -2,701,000 | |
6.03.05 | Payment of Dividends and Interest on own Capital | -294,000 | -229,000 | |
6.03.06 | Transactions with Non-controlling Interest | 3,000 | 0 | |
6.03.07 | Acquisition of companies | 0 | -19,000 | |
6.03.08 | Transactions with Non-controlling Interest | 2,000 | 0 | |
6.03.09 | Payment of lease liability | -1,260,000 | -1,202,000 | |
6.04 | Exchange rate changes in cash and cash equivalents | 428,000 | 0 | |
6.05 | Increase (Decrease) in Cash and Cash Equivalents | -671,000 | 4,576,000 | |
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 | 7,283,000 | 12,656,000 | |
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ITR – Interim Financial Information – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Changes in Shareholders' Equity 01/01/2020 to 09/30/2020 | ||||||||||||
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 | |||
5.02 | Prior year adjustments | 0 | 0 | 0 | 0 | 0 | 0 | 37,000 | 37,000 | |||
5.03 | Adjusted opening balance | 6,857,000 | 447,000 | 3,529,000 | 0 | 107,000 | 10,940,000 | 2,608,000 | 13,548,000 | |||
5.04 | Capital Transactions with Shareholders | 8,000 | 21,000 | 165,000 | -2,000 | 0 | 192,000 | -69,000 | 123,000 | |||
5.04.01 | Capital Increases | 8,000 | 0 | 0 | 0 | 0 | 8,000 | 0 | 8,000 | |||
5.04.03 | Share based expenses | 0 | 18,000 | 0 | 0 | 0 | 18,000 | 0 | 18,000 | |||
5.04.06 | Dividends | 0 | 0 | 0 | 0 | 0 | 0 | -78,000 | -78,000 | |||
5.04.08 | Share based expenses of Subsidiaries | 0 | 3,000 | 0 | 0 | 0 | 3,000 | 0 | 3,000 | |||
5.04.11 | Hyperinflationary economy effect | 0 | 0 | 165,000 | 0 | 0 | 165,000 | 10,000 | 175,000 | |||
5.04.12 | Others | 0 | 0 | 0 | -2,000 | 0 | -2,000 | -1,000 | -3,000 | |||
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 578,000 | 1,381,000 | 1,959,000 | 604,000 | 2,563,000 | |||
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 581,000 | 0 | 581,000 | 112,000 | 693,000 | |||
5.05.02 | Other Comprehensive Income | 0 | 0 | 0 | -3,000 | 1,381,000 | 1,378,000 | 492,000 | 1,870,000 | |||
5.05.02.04 | Foreign currency translation | 0 | 0 | 0 | -3,000 | 1,371,000 | 1,368,000 | 491,000 | 1,859,000 | |||
5.05.02.06 | Defined benefit plan | 0 | 0 | 0 | 0 | 1,000 | 1,000 | 0 | 1,000 | |||
5.05.02.07 | Fair value of trade receivables | 0 | 0 | 0 | 0 | -1,000 | -1,000 | 0 | -1,000 | |||
5.05.02.08 | Cash Flow Hedge | 0 | 0 | 0 | 0 | 10,000 | 10,000 | 1,000 | 11,000 | |||
5.06 | Internal Changes of Shareholders’ Equity | 0 | 0 | 0 | 0 | 0 | 0 | 8,000 | 8,000 | |||
5.06.05 | Transactions with Non-controlling Interests | 0 | 0 | 0 | 0 | 0 | 0 | 8,000 | 8,000 | |||
5.07 | Closing Balance | 6,865,000 | 468,000 | 3,694,000 | 576,000 | 1,488,000 | 13,091,000 | 3,151,000 | 16,242,000 | |||
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ITR – Interim Financial Information – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Changes in Shareholders' Equity 01/01/2019 to 09/30/2019 | |||||||||||||||||
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 | 25,000 | 25,000 | -137,000 | -42,000 | 18,000 | -111,000 | -3,284,000 | -3.395.000 | ||||||||
5.04.01 | Capital Increases | 25,000 | 0 | 0 | 0 | 0 | 25,000 | 0 | 25.000 | ||||||||
5.04.03 | Share based expenses | 0 | 21,000 | 0 | 0 | 0 | 21,000 | 0 | 21,000 | ||||||||
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 | 4,000 | 0 | 0 | 0 | 4,000 | 4,000 | 8,000 | ||||||||
5.04.09 | Desconsolidation Via Varejo | 0 | 0 | 0 | -5,000 | 18,000 | 13,000 | -3,288,000 | -3,275,000 | ||||||||
5.05 | Total Comprehensive Income | 0 | 0 | 0 | 697,000 | -44,000 | 653,000 | 32,000 | 685,000 | ||||||||
5.05.01 | Net Income for the Period | 0 | 0 | 0 | 697,000 | 0 | 697,000 | 32,000 | 729,000 | ||||||||
5.05.02 | Other Comprehensive Income | 0 | 0 | 0 | 0 | -44,000 | -44,000 | 0 | -44,000 | ||||||||
5.05.02.04 | Foreign currency translation | 0 | 0 | 0 | 0 | -10,000 | -10,000 | 0 | -10,000 | ||||||||
5.05.02.07 | Fair value of trade receivables | 0 | 0 | 0 | 0 | -6,000 | -6,000 | -10,000 | -16,000 | ||||||||
5.05.02.08 | Cash Flow Hedge | 0 | 0 | 0 | 0 | -52,000 | -52,000 | 0 | -52,000 | ||||||||
5.05.02.09 | Income taxes related to other comprehensive income | 0 | 0 | 0 | 0 | 24,000 | 24,000 | 10,000 | 34,000 | ||||||||
5.06 | Internal Changes of Shareholders’ Equity | 0 | 0 | -4,000 | 0 | 0 | -4,000 | 327,000 | 323,000 | ||||||||
5.06.05 | Transactions with Non-controlling Interests | 0 | 0 | -4,000 | 0 | 0 | -4,000 | 327,000 | 323,000 | ||||||||
5.07 | Closing Balance | 6,850,000 | 438,000 | 2,921,000 | 655,000 | -92,000 | 10,772,000 | 0 | 10,772,000 | ||||||||
20 |
FREE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE) |
ITR – Interim Financial Information – September 30,2020 – COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO |
Consolidated Interim Financial Information / Statement of Value Added | ||||
R$ (in thousands) | 1000 | |||
Code | Description | Year to date current period 01/01/2020 to 09/30/2020 | Year to date previous period 01/01/2019 to 09/30/2019 | |
7.01 | Revenues | 69,430,000 | 42,691,000 | |
7.01.01 | Sales of Goods, Products and Services | 68,012,000 | 42,617,000 | |
7.01.02 | Other Revenues | 1,433,000 | 87,000 | |
7.01.04 | Allowance for/Reversal of Doubtful Accounts | -15,000 | -13,000 | |
7.02 | Products Acquired from Third Parties | -55,910,006 | -34,321,000 | |
7.02.01 | Costs of Products, Goods and Services Sold | -49,551,000 | -30,959,000 | |
7.02.02 | Materials, Energy, Outsourced Services and Other | -6,359,006 | -3,362,000 | |
7.03 | Gross Value Added | 13,519,994 | 8,370,000 | |
7.04 | Retention | -1,892,000 | -1,100,000 | |
7.04.01 | Depreciation and Amortization | -1,892,000 | -1,100,000 | |
7.05 | Net Value Added Produced | 11,627,994 | 7,270,000 | |
7.06 | Value Added Received in Transfer | 595,000 | 693,000 | |
7.06.01 | Share of Profit of Subsidiaries and Associates | 55,000 | -9,000 | |
7.06.02 | Financial Revenue | 439,000 | 345,000 | |
7.06.03 | Other | 101,000 | 357,000 | |
7.07 | Total Value Added to Distribute | 12,222,994 | 7,963,000 | |
7.08 | Distribution of Value Added | 12,222,994 | 7,963,000 | |
7.08.01 | Personnel | 5,487,000 | 3,387,000 | |
7.08.01.01 | Direct Compensation | 3,741,000 | 2,173,000 | |
7.08.01.02 | Benefits | 968,000 | 709,000 | |
7.08.01.03 | Government Severance Indemnity Fund for Employees (FGTS) | 233,000 | 205,000 | |
7.08.01.04 | Other | 545,000 | 300,000 | |
7.08.01.04.01 | Profit (cost) sharing | 545,000 | 300,000 | |
7.08.02 | Taxes, Fees and Contributions | 4,180,994 | 2,690,000 | |
7.08.02.01 | Federal | 1,029,994 | 1,057,000 | |
7.08.02.02 | State | 2,840,000 | 1,402,000 | |
7.08.02.03 | Municipal | 311,000 | 231,000 | |
7.08.03 | Value Distributed to Providers of Capital | 1,862,000 | 1,157,000 | |
7.08.03.01 | Interest | 1,811,000 | 1,125,000 | |
7.08.03.02 | Rentals | 51,000 | 32,000 | |
7.08.04 | Value Distributed to Shareholders | 693,000 | 729,000 | |
7.08.04.01 | Interest on shareholders' equity | 0 | 174,000 | |
7.08.04.03 | Retained Earnings/ Accumulated Losses for the Period | 581,000 | 523,000 | |
7.08.04.04 | Noncontrolling Interest in Retained Earnings | 112,000 | 32,000 | |
21 |
GPA - 3Q20 Results
Highlights ✔ Strong gross sales growth of 61.0% (21.0% pro forma) ✔ Assaí exceeded R$10 billion in revenue, up 33.4%, with high EBITDA margin of 7.8% ✔ Food e-commerce sales increased 240%, even with a strong base in the previous year, accounting for 12.4% of Pão de Açúcar sales ✔ Yet another quarter with Multivarejo recording EBITDA margin growth, reaching 8.1% ✔ Consolidated net income more than doubled in relation to 3Q19
|
Operating and Financial Performance | Consolidated gross sales of R$ 23.5 billion, reflecting the strong growth in both Brazilian and international operations. ▪ GPA Food Brazil: R$ 17.5 billion, significant growth of 20.0%, with 14.8% on same-store basis excluding gas stations and drugstores: ✔ Assaí: strong revenue of R$10.1 billion, up R$2.5 billion from the previous year. On a same-store basis, growth was 18.1%, the highest evolution since the end of 2016. This growth was driven by the outstanding contribution from the 42 stores opened in the last 24 months, the gradual resumption of food service and the continued growth in the participation of individual customers. ✔ Multivarejo: R$7.4 billion, growth of 10.4% on a same-store basis excluding gas stations and drugstores. Noteworthy growth of 11% in the food category and 11% in the non-food category (home appliances, home products and textiles). Additionally, online sales continued to grow significantly, up 240% vs. 3Q19 and already correspond to 6% and 12.4% of total Multivarejo and Pão de Açúcar sales, respectively. ▪ Grupo Éxito: R$ 6.0 billion, up 23.7% in pro forma total sales and 2.3% on a same-store basis excluding gas stations and in constant currency. Notable performance by Éxito Wow (+8% in total sales) and Carulla FreshMarket (+24% in total sales) and the development of the omnichannel strategy across all regions, which was accelerated by the scenario of higher restrictions on the circulation of people during the pandemic. The quarter registered record sales through the omnichannel platform, which totaled approximately R$1.5 billion in 9M20 and already represent 18.1% of total sales in Colombia.
Consolidated Adjusted EBITDA of R$ 1.7 billion, up 29.7% pro forma, with margin of 7.8% (+80 bps). Profitability increased across all businesses. ▪ GPA Food Brazil: R$ 1.3 billion (+28.1%), with strong Adjusted EBITDA margin of 7.9%, up 60 bps from 3Q19: ✔ Assaí: R$ 718 million, strong increase of 48%. Margin expanded 80 bps, reaching an impressive 7.8%. ✔ Multivarejo: R$ 546 million and margin of 8.1%, an increase of 50 bps, being the third consecutive quarter of profitability growth. ▪ Grupo Éxito: R$436 million, with margin of 8.2%, up 60 bps, mainly driven by the outstanding retail performance boosted by innovation and omnichannel strategy, and the contribution of the Tuya financial operation. Net income attributable to controlling shareholders amounted to R$386 million, up 2.5 times from the same period last year, with net margin of 1.8%, reflecting the operational improvement in Brazil and the consolidation of international operations. | |
Leverage | ▪ Net debt/EBITDA ratio stood at 2.1x, in line with 2Q20 (2.2x). ▪ Solid financial position, with cash balance of R$7.3 billion, corresponding to 124% of short-term debt (12 months), which demonstrates an adequate level of liquidity in relation to the Company’s future obligations. |
Capex | ▪ Gross investments of consolidated GPA totaled R$ 640 million, with the opening of 7 new Assaí stores in the quarter (5 organic and 2 Hiper conversions), 1 Mini Extra and 1 gas station, plus 8 Extra Super stores converted to the Mercado Extra format. In Colombia, the strategy of expanding innovative formats continues, with 2 stores converted into the Surtimayorista banner and 2 stores into the Éxito Wow format. |
22 |
Spin-off Study
| ▪ On September 9, the Board of Directors of GPA authorized studies to segregate its Cash & Carry operation (Assaí) through the partial spin-off of the Company and its subsidiary Sendas. Key pillars: (i) increased strategic focus to bring greater agility to each segment; (ii) eliminating corporate inefficiencies for operationally distinct businesses; (iii) more efficient capital allocation, prioritizing investments by business and with greater access to capital markets; and (iv) creating value for shareholders through better assessment of business units. ▪ All the work fronts are in progress according to the schedule expected by the Company. |
"We wrap up the third quarter with very positive performance by our Brazilian and our international operations. Our net income attributable to controlling shareholders was 2.5 times higher than in the same period last year, we registered consecutive growth in Multivarejo's profitability, resuming our growth trajectory through significant advances in our omnichannel strategy, and witnessed the Assaí banner posting record quarterly sales growth, following a positive and consistent trajectory and a successful expansion plan. At the Grupo Éxito, we posted record sales in the omnichannel platform, driven by growth and penetration at surprising rates. We expect a fourth quarter with important seasonal dates and have streamlined our strategic plan by adjusting our portfolio, expanding profitable businesses and strengthening our digital ecosystem to ensure greater purchase recurrence, frequency and engagement from consumers."
Peter Estermann, Chief Executive Officer of GPA
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São Paulo, October 28, 2020 – GPA [B3: PCAR3; NYSE: CBD] announces its results for the 3rd quarter of 2020. All comparisons are with the same period in 2019, except where stated otherwise. In addition, starting 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.
3Q20 RESULTS
Consolidated GPA:
3Q20
(1) Same-store performance does not include revenue from gas stations and drugstores
(2) Other: Includes the operations of more recent initiatives such as James Delivery, Cheftime and Stix Fidelidade.
(3) Pro forma variation includes the results of Grupo Éxito in 3Q19 as if they were part of the group in the past, which is presented only for comparison purposes.
(4) Includes increases in constant exchange rate for international operations.
(1) GPA Brazil results do not include others (Stix Fidelidade, James Delivery 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.
In 3Q19, in compliance with CVM resolution, there was a reclassification concerning the application of IFRS 16. Hence, figures presented here differ from those published previously, resulting in a reclassification of R$8 million in EBITDA of GPA Food and Consolidated.
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I. OPERATING PERFORMANCE BY BUSINESS
Assaí:
3Q20
(1)There was no calendar effect in the quarter.
Gross sales came to R$10.1 billion, up 33.4%, adding R$2.5 billion, the banner's all-time record quarterly growth. Same-store sales posted strong growth of 18.1%, demonstrating the wide acceptance of the model and its rapid capacity to adapt to diverse market scenarios.
The quarter's performance was driven by the outstanding contribution from the stores opened in the last 24 months, the gradual resumption of food service, the continued growth in the participation of individual customers and inflation in the commodities categories. Successful commercial actions were rolled out, such as “Two-Week Merchant Festival,” “It’s time to resume good deals,” “Father’s Day” and the “46th anniversary of the banner.” As a result, average ticket grow well above inflation.
In line with the strategy to expand the banner’s nationwide presence, 7 new stores were opened in 5 different states (5 organic openings and 2 conversions from Extra Hiper). In addition, 8 stores are under construction and 3 Extra Hiper stores are being converted.
The Passaí card, an important loyalty-building instrument among individual customers, already has over 1.2 million plastics issued, and purchases made using it presented a 40% higher ticket on average. Moreover, the Passaí credit and debit POS machines, focused on business clients and available at all Assaí stores, continue to enjoy wide acceptance among clients.
Gross profit amounted to R$1.5 billion (+32.9%). Gross margin reached 16.6%, despite the numerous stores under maturation, which shows that the format remains presenting adequate commercial competitiveness.
Selling, general and administrative expenses corresponded to 8.9% of net sales, important dilution of 80 bps from 3Q19, thanks to the robust sales growth in the quarter.
Adjusted EBITDA totaled R$718 million, a strong growth of 47.9% (higher than the gross revenue growth of 145 bps), with an impressive margin of 7.8%, representing a sharp increase of 80 bps, which demonstrates the success of the format and its value proposition.
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(1) Earnings before interest, tax, depreciation and amortization. (2) Adjusted for Other Operating Income and Expenses
Note: In 3Q19, in compliance with CVM resolution, there was a reclassification concerning the application of IFRS 16. Hence, the figures presented here differ from those published previously, resulting in a reclassification of R$8 million in EBITDA.
The strategy of strong expansion of Assaí stores continues to prove successful, and we maintain the plan to open more than 25 new stores per year in the coming years, serving new regions and consolidating more and more this format in Brazil.
Moreover, it must be noted that the banner’s results have been driven by the high productivity of the stores opened in recent years – both organic and conversions - which have helped profitability growth, as the image shows, making us very confident of the strategy adopted.
Evolution of monthly sales per square meter and EBITDA margin
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Multivarejo:
3Q20
(1)There was no calendar effect in the quarter.
(2) Includes e-commerce sales with deliveries straight from the DC and revenues from lease of commercial centers.
Total sales excluding gas stations and drugstores (which performed better than in 2Q20 but still present a negative impact) came to 10.4%, due to the strong performance by the portfolio of renovated stores and the rapid growth of food e-commerce (+240%). There was an 11% growth in both the food and non-food (home appliances, home products and textiles) categories.
Highlights per banner:
● | Hiper: significant growth of 7.4% in same-store sales, marked by the consistent value proposition of the non-food segment, which maintained double-digit growth even after the reopening of establishments selling non-essential items. |
We advanced in the process of store renovation and in consolidating the value proposition and appeal of the format through initiatives such as: i) more competitive prices in categories that increase customer traffic at stores; ii) further improving customer service, especially in perishable goods; iii) review of non-food portfolio; and iv) simplifying the assortment per store in order to better meet customer demand.
● | Pão de Açúcar: same-store sales of 3.6%, with the G7 model stores growing by noteworthy 7.0% in the period. There was significant sales growth in regions distant from major cities, such as coastal towns and towns in the countryside during the quarantine period. Some stores located in large cities registered lower customer traffic, while stores in these towns posted same-store growth of more than 30%, proving this migration movement of consumers. The 156 stores with e-commerce express operations registered growth of 170% in this delivery format. |
● | Mercado Extra: significant increase in same-store revenue (+17.6%) during one more quarter, reflecting the rapid maturation of stores converted to this format and the successful commercial campaigns during the period, showing the strength of the value proposition of this format to the target public. In 3Q20, 8 stores were converted from Extra Super to Mercado Extra and 30 more stores should be converted during 4Q20, practically concluding the conversion process planned by the Company. |
● | Compre Bem: The 28 converted stores continue to mature rapidly, with strong growth in same-store sales (+35.5%), even with the strong comparison base. The number of new customers increased significantly during the quarter, proving the strong acceptance of this model in response to consumer needs. |
27 |
In line with the portfolio optimization strategy, we plan to conclude the conversion of Extra Super stores to the Mercado Extra and Compre Bem formats by 1Q21, which will drive revenue growth and profitability of the format.
● | Proximity: significant same-store growth of 36.5%, with 3Q20 being the ninth consecutive quarter of double-digit growth. The Minuto Pão de Açúcar and Mini Extra formats continued to deliver healthy performance, positively impacted by the strong growth of neighborhood stores, which account for a greater share of sales in the formats and offset the sharp decline in traffic at street and office stores. Outstanding performance of convenience stores opened in 2019 (10 stores), which already outperform profitability and sales results posted by mature Minuto stores, which showcases the successful expansion of the format. The “Aliados” program continues to add new customers to its base, contributing to the format. |
Private-Label Brands registered penetration of 20.2% in the food category, thanks to an optimum value proposition, which contributed to a positive price-quality perception among consumers.
Gross profit amounted to R$1.8 billion, with margin of 26.2% in 3Q20, the third consecutive quarter of improvement in gross margin, thanks to the successful promotional campaigns and better management of shrinkage level.
Selling, general and administrative expenses corresponded to 19.1% of net sales revenue in the quarter, important dilution of 60 bps from 3Q19, mainly due to the constant control of expenses and improvement of operational productivity at stores and distribution centers. Administrative expenses presented a reduction mainly in marketing and corporate expenses.
As a result of the above factors, Adjusted EBITDA came to R$546 million, growing 8.9% in relation to 3Q19. Adjusted EBITDA margin reached 8.1%, up 50 bps vs. 3Q19, presenting a sequentially increase in relation to the previous quarters, as shown in the chart below.
(1) | Multivarejo results do not include the result of Other (Stix Fidelidade, Cheftime and James Delivery). (2) Earnings before interest, tax, |
depreciation and amortization. (3). Adjusted by Other Operating Income and Expenses.
Note: In 3Q19, in compliance with CVM resolution, there was a reclassification concerning the application of IFRS 16. Hence, the figures presented here differ from those published previously, resulting in a reclassification of R$1 million in EBITDA.
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Sequential improvement in EBITDA margin
Digital Ecosystem
The digital ecosystem continues to be one of the biggest growth levers of Multivarejo, supported by 3 integrated recurrent drivers: food e-commerce, customer relations and multichannel convenience.
Food e-commerce:
Our food e-commerce offers unique and complementary options that provide consumers with a complete shopping journey. Our online food sales already account for 6% of total Multivarejo sales and 12.4% of Pão de Açúcar sales, and customers may choose from among various delivery methods, such as: a) traditional delivery in up to 1 day, b) express delivery in the same day, c) delivery in up to 2 hours via James Delivery and d) click & collect.
Food e-commerce sales grew 240% from the same period last year, even with a strong prior year comparison, driven by the significant increase in new customers (+202%) and higher average ticket in all delivery channels (+10.4% vs. 3Q19 ex-James). The Express delivery channel expanded from 113 stores in 3Q19 to 295 stores in 3Q20, while James Delivery grew from 31 stores in 3Q19 to 347 stores in 3Q20. James Delivery registered GMV growth of 577% in the quarter, while the number of orders increased 358% from the same period last year.
Also noteworthy was the successful strategy in the online wine category, which grew more than 5 times from 3Q19 and reached the impressive milestone of more than 1.2 million bottles sold in the period. This was due to the combination of a consistent commercial strategy, innovative actions in the online market, the group's logistics capacity and broad reach.
Customer relations:
We have a comprehensive relationship platform consisting of loyalty programs and apps designed to provide an increasingly personalized buying experience, bringing greater engagement, better experience and more recurring purchases by our customers. Moreover, in October this year we changed the loyalty program "My Rewards" and embedded it into the STIX platform - transforming the traditional stamp dynamics into purchase missions that lead to accumulating points and earning benefits for millions of loyal consumers. With STIX, we started to have a new, fully integrated rewards program with a strong value proposition for the consumer. This program, launched in partnership with Raia Drogasil, was born with a solid base of over 60 million loyal customers.
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The loyalty apps of Extra and Pão de Açúcar have already registered more than 14 million active downloads (+40% vs. 3Q19) and account for about 30% of Multivarejo's sales and 40% of online sales. This large database enables us to identify 70% of Multivarejo’s total sales (90% at Pão de Açúcar and 62% at Extra).
Multichannel Convenience:
We continue to develop new multichannel convenience solutions, with options that complement other growth drivers of the digital platform, such as Cheftime - which offers gastronomic kits and ready and semi-ready-to-eat meals. Currently, Cheftime's gastronomic solutions are available in 284 stores of the Group, growing 56% vs. 2Q20, while the number of meals sold more than doubled during the period.
We are developing the GPA Marketplace, which should be launched in November and will have strong and diversified partners. We have already signed agreements with the brand leaders in the categories that will be prioritized (household items such as furniture, decor, towels and linens and domestic utensils, toys, children's line, cosmetics and personal care, automotive such as tires, pet shop, sports and leisure, food supplements, food and beverages).
Sales through online platforms have the potential to reach R$1 billion[1] in 2020 (almost three times the sales in 2019), mainly driven by the increase in operational capacity and the gain in food e-commerce market share- which was more than 71% in 3Q20 according to EBIT Nielsen (self-service food channel), proving the immense business potential.
[1] It is a mere estimate and should not be understood or treated as guidance.
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Grupo Éxito:
3Q20
GPA acquired 96.57% of the capital stock of Grupo Éxito on November 27, 2019. Hence, the results of Grupo Éxito are included in the GPA Consolidated results only in 3Q20, and changes in relation to 3Q19 are presented merely for comparison purposes.
(1) To reflect the calendar effect, the following reductions were made in 3Q20: 0 bps in Grupo Éxito, 0 bps in Colombia, 20 bps in Uruguay and 60 bps in Argentina.
(2) Includes the formats Surtimayorista, VIVA, Aliados and Other Businesses. (3) Same store presented in growth in constant currency.
Gross revenue reached R$ 6.0 billion, growing 23.7% in the quarter (+0.7% in constant currency). The omnichannel strategy evolved to all the countries where it operates demonstrating its capacity to quickly adapt to the pandemic scenario. Moreover, there was a gradual resumption of the non-food segment, which, just like the malls segment, had been affected by restrictions on circulation in major Colombian cities.
Same-store sales, excluding gas stations, grew 2.3%, affected by the restrictions on mobility in Colombia, which involved reduced business hours at stores, purchases limited to once a week in July and August and four times a week since September, dry law enforcement on some weekends and curfew in the main Colombian cities.
Following are the highlights by country:
● | Colombia: same-store sales in Colombia declined slightly from the same period last year, due to the stringent restrictions imposed by the government during most of 3Q20. Nevertheless, the innovative formats delivered a very positive performance, driven by the quality of fresh products and service excellence at stores, as well as the excellent performance of the omnichannel strategy, which witnessed record sales in the quarter. Around 73 stores - representing 30% of the sales – registered lower customer traffic due to the restrictions on circulation, and this was also observed in low-cost banners, which explain the unusually negative same-store performance in some formats. |
● | Uruguay: Solid same-store performance of 11.0%, mainly driven by the double-digit growth in the Devoto and Geant banners. This growth demonstrates the successful commercial actions, the consistent progress of the omnichannel strategy and the strong performance of the food category. |
● | Argentina: same-store sales of 12.7% despite a challenging scenario of major restrictions on circulation, reduced business hours of stores and stiff competition due to the decline in production among local suppliers, especially in technology-related categories. The omnichannel strategy continued to expand through the addition of new stores served by last miler partners (such as Rappi and Pedidos Ya). |
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Gross profit was R$ 1.3 billion, up 20.0% from 3Q19, with margin of 24.6%. Gross margin compared with pro forma margin in 3Q19 was explained by: (i) the challenges related to the pandemic scenario, which led to a lower distribution of royalties in Tuya (-100 bps); and (ii) the increase in the gross margin of the retail operation due to better terms negotiated with suppliers (+30 bps).
Selling, general and administrative expenses totaled R$ 971 million, equivalent to 18.2% of net sales revenue, stable in relation to the same period last year, demonstrating the Group's unwavering commitment to controlling expenses.
Adjusted EBITDA totaled R$ 436 million (+32.7% vs. 3Q19), with strong 60 bps growth in EBITDA margin, which stood at 8.2%. This evolution was due to the improvement in retail operation, as well as Tuya's higher net income through equity income explained by: i) reduction of royalties, ii) actions to reduce costs and renovation of key contracts and iii) reversal of provision for lower expected default.
(1) Earnings before interest, tax, depreciation and amortization. (2). Adjusted by Other Operating Income and Expenses. (3) Pro forma for comparison purposes only.
32 |
II. EQUITY INCOME
Consolidated equity income totaled R$91 million in 3Q20, an increase of R$73 million from the same period last year, driven mainly by the result of interest held in financial operations in Brazil (36% of FIC) and Colombia (50% of Tuya / Puntos Colombia).
III. OTHER INCOME AND EXPENSES
Other Income and Expenses resulted in an expense of R$33 million in 3Q20, compared to an expense of R$121 million in 3Q19. This amount is mainly composed of:
i) expenses incurred to optimize the portfolio of stores in operation in Brazil, totaling approximately R$100 million, which involved store closures and asset write-offs, projects and other restructuring costs, which mostly do not impact cash and contribute to the sales and profitability growth strategy;
ii) positive impact of approximately R$110 million from the capital gain on the sale and leaseback operations already announced in 2Q20.
iii) tax contingencies of approximately R$10 million and expenses of about R$35 million in the international operations.
It is important to mention that no reclassification was applied for expenses related to COVID-19 this quarter.
IV. FINANCIAL RESULT
The net financial result of GPA Consolidated was an expense of R$486 million, corresponding to 2.3% of net sales revenue, remaining stable in relation to 2Q20. The increase as a percentage of net revenue compared to last year was mainly due to the higher non-recurring financial revenue in 3Q19.
With the adoption of IFRS 16, the financial result now includes Interest on lease liabilities, which was an expense of R$242 million in the quarter.
33 |
The main variations in the net financial result were:
● | Finance income: lower than in 3Q19 due to the non-recurring effects that did not repeat in 3Q20, such as: the divestment of interest in Via Varejo, entry of funds for the acquisition of Grupo Éxito and income from inflation adjustment. |
● | Financial expenses (including the cost of selling receivables): increase from 3Q19, mainly due to interest expenses coming from the increase in gross debt; |
● | Net effect of exchange variation: increase in expenses compared to 3Q19 due to the depreciation of the Colombian peso in the period. |
V. NET INCOME
Consolidated GPA ended 3Q20 with consolidated net income from controlling shareholders of R$386 million, up 2.5 times from the same period last year, while net income from continuing operations doubled to R$339 million.
The 3Q20 results underline the success of the strategies executed by the group, resulting in sequential improvement at Multivarejo, excellent performance by Assaí and strong results from the Grupo Éxito.
34 |
VI. NET DEBT
To calculate the indicators in the table, the Company does not consider the lease liabilities related to IFRS 16.
(1) Adjusted EBITDA before IFRS 16 in the last 12 months.
Net debt adjusted by the balance of receivables not discounted reached R$ 9.6 billion in consolidated GPA, compared to R$ 2.2 billion in 3Q19, mainly reflecting the funds raised for the acquisition of Grupo Éxito.
The ratio of net debt/Adjusted EBITDA(1) was 2.1x at the end of 3Q20, in line with 2Q20 (2.2x) and within the Company’s expectations.
Cash balance at the end of the quarter was R$7.3 billion, equivalent to 124% of short-term debt, which represents an adequate level of liquidity in relation to the Company's future obligations. Balance of unsold receivables totaled R$194 million.
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VII. INVESTMENTS
Gross investments in the quarter totaled R$640 million, and went to: i) the opening of 7 new Assaí stores (5 organic and 2 conversions from Hiper), and 11 stores are currently under construction; ii) 1 Mini Extra store; iii) 1 gas station; iv) conversion of 8 Extra Super stores into Mercado Extra; v) conversion of 2 stores into Surtimayorista; and vi) conversion of 2 stores into Éxito Wow.
We reiterate our expectations of ending 2020 with 19 Assaí stores opened (16 organic and 3 conversions) and 38 renovations of Extra Super to Mercado Extra in Brazil. At Grupo Éxito, we expect to open, renovate and convert between 5 and 7 stores by the end of the year, with the focus on innovative models: Éxito WOW, Carulla FreshMarket and Surtimayorista.
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VIII. STORE PORTFOLIO CHANGES BY BANNER
In Brazil, 7 Assaí stores (5 organic and 2 conversions from Extra Hiper), 1 Mini Extra and 1 gas station were opened, while 8 Extra Super were converted to Mercado Extra. Continuing the portfolio adjustment process, 1 Hiper store, 4 Extra Super stores and 18 drugstores were closed. At Grupo Éxito, 2 stores were converted to the cash and carry format under the Surtimayorista banner and 2 Hipers were converted into the Éxito Wow model. Ten stores were closed: 6 Éxito and 3 Surtimax (Colombia) and 1 Devoto (Uruguay).
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IX. CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet
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Income Statement - 3rd Quarter 2020
(1) Consolidated includes results of other complementary businesses; (2) Equity income includes Cdiscount’s results in the Consolidated figures; (3) Net income after non-controlling interest; (4) Adjusted for Other Operating Income and Expenses.
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Cash Flow – Consolidated (*)
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X. BREAKDOWN OF SALES BY BUSINESS - BRAZIL
(1) Includes sales by Extra Supermercado, Mercado Extra, Extra Hiper and Compre Bem. (2) Includes sales by Mini Extra and Minuto Pão de Açúcar.
(3) Includes sales by Gas stations, Drugstores, Delivery and rental revenue from commercial centers. (4) GPA includes the results of James Delivery, Stix Fidelidade and Cheftime
XI. BREAKDOWN OF SALES (% of Net Sales) - BRAZIL
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3Q20 Results Conference Call and Webcast
Thursday, October 29, 2020
2:00 p.m. (Brasília) | 1:00 p.m. (New York) | 5:00 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:
Adjusted EBITDA: Measure of profitability calculated by excluding Other Operating Income and Expenses from EBITDA. Management uses this measure in its analysis as it believes it eliminates nonrecurring expenses and revenues and other nonrecurring items that could compromise comparability and analysis of results.
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.
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 in the market, as applicable. |
Equity instruments that will or may be settled with the shares of the Company and its subsidiaries are only included in the calculation when their settlement has a dilutive impact on earnings per share.
EBITDA: EBITDA is calculated in accordance with Instruction 527 issued by the Securities and Exchange Commission of Brazil (CVM) on October 4, 2012.
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.
Food – Brazil: Amounts reported refer to the sum of Assaí and Multivarejo operations.
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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.
Same-store growth: Same-store growth, as mentioned in this document, is adjusted by the calendar effect in each period
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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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”, “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 is controlled 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 the pandemic of COVID-19 (Coronavirus) and its impacts on its operations. Several actions were taken by management, among which we highlight the creation of a crisis committee formed by the senior management, which takes decisions in line with the recommendations of Health and 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 home office, among other decisions.
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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Since the beginning of the COVID-19 outbreak, our stores have remained open, in addition to the significant increase 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 our supply chain, and our suppliers continued to deliver their products in 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.
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 impairment test on June 30, 2020 (see Note 16) ; There were no new elements in the quarter ended September 30, 2020 that denote the need for the Company to review the asset impairment test |
· | We assessed the recoverability of receivables from credit card companies, customers, galleries in our stores, real estate rentals and no need to record additional provisions to those already registered; |
· | In relation to inventories, we do not expect any adjustment impacting their realizable amount; |
· | Financial instruments already reflect the market assumptions in their valuation, and there are no additional exposures. The Company is not exposed to significant financing denominated in US dollars; |
· | The Company does not expect obtaining new financing as a consequence of the pandemic; 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.
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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1.3. | Sale and Leaseback |
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$91 was received. On September 30, 2020, the Company concluded the sale of 5 of the 6 stores. The parties entered into lease agreements for the 5 properties, with a term of 10 years, renewable for the same period, ensuring the continuity of GPA operations in properties with sustainable financial conditions.
On March 5, 2020, 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. (“TRX”), pursuant to the signing of a “Private Instrument of Commitment of Purchase and Sale of Real Estate Properties and Real Surface Law Institution” (“Instrument”). The Instrument initially foresees the sale of 43 properties of the Company in various tranches, for the total amount of R$1,246.
· | On May 29, 2020, the Company concluded the sale of 5 properties |
· | On June 29, 2020, the Company concluded the sale of 7 properties |
· | On July 22, 2020, the Company concluded the sale of another 16 properties |
· | On July 30, 2020, the Company concluded the sale of the remaining 11 properties, whose transfer was completed on August 28, 2020. |
The Company completed the sale of 39 properties for a total amount of R$1,183, which 1,179 already received. Four properties of non-relevant value from the total volume were not sold. The parties entered into lease agreements for each property, with a term of 15 years, renewable for the same period.
1.4. | Study about the Company's partial spin-off |
At a meeting of the Board of Directors held on September 9, 2020, the beginning of studies for the segregation of the Company and its wholly-owned subsidiary Sendas Distribuidora (Potential Transaction) was authorized. The spin-off will be preceded by the transfer of the shareholding currently held by Sendas in Éxito to CBD. The purpose of the Potential Transaction is to unlock the full potential of the Company's cash & carry (cash and carry) and traditional retail businesses, allowing them to operate autonomously, with separate management, focus on the business model and market opportunities. In addition, the Potential Transaction will allow direct access to the capital market and other sources of financing for each of the businesses. With the implementation of the Potential Transaction, the shares issued by Sendas held by the Company will be distributed to the Company's shareholders, in the exact proportion of the interests they hold in the Company's share capital. The distribution will take place after Sendas obtains the listing of its shares in the Novo Mercado segment of B3 SA - Brasil, Bolsa, Balcão, whose application for registration took place on October 7, 2020, together with the listing of ADRs representing Sendas shares on the New York Stock Exchange (NYSE).
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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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.
The individual and consolidated interim financial information for the nine months period ended on September 30, 2020 were approved by the Board of Directors on October 28, 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 September 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.
2.1 | Restatement of Statement of operations and Statement of cash flow on September 30, 2019 |
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 September 30, 2019 and the cash flows for the same period to allow comparison with the information financial statements presented on September 30, 2020.
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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Statement of operation
(Nine months period ended on September 30, 2020)
Parent Company | Consolidated | |||||||
09.30.2019 | 09.30.2019 | |||||||
As originally presented | IFRS16 effects | Restated | As originally presented | IFRS16 effects | Restated | |||
Cost of sales | (13,822) | 3 | (13,819) | (30,817) | 3 | (30,814) | ||
Gross profit | 5,061 | 3 | (5,064) | 8,497 | 3 | 8,500 | ||
Operating income (expenses) | ||||||||
Selling expenses | (3,383) | 3 | (3,380) | (5,118) | 2 | (5,116) | ||
Depreciation and amortization | (717) | 16 | (701) | (1,011) | 14 | (997) | ||
Equity in earnings | 729 | (1) | 728 | (9) | - | (9) | ||
Other operation expenses, net | (212) | 1 | (211) | (243) | 1 | (242) | ||
Profit from operations before net financial expenses | 928 | 22 | 950 | 1,313 | 20 | 1,333 | ||
Net financial expenses | (694) | (57) | (751) | (709) | (56) | (765) | ||
Income before income tax and social | 234 | (35) | 199 | 604 | (36) | 568 | ||
Income tax and social contribution | 169 | 8 | 177 | (205) | 9 | (196) | ||
Net income from continued operations | 403 | (27) | 376 | 399 | (27) | 372 | ||
Net income from discontinued operations | 329 | (8) | 321 | 365 | (8) | 357 | ||
Net income for the period | 732 | (35) | 697 | 764 | (35) | 729 | ||
Attributable: | ||||||||
Controlling shareholders – continuing operations | 403 | (27) | 376 | 399 | (27) | 372 | ||
Controlling shareholders – discontinued operations | 329 | (8) | 321 | 333 | (8) | 325 | ||
Total of Controlling shareholders | 732 | (35) | 697 | 732 | (35) | 697 | ||
Non-controlling shareholders – discontinued operations | 32 | - | 32 | |||||
Total of non-controlling shareholders | 32 | - | 32 | |||||
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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Statement of operation
(Quarter ended on September 30,2020)
Parent Company | Consolidated | |||||||
09.30.2019 | 09.30.2019 | |||||||
As originally presented | IFRS16 effects | Restated | As originally presented | IFRS16 effects | Restated | |||
Cost of sales | (4,692) | 1 | (4,691) | (10,643) | 1 | (10,642) | ||
Gross profit | 1,566 | 1 | 1,567 | 2,881 | 1 | 2,882 | ||
Operating income (expenses) | ||||||||
Selling expenses | (1,092) | 2 | (1,090) | (1,696) | (9) | (1,705) | ||
Depreciation and amortization | (243) | 5 | (238) | (348) | 7 | (341) | ||
Equity in earnings | 395 | (3) | (392) | 18 | - | 18 | ||
Profit from operations before net financial expenses | 336 | 5 | 341 | 456 | (1) | 455 | ||
Net financial expenses | (218) | (20) | (238) | (147) | (17) | (164) | ||
Income before income tax and social | 118 | (15) | 103 | 309 | (18) | 291 | ||
Income tax and social contribution | 64 | 5 | 69 | (127) | 8 | (119) | ||
Net income from continued operations | 182 | (10) | 172 | 182 | (10) | 172 | ||
Net income from discontinued operations | (16) | (3) | (19) | (16) | (3) | (19) | ||
Net income for the period | 166 | (13) | 153 | 166 | (13) | 153 | ||
Attributable: | ||||||||
Controlling shareholders – continuing operations | 182 | (10) | 172 | 182 | (10) | 172 | ||
Controlling shareholders – discontinued operations | (16) | (3) | (19) | (16) | (3) | (19) | ||
Total of Controlling shareholders | 166 | (13) | 153 | 166 | (13) | 153 | ||
Statement of Cash Flows
(Nine months period ended on September 30, 2020)
Parent Company | Consolidated | ||||||
09.30.2019 | 09.30.2019 | ||||||
As originally presented | IFRS16 effects | Restated | As originally presented | IFRS16 effects | Restated | ||
Net income for the period | 732 | (35) | 697 | 764 | (35) | 729 | |
Deferred income tax (note 20) | (17) | (8) | (25) | 157 | (9) | 148 | |
Loss (gain) on disposal of property, plant and equipment | 47 | 2 | 49 | 99 | 3 | 102 | |
Depreciation/ Amortization | 807 | (19) | 788 | 1,115 | (15) | 1,100 | |
Interest and inflation adjustments | 666 | 74 | 740 | 1,158 | 80 | 1,238 | |
Equity in earnings | (729) | 1 | (728) | (7) | - | (7) | |
Gain (loss) on write-off of lease liabilities | (73) | (3) | (76) | (97) | (3) | (100) | |
Gain in disposal of subsidiaries | (608) | 10 | (598) | (608) | 10 | (598) | |
Taxes and Social Contributions Payable | (30) | (2) | (32) | 52 | (2) | 50 | |
Payments of lease liability | (632) | (20) | (652) | (1,173) | (29) | (1,202) |
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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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. | 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 September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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4.2. | 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 nine months period ended on September 30, 2020 were the same as those adopted in the individual and consolidated financial statements for the year ended December 31, 2019.
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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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 | |||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | |||
Cash and banks – Brazil | 91 | 171 | 171 | 249 | ||
Cash and banks - Abroad (*) | 119 | 84 | 1,807 | 3,109 | ||
Short-term investments - Brazil (**) | 3,080 | 2,608 | 5,246 | 4,471 | ||
Short-term investments - Abroad (***) | - | - | 59 | 125 | ||
3,290 | 2,863 | 7,283 | 7,954 |
(*) As of September 30, 2020, they refer to (i) funds from the Éxito group, of which R$86 in Argentine pesos, R$342 in Uruguay pesos and R$1,122 in Colombian pesos; (ii) Company funds invested in the abroad, in dollars in the amount of R$143 and R$114 in Colombian pesos.
(**) Short-term investments as September 30, 2020 refer substantially to highly liquid investments accruing interest corresponding to a weighted average rate of 97.57% (89.94% on December 31, 2019) of the Interbank deposit Certificate ("CDI").
(***) Refers to amounts deposited abroad, in local currency equivalent to R$10 in Uruguay and R$49 in Colombia.
7. | Trade receivables |
The detailed information on trade receivables was presented in the annual financial statements for 2019, in note 7.
Parent Company | Consolidated | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Credit card companies | 66 | 24 | 131 | 42 | |
Credit card companies - related parties (note 11.2) | 54 | 13 | 63 | 24 | |
Sales vouchers | 78 | 70 | 517 | 446 | |
Private label credit card | 18 | 56 | 24 | 70 | |
Receivables from related parties (note 11.2) | 18 | 21 | - | 12 | |
Receivables from suppliers | 68 | 74 | 79 | 166 | |
Allowance for doubtful accounts (note 7.1) | - | (1) | (49) | (32) | |
302 | 257 | 765 | 728 | ||
Current | 259 | 256 | 717 | 727 | |
Noncurrent | 43 | 1 | 48 | 1 |
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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7.1. | Allowance for doubtful accounts |
Parent Company | Consolidated | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
At the beginning of the period | (1) | (1) | (32) | (5) | |
Allowance booked for the period | (32) | (13) | (71) | (261) | |
Write-off of receivables | 33 | 13 | 60 | 280 | |
Deconsolidation Via Varejo | - | - | - | (19) | |
Foreign currency translation adjustment | - | - | (6) | - | |
At the end of the period | - | (1) | (49) | (5) |
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 | |
09.30.2020 | 814 | 473 | 285 | 29 | 9 | 18 |
12.31.2019 | 760 | 609 | 79 | 21 | 5 | 46 |
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 | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Accounts receivable from insurers | 35 | 68 | 41 | 72 | |
Receivable from sale of subsidiaries | 76 | 83 | 76 | 83 | |
Rental receivable | 45 | 42 | 229 | 113 | |
Accounts receivable - Via Varejo | 266 | 49 | 266 | 49 | |
Assets sale | 212 | 15 | 229 | 128 | |
Other | 104 | 80 | 214 | 143 | |
Allowance for doubtful other receivables (note 8.1) | (10) | (13) | (12) | (15) | |
728 | 324 | 1,043 | 573 | ||
Current | 100 | 168 | 365 | 381 | |
Noncurrent | 628 | 156 | 678 | 192 | |
8.1. | Allowance for doubtful accounts |
Parent Company | Consolidated | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
At the beginning of the period | (13) | (14) | (15) | (16) | |
Write-off of receivables | 3 | 2 | 3 | 6 | |
Deconsolidation Via Varejo | - | - | - | (4) | |
At the end of the period | (10) | (12) | (12) | (14) |
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Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
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9. | Inventories |
The detailed information on inventories was presented in the annual financial statements for 2019, in note 9.
Parent Company | Consolidated | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Stores | 2,130 | 2,240 | 5,125 | 4,698 | |
Distribution centers | 1,299 | 1,149 | 1,744 | 1,583 | |
Inventories – Éxito Group | - | - | 2,964 | 2,254 | |
Real Estate Inventory – Éxito Group | - | - | 136 | 190 | |
Real estate inventories | - | - | 1 | 1 | |
Losses with obsolescence and losses (note 9.1) | (39) | (31) | (100) | (95) | |
3,390 | 3,358 | 9,870 | 8,631 |
9.1. | Allowance for losses on inventory obsolescence and damages |
Parent Company | Consolidated | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
At the beginning of the period | (31) | (31) | (95) | (65) | |
Additions | (41) | (2) | (37) | (48) | |
Write-offs | 33 | 7 | 36 | 59 | |
Foreign currency translation adjustment | - | - | (4) | - | |
Deconsolidation Via Varejo | - | - | - | 8 | |
At the end of the period | (39) | (26) | (100) | (46) |
10. | Recoverable taxes |
The detailed information on recoverable taxes was presented in the annual financial statements for 2019, in note 10.
Parent Company | Consolidated | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
ICMS (note 10.1) | 1,436 | 1,420 | 2,697 | 2,621 | |
PIS/COFINS | 305 | 462 | 418 | 854 | |
Social Security Contribution - INSS | 314 | 291 | 348 | 321 | |
Income tax and Social Contribution (*) | 132 | 61 | 595 | 472 | |
Other | 27 | 17 | 35 | 49 | |
Other taxes – Éxito Group | - | - | 140 | 77 | |
Total | 2,214 | 2,251 | 4,233 | 4,394 | |
Current | 657 | 516 | 1,791 | 1,692 | |
Noncurrent | 1,557 | 1,735 | 2,442 | 2,702 | |
(*) Includes Éxito’s amount of R$370 (R$340 on December 31, 2019).
55 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
(**) On August 28, 2020, the Supreme Court, in general repercussion, recognized the incidence of social security contributions on the constitutional one-third of vacations payment. The Company has been following the development of these issues, and together with its legal advisors, concluded that the elements so far do not impact the expectation of realization. The amount involved for the Company and consolidated is equivalent to R$ 158 and R$ 169 respectively on September 30, 2020.
10.1. | ICMS expectation schedule (net of provision for non realization in the consolidated) |
In | Parent Company | Consolidated |
Up to one year | 217 | 633 |
From 1 to 2 years | 190 | 528 |
From 2 to 3 years | 163 | 505 |
From 3 to 4 years | 164 | 266 |
From 4 to 5 years | 160 | 174 |
More than 5 years | 542 | 591 |
1,436 | 2,697 |
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 September 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 |
11.1Management | 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 nine months ended on September 30, 2020 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 (*) | 63,241 | 11,880 | - | - | 3,042 | 1,352 | 66,283 | 13,232 | |||
Executive officers | 30,063 | 24,427 | 8,381 | 9,939 | 8,740 | 12,662 | 47,184 | 47,028 | |||
Fiscal Council | 202 | - | - | - | - | - | 202 | - | |||
93,506 | 36,307 | 8,381 | 9,939 | 11,782 | 14,014 | 113,669 | 60,260 |
(*) 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 September 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 | (67) | (46) | ||||
Euris | - | - | - | - | - | - | 2 | 1 | (3) | - | ||||
Helicco | - | - | - | - | - | - | - | - | - | (4) | ||||
Subsidiaries: | - | |||||||||||||
Éxito | - | - | 2 | - | - | - | - | - | 8 | - | ||||
Novasoc Comercial | - | - | 67 | 54 | - | - | - | - | 1 | 2 | ||||
Sendas Distribuidora | 18 | 8 | 139 | 83 | 6 | 11 | - | 2 | 89 | 45 | ||||
SCB Distribuição e Comércio | 5 | 9 | 8 | - | - | - | - | (1) | - | |||||
Via Varejo | - | - | - | - | - | - | - | - | - | |||||
Stix Fidelidade | - | 25 | - | 24 | - | 1 | (75) | - | ||||||
Cheftime | - | - | 20 | 4 | - | - | 3 | - | - | - | ||||
James Intermediação | - | - | 52 | 4 | 2 | - | 13 | - | 100 | - | ||||
GPA M&P | - | - | - | - | - | - | 11 | 14 | - | (1) | ||||
GPA Logistica | - | - | 85 | 68 | 1 | 2 | 67 | 61 | 1 | 1 | ||||
Bellamar | - | - | 1 | 1 | - | - | - | - | - | - | ||||
Associates | - | |||||||||||||
FIC | 54 | 13 | 28 | 25 | 8 | 22 | - | - | 42 | 64 | ||||
Other related parties | ||||||||||||||
Greenyellow do Brasil Energia e Serviços Ltda(“Greenyellow”) | - | - | - | - | - | - | 119 | 132 | (34) | (26) | ||||
Casino Group | 8 | 2 | - | 2 | 1 | - | - | (7) | - | |||||
Others | - | - | 1 | 1 | - | - | - | - | - | - | ||||
Total | 72 | 34 | 431 | 248 | 43 | 36 | 216 | 234 | 54 | 35 | ||||
57 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | (67) | (46) | ||||
Euris | - | - | - | - | - | - | 2 | 1 | (5) | - | ||||
Helicco Participações | - | - | - | - | - | - | - | - | - | (4) | ||||
Associates | ||||||||||||||
FIC | 63 | 24 | 37 | 36 | 16 | 39 | - | - | 96 | 114 | ||||
Puntos Colombia | - | - | 36 | 28 | - | - | 48 | 43 | (80) | - | ||||
Tuya | - | - | 27 | 26 | - | - | - | - | 17 | - | ||||
Other related parties | ||||||||||||||
Greenyellow | - | - | - | - | - | - | 120 | 134 | (58) | (26) | ||||
Casino Group | 12 | 8 | 8 | 2 | 1 | 24 | 13 | (26) | - | |||||
Others | - | - | 1 | 1 | - | - | - | - | - | - | ||||
Total | 63 | 36 | 109 | 104 | 18 | 40 | 194 | 215 | (123) | 38 | ||||
58 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 and 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 | 711 | 88 | (18) | (141) | 640 |
Dividends and interest of own capital | (310) | (11) | - | - | (321) |
Stock options | 3 | - | - | - | 3 |
Capital increase | 150 | - | 53 | 45 | 248 |
Capital increase with property and equipment | 178 | - | - | 7 | 185 |
Others movements | (9) | - | - | - | (9) |
Share of other comprehensive income | 1,729 | - | - | (181) | 1,548 |
Balances at 09.30.2020 | 9,547 | 376 | 312 | (576) | 9,659 |
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 | 775 | 16 | 71 | (25) | (109) | 728 |
Investment write-off Via Varejo | (2) | (1,361) | - | - | (492) | (1,855) |
Dividends and interest on own capital | (50) | - | (9) | - | - | (59) |
Stock options | 1 | 3 | - | - | - | 4 |
Capital increase | - | - | - | 142 | 14 | 156 |
Capital increase with property and equipment | 67 | - | - | 14 | (5) | 76 |
Others movements | - | - | - | - | 20 | 20 |
Share of other comprehensive income | (34) | (9) | (43) | |||
Assets held for sale and discontinued operations | - | 1,342 | - | - | 492 | 1,834 |
Balances at 09.30.2019 – restated | 4,848 | - | 269 | 206 | (323) | 5,000 |
(*) Includes the effects of on the provision for losses on investments in associates in Luxco of R$618 on September, 30 2020 (R$373 on September 30, 2019).
Consolidated | ||
09.30.2020 | 09.30.2019 | |
At beginning of period | 223 | (75) |
Share of profit of associates – Continuing operations | (55) | (9) |
Share of profit of associates – Discontinued operations | - | 16 |
Share of other comprehensive income | (116) | (9) |
Capital increase | 51 | - |
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 | 198 | (102) |
59 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 September 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 September 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 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 |
The information regarding the business combination and goodwill was disclosed in the 2019 annual financial statements, which was restated on October 28, 2020 and includes the final adjustments to the PPA (see 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, though the transactions with corporate reorganization purpose historically have been treated at cost by the Company. 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 15/IFRS 3.
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 September 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 execution 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.
12.30.2019 | |
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 September 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 assumed from Éxito, on the date of the business combination, are as follows:
Balance after allocation of purchase price | ||
Assets: | ||
Cash and cash equivalents | 6,062 | |
Trade receivables, net | 416 | |
Inventories, net | 2,765 | |
Recoverable taxes | 477 | |
Other current assets | 349 | |
Deferred income tax and social contribution | 1,353 | |
Related parties | 137 | |
Other noncurrent assets | 111 | |
Investments in associates | 316 | |
Investment properties | 2,972 | |
Property and equipment, net | 8,496 | |
Intangible assets, net | 3,009 | |
26,463 | ||
Liabilities: | ||
Payroll and related taxes | 283 | |
Trade payables, net | 4,545 | |
Taxes and contributions payables | 219 | |
a Borrowings and financing | 2,546 | |
Lease liabilities | 277 | |
Other current liabilities | 998 | |
Noncurrent borrowings and financing | 2,060 | |
Deferred income tax and social contribution | 2,100 | |
Provisions for contingencies | 103 | |
Noncurrent lease liabilities | 1,540 | |
Other noncurrent liabilities | 28 | |
14,669 | ||
Net assets | 11,764 | |
(-) Attributed to non-controlling shareholders | (2,558) | |
Net assets | 9,206 |
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, Surti Mayorista, Viva, Frescampo, Éxito and Carulla, in Argentina Libertad brand and in Uruguay Disco. In addition it was evaluated the own brands for products as Éxito, Bronzini, and Carulla. Tradenames have an indefinite useful life. |
62 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
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, it was evaluated a group of stores operated by Éxito that was considered significant. |
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:
Total consideration transferred - 96.57% | 9,371 |
Company at Fair value 100% | 9,706 |
Non-controlling interest Fair value | 335 |
Goodwill identified
As a result of: (i) measurement of the total consideration transferred by the acquisition of control of Éxito, (ii) measurement of the non-controlling interest, and (iii) measurement of identifiable assets and liabilities at fair value, the Company recorded goodwill for expected future profitability of R$165 arising from the acquisition mainly due to synergies and economies of scale. Goodwill is not deductible for tax purposes, except on the sale of the investment and is shown below:
Fair value of net assets acquired | 11,764 | |
(-) Attributed to non-controlling shareholders | (2,223) | |
9,541 | ||
Remaining non-controlling interest | (335) | |
9,206 | ||
Total consideration transferred for the acquisition of control of Éxito | 9,371 | |
Goodwill resulting from acquisition of the controlling interest of Éxito | 165 |
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 September 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 | Foreign Currency Translation adjustment |
Transfers | Balance at 09.30.2020 | |
Land | 656 | - | - | 133 | (18) | 771 |
Buildings | 2,385 | 5 | (46) | 490 | 3 | 2,837 |
Construction in progress | 10 | 7 | - | 2 | (3) | 16 |
Total | 3,051 | 12 | (46) | 625 | 18 | 3,624 |
Consolidated | |||||||
Balance at 09.30.2020 | Balance at 12.31.2019 | ||||||
Cost | Accumulated depreciation | Net | Cost | Accumulated depreciation | Net | ||
Land | 771 | - | 771 | 656 | - | 656 | |
Buildings | 2,891 | (54) | 2,837 | 2,400 | (15) | 2,385 | |
Construction in progress | 16 | - | 16 | 10 | - | 10 | |
Total | 3,678 | (54) | 3,624 | 3,066 | (15) | 3,051 |
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-nos | Remeasu-rement | Depre-ciation | Write-offs | Transfers (*) | Balance at 09.30.2020 | |
Land | 904 | - | - | - | (5) | (223) | 676 |
Buildings | 1,026 | 2 | - | (26) | (1) | (157) | 844 |
Leasehold improvements | 2,091 | 63 | - | (171) | (7) | (46) | 1,930 |
Machinery and equipment | 975 | 47 | - | (127) | (56) | 76 | 915 |
Facilities | 249 | 3 | - | (26) | (1) | (12) | 213 |
Furniture and fixtures | 377 | 23 | - | (47) | - | 7 | 360 |
Construction in progress | 119 | 295 | - | - | - | (331) | 83 |
Others | 33 | 9 | - | (9) | - | (5) | 28 |
Total | 5,774 | 442 | - | (406) | (70) | (691) | 5,049 |
Lease – right of use: | |||||||
Buildings | 3,578 | 603 | 271 | (318) | (338) | (6) | 3,790 |
3,578 | 603 | 271 | (318) | (338) | (6) | 3,790 | |
Total | 9,352 | 1,045 | 271 | (724) | (408) | (697) | 8,839 |
(*) Of this amount, R$374 are transfers to held for sale, R$138 for intangibles and R$185 for capital increase with fixed assets (see note 12).
64 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 09.30.2019 | |
Land | 991 | - | - | - | (9) | (15) | 967 |
Buildings | 1,179 | 4 | - | (31) | - | (58) | 1,094 |
Leasehold improvements | 2,033 | 32 | - | (149) | (35) | 181 | 2,062 |
Machinery and equipment | 861 | 119 | - | (124) | - | 86 | 942 |
Facilities | 275 | 13 | - | (29) | (1) | - | 258 |
Furniture and fixtures | 357 | 35 | - | (44) | (7) | 21 | 362 |
Construction in progress | 115 | 445 | - | - | - | (407) | 153 |
Others | 32 | 22 | - | (10) | - | (12) | 32 |
Total | 5,843 | 670 | - | (387) | (52) | (204) | 5,870 |
Lease – right of use: | |||||||
Buildings | 3,420 | 60 | 200 | (289) | (55) | - | 3,336 |
Equipment | 1 | - | - | (1) | - | - | - |
3,421 | 60 | 200 | (290) | (55) | - | 3,336 | |
Total | 9,264 | 730 | 200 | (677) | (107) | (204) | 9,206 |
Parent Company | |||||||||||
Balance at 09.30.2020 | Balance at 12.31.2019 | ||||||||||
Cost | Accumulated depreciation | Net | Cost | Accumulated depreciation | Net | ||||||
Land | 676 | - | 676 | 904 | - | 904 | |||||
Buildings | 1,425 | (581) | 844 | 1,659 | (633) | 1,026 | |||||
Leasehold improvements | 3,801 | (1,871) | 1,930 | 3,859 | (1,768) | 2,091 | |||||
Machinery and equipment | 2,504 | (1,589) | 915 | 2,445 | (1,470) | 975 | |||||
Facilities | 552 | (339) | 213 | 582 | (333) | 249 | |||||
Furniture and fixtures | 1,017 | (657) | 360 | 992 | (615) | 377 | |||||
Construction in progress | 83 | - | 83 | 119 | - | 119 | |||||
Others | 147 | (119) | 28 | 143 | (110) | 33 | |||||
Total | 10,205 | (5,156) | 5,049 | 10,703 | (4,929) | 5,774 | |||||
Lease – right of use: | |||||||||||
Buildings | 6,820 | (3,030) | 3,790 | 6,461 | (2,883) | 3,578 | |||||
Equipment | 37 | (37) | - | 37 | (37) | - | |||||
6,857 | (3,067) | 3,790 | 6,498 | (2,920) | 3,578 | ||||||
Total | 17,062 | (8,223) | 8,839 | 17,201 | (7,849) | 9,352 |
65 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 09.30.2020 | |
Land | 3,692 | 62 | - | - | (5) | (347) | 490 | 3,892 |
Buildings | 4,869 | 54 | - | (115) | (49) | (404) | 621 | 4,976 |
Leasehold improvements | 4,441 | 616 | - | (319) | (62) | 265 | 75 | 5,016 |
Machinery and equipment | 2,281 | 215 | - | (324) | (70) | 104 | 132 | 2,338 |
Facilities | 580 | 36 | - | (50) | (4) | (23) | 15 | 554 |
Furniture and fixtures | 1,007 | 76 | - | (143) | (4) | 43 | 58 | 1,037 |
Construction in progress | 275 | 521 | - | - | (6) | (507) | 26 | 309 |
Other | 74 | 14 | - | (21) | - | 5 | 1 | 73 |
Total | 17,219 | 1,594 | - | (972) | (200) | (864) | 1,418 | 18,195 |
Lease – right of use: | ||||||||
Buildings | 7,023 | 1,273 | 778 | (684) | (552) | - | 354 | 8,192 |
Equipment | 45 | 14 | (7) | (11) | (1) | - | 8 | 48 |
Land | 3 | - | - | - | - | - | - | 3 |
7,071 | 1,287 | 771 | (695) | (553) | - | 362 | 8,243 | |
Total | 24,290 | 2,881 | 771 | (1,667) | (753) | (864) | 1,780 | 26,438 |
(*) Of this amount, the main effects are R$730 for transfers to held for sale and R$141 for intangibles and (R$18) for investment properties
66 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 09.30.2019 | |
Land | 1,366 | 73 | - | - | (9) | 4 | - | 1,434 |
Buildings | 1,773 | 161 | - | (45) | 1 | (2) | (1) | 1,887 |
Leasehold improvements | 3,843 | 391 | - | (239) | (47) | 256 | (63) | 4,141 |
Machinery and equipment | 1,308 | 231 | - | (186) | (6) | 136 | (34) | 1,449 |
Facilities | 501 | 55 | - | (44) | (6) | 27 | (24) | 509 |
Furniture and fixtures | 595 | 72 | - | (70) | (8) | 60 | (16) | 633 |
Construction in progress | 176 | 593 | - | - | (1) | (620) | 63 | 211 |
Other | 59 | 24 | - | (18) | (1) | 4 | (4) | 64 |
Total | 9,621 | 1,600 | - | (602) | (77) | (135) | (79) | 10,328 |
Lease – right of use: | ||||||||
Buildings | 4,422 | 308 | 428 | (366) | (76) | 34 | (142) | 4,608 |
Equipment | 9 | - | - | (3) | - | - | - | 6 |
4,431 | 308 | 428 | (369) | (76) | 34 | (142) | 4,614 | |
Total | 14,052 | 1,908 | 428 | (971) | (153) | (101) | (221) | 14,942 |
67 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
Consolidated | |||||||||||
Balance at 09.30.2020 | Balance at 12.31.2019 | ||||||||||
Cost | Accumulated depreciation | Net | Cost | Accumulated depreciation | Net | ||||||
Land | 3,892 | - | 3,892 | 3,692 | - | 3,692 | |||||
Buildings | 5,889 | (913) | 4,976 | 5,712 | (843) | 4,869 | |||||
Leasehold improvements | 7,922 | (2,906) | 5,016 | 7,065 | (2,624) | 4,441 | |||||
Machinery and equipment | 5,373 | (3,035) | 2,338 | 4,864 | (2,583) | 2,281 | |||||
Facilities | 1,080 | (526) | 554 | 1,065 | (485) | 580 | |||||
Furniture and fixtures | 2,465 | (1,428) | 1,037 | 2,196 | (1,189) | 1,007 | |||||
Construction in progress | 309 | - | 309 | 275 | - | 275 | |||||
Other | 280 | (207) | 73 | 256 | (182) | 74 | |||||
27,210 | (9,015) | 18,195 | 25,125 | (7,906) | 17,219 | ||||||
Lease – right of use: | |||||||||||
Buildings | 12,386 | (4,194) | 8,192 | 10,655 | (3,632) | 7,023 | |||||
Equipment | 141 | (93) | 48 | 128 | (83) | 45 | |||||
Land | 7 | (4) | 3 | 6 | (3) | 3 | |||||
12,534 | (4,291) | 8,243 | 10,789 | (3,718) | 7,071 | ||||||
Total | 39,744 | (13,306) | 26,438 | 35,914 | (11,624) | 24,290 |
15.1. | Capitalized borrowing costs |
The amount of consolidated capitalized borrowing costs for the semester ended September 30, 2020 was R$9 (R$16 in the semester ended September 30, 2019).The rate used to determine the borrowing costs eligible for capitalization was 133.91% (102.31% on September 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 | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Restated | Restated | ||||
Additions | 1,045 | 730 | 2,881 | 1,908 | |
Lease | (603) | (60) | (1,287) | (308) | |
Capitalized borrowing costs | (2) | (5) | (9) | (21) | |
Intangible assets financing – Additions | (416) | (478) | (1,479) | (1,241) | |
Intangible assets financing – Payments | 517 | 496 | 1,603 | 1,343 | |
Total | 541 | 683 | 1,709 | 1,681 |
15.3. | Other information |
At September 30, 2020, the Company and its subsidiaries recorded in the cost of sales the amount of R$96 in the parent company (R$87 at September 30, 2019) and R$212 in consolidated (R$103 at September 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 September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
16. | Intangible assets |
The detailed information on 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 09.30.2020 | |
Goodwill | 501 | - | - | - | 1 | 502 |
Commercial rightsl | 46 | - | - | - | - | 46 |
Software and implementation | 749 | 68 | (98) | (1) | 137 | 855 |
1,296 | 68 | (98) | (1) | 138 | 1,403 | |
Lease-right of use: | ||||||
Right of use Paes Mendonça (*) | 557 | - | (27) | - | - | 530 |
Software | 56 | - | (16) | - | - | 40 |
613 | - | (43) | - | - | 570 | |
Total | 1,909 | 68 | (141) | (1) | 138 | 1,973 |
Consolidated | |||||||
Balance at 12.31.2019 | Additions | Amorti-zation | Write-off | Foreign currency translation adjustment | Transfers | Balance at 09.30.2020 | |
Goodwill | 1,314 | - | - | - | 31 | - | 1,345 |
Brands | 3,062 | - | (1) | - | 599 | - | 3,660 |
Commercial rights | 136 | 6 | - | - | (1) | - | 141 |
Software | 888 | 132 | (129) | (1) | 15 | 141 | 1,046 |
5,400 | 138 | (130) | (1) | 644 | 141 | 6,192 | |
Lease-right of use: | |||||||
Right of use Paes Mendonça (*) | 780 | - | (33) | - | - | 747 | |
Software | 56 | 1 | (16) | - | - | - | 41 |
836 | 1 | (49) | - | - | - | 788 | |
Total | 6,236 | 139 | (179) | (1) | 644 | 141 | 6,980 |
(*) 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 September 30, 2020 is R$3,723 (R$3,720 on December 31, 2019) and accumulated amortization R$1,750 (R$1,811 on December 31, 2019). In the consolidated, the balance of the accumulated cost on September 30, 2020 is R$9,242 (R$8,494 on December 31, 2019) and accumulated amortization R$2,262 (R$2,258 on December 31, 2019).
69 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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.
There were no new elements in the quarter ended September 30, 2020 that denote the need for the Company to review the asset impairment test carried out on June 30, 2020.
16.2. | Additions to intangible assets for cash flow presentation purposes: |
Parent Company | Consolidated | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Additions | 68 | 100 | 139 | 218 | |
Lease Agreement | - | (1) | - | - | |
Intangible assets financing - Addition | - | - | - | (23) | |
Intangible assets financing - Payments | - | - | 3 | 46 | |
Total | 68 | 99 | 142 | 241 |
70 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | 09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | |||||
Debentures and promissory note | |||||||||
Debentures and Certificate of Agribusiness Receivables (note 17.4) |
CDI + 1.33% per year | 4,882 | 3,978 | 11,396 | 11,863 | ||||
4,882 | 3,978 | 11,396 | 11,863 | ||||||
Borrowings and financing | |||||||||
Local currency | |||||||||
BNDES | 4.07% per year | 3 | 4 | 21 | 27 | ||||
Working capital | CDI + 2.88% per year | 1,683 | 509 | 2,591 | 1,008 | ||||
Working capital | TR + 9.80 % per year | 15 | 15 | 90 | 99 | ||||
Swap contracts (note 17.7) | CDI + 0.03% per year | (2) | (2) | (13) | (12) | ||||
Borrowing cost | (14) | (9) | (28) | (22) | |||||
1,685 | 517 | 2,661 | 1,100 | ||||||
Foreign currency (note 17.5) | |||||||||
Working capital | USD + 3.02% per year | 926 | 845 | 1,209 | 846 | ||||
Working capital | IBR 3M + 3.7% | - | - | 2,057 | 323 | ||||
Working capital - Argentina | Pre: 31.15% | - | - | 32 | - | ||||
Credit letter | - | - | 24 | 12 | |||||
Swap contracts (note 17.7) | CDI + 0.82% per year | (223) | (15) | (313) | (15) | ||||
Swap contracts (note 17.7) | IBR 3M + 3.7% | - | - | (3) | (19) | ||||
NDF Contracts - Derivatives | - | - | - | (1) | |||||
Borrowing cost | - | - | (1) | (1) | |||||
693 | 830 | 3,011 | 1,145 | ||||||
Total | 7,260 | 5,325 | 17,068 | 14,108 | |||||
Current assets | 233 | 45 | 313 | 73 | |||||
Noncurrent assets | 2 | 2 | 13 | 13 | |||||
Current liabilities | 2,475 | 2,016 | 6,177 | 3,488 | |||||
Noncurrent liabilities | 5,020 | 3,356 | 11,217 | 10,706 |
71 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | 3,130 | 5,912 | |
Accrued interest | 211 | 588 | |
Accrued swap | (341) | (423) | |
Mark-to-market | - | 7 | |
Monetary and exchange rate changes | 338 | 417 | |
Borrowing costs | 8 | 41 | |
Interest paid | (175) | (624) | |
Payments | (1,361) | (3,278) | |
Swap paid | 125 | 142 | |
Adjustment in conversion to presentation currency | - | 178 | |
At September 30, 2020 | 7,260 | 17,068 | |
Parent Company | Consolidated | ||
At December 31, 2018 | 4,561 | 5,286 | |
Additions - working capital | 1,098 | 11,957 | |
Accrued interest | 241 | 442 | |
Accrued swap | (21) | (51) | |
Mark-to-market | - | 113 | |
Monetary and exchange rate changes | 33 | 79 | |
Borrowing costs | 7 | 10 | |
Interest paid | (210) | (353) | |
Payments | (12) | (2,395) | |
Swap paid | (3) | 47 | |
Deconsolidation Via Varejo | (217) | (137) | |
At September 30, 2019 | 5,477 | 14,998 |
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 | 3,523 | 6,272 | |
From 2 to 3 years | 1,170 | 4,022 | |
From 3 to 4 years | 169 | 458 | |
From 4 to 5 years | 169 | 451 | |
After 5 years | 1 | 51 | |
Subtotal | 5,032 | 11,254 | |
Borrowing costs | (14) | (50) | |
Total | 5,018 | 11,204 |
72 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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) | 09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | |
14th Issue of Debentures – CBD and CRA | No preference | 1,080 | 1,080,000 | 04/17/17 | 04/13/20 | - | - | - | 1,091 | - | 1,091 |
15th Issue of Debentures – CBD | No preference | 800 | 800,000 | 01/17/18 | 01/15/21 | 104.75% of CDI | 1,004 | 803 | 821 | 803 | 821 |
16th Issue of Debentures – CBD (1st serie) | No preference | 700 | 700,000 | 09/11/18 | 09/10/21 | 106% of CDI | 1,001 | 701 | 712 | 701 | 712 |
16th Issue of Debentures – CBD (2nd serie) | No preference | 500 | 500,000 | 09/11/18 | 09/12/22 | 107.4% of CDI | 1,002 | 501 | 508 | 501 | 508 |
17th Issue of Debentures – CBD | No preference | 2,000 | 2,000,000 | 01/06/20 | 01/06/23 | CDI + 1.45% per year | 1,008 | 2,016 | - | 2,016 | - |
4th Issue of Promissory Notes – CBD | No preference | 800 | 800 | 01/10/19 | 01/09/22 | 105.75% of CDI | 1,086,945 | 870 | 849 | 870 | 849 |
1th Issue of Promissory Notes – Sendas (1nd serie) | No preference | 50 | 1 | 07/04/19 | 07/03/20 | - | - | - | - | - | 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 ,998,286 | - | - | 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 | 52,998,286 | - | - | 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 | 52,998,286 | - | - | 265 | 258 |
1th Issue of Promissory Notes – Sendas (5nd serie) | No preference | 200 | 4 | 07/04/19 | 07/04/24 | CDI + 0.72% per year | 52,998,286 | - | - | 212 | 206 |
1th Issue of Promissory Notes – Sendas (6nd serie) | No preference | 200 | 4 | 07/04/19 | 07/04/25 | CDI + 0.72% per year | 52,998,286 | - | - | 212 | 206 |
1th Issue of Debentures – Sendas (1nd serie) | No preference | 2,000 | 2,000,000 | 09/04/19 | 08/20/20 | - | - | - | - | - | 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 | 1,004 | - | - | 2,008 | 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 | 1,005 | - | - | 2,009 | 2,047 |
Borrowing cost | (9) | (3) | (59) | (82) | |||||||
4,882 | 3,978 | 11,396 | 11,863 | ||||||||
Current liabilities | 1,517 | 1,130 | 3,316 | 2,287 | |||||||
Noncurrent liabilities | 3,365 | 2,848 | 8,080 | 9,576 |
73 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
17.5. | Borrowings in foreign currencies |
On September 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 maturity as the loan and protect the interest and principal and are signed with the same economic group. The weighted average annual rate of CDI in September 2020 was 3.54% (6.27% in September 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 September 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.
74 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Financial assets: | |||||
Amortized cost | |||||
Related parties – assets | 431 | 248 | 109 | 104 | |
Trade receivables and other receivables | 887 | 531 | 1,532 | 924 | |
Others assets | - | - | 47 | 51 | |
Fair value through profit or loss | |||||
Cash and cash equivalents | 3,290 | 2,863 | 7,283 | 7,954 | |
Financial instruments | 235 | 47 | 337 | 86 | |
Others assets | - | - | 2 | 2 | |
Fair value through other comprehensive income | |||||
Trade receivables with credit card companies and sales vouchers | 143 | 50 | 276 | 377 | |
Others assets | - | - | 30 | 19 | |
Financial liabilities: | |||||
Other financial liabilities - amortized cost | |||||
Related parties –liabilities | (216) | (234) | (194) | (215) | |
Trade payables | (3,762) | (5,022) | (11,971) | (14,887) | |
Financing for purchase of assets | (42) | (127) | (128) | (231) | |
Debentures and promissory notes | (4,882) | (3,978) | (11,396) | (11,863) | |
Borrowings and financing | (1,672) | (503) | (4,696) | (1,347) | |
Lease liability | (5,295) | (4,921) | (10,250) | (8,667) | |
Fair value through profit or loss | |||||
Loans and financing (Hedge accounting) | (941) | (861) | (1,299) | (945) | |
Financial instruments | - | (30) | (5) | (47) | |
Disco del Uruguay put option (18.3) | - | - | (581) | (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 September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
There were no changes as to objectives, policies or processes during the nine-month ended on September 30, 2020. The capital structure is presented as follows:
Parent Company | Consolidated | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Cash and cash equivalents | 3,290 | 2,863 | 7,283 | 7,954 | |
Financial instruments | 235 | 17 | 332 | 39 | |
Borrowings and financing | (7,495) | (5,342) | (17,391) | (14,155) | |
Other liabilities with related parties (*) | (111) | (124) | (111) | (124) | |
Net debt | (4,081) | (2,586) | (9,887) | (6,286) | |
Shareholders’ equity | (13,091) | (10,940) | (16,242) | (13,548) | |
Net debt to equity ratio | 31% | 24% | 61% | 46% |
(*) 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 September 30, 2020.
a) Parent Company
Up to 1 Year | 1 – 5 years | More than 5 years | Total | |
Borrowings and financing | 999 | 1,786 | 184 | 2,969 |
Debentures and promissory note | 1,616 | 3,534 | - | 5,150 |
Derivative financial instruments | (235) | (2) | - | (237) |
Lease liability | 1,052 | 3,336 | 6,586 | 10,974 |
Trade payables | 3,762 | - | - | 3,762 |
Total | 7,194 | 8,654 | 6,770 | 22,618 |
b) Consolidated
Up to 1 Year | 1 – 5 years | More than 5 years | Total | |
Borrowings and financing | 2,948 | 3,414 | 261 | 6,623 |
Debentures and promissory note | 3,672 | 8,926 | - | 12,598 |
Derivative financial instruments | (314) | (12) | (2) | (328) |
Lease liability | 1,908 | 6,256 | 11,869 | 20,033 |
Trade payables | 11,971 | - | - | 11,971 |
Total | 20,185 | 18,584 | 12,128 | 50,897 |
76 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
(iii) | Derivative financial instruments |
Consolidated | ||||||
Notional value | Fair value | |||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | |||
Swap with hedge | ||||||
Hedge object (debt) | 1,001 | 955 | 1,299 | 944 | ||
Long position (buy) | ||||||
Prefixed rate | TR+9.80% per year | 127 | 127 | 90 | 99 | |
US$ + fixed | USD+3.02% per year | 874 | 828 | 1,209 | 846 | |
1,001 | 955 | 1,299 | 945 | |||
Short position (sell) | ||||||
CDI + 0.82% per year | (1,001) | (955) | (973) | (917) | ||
Hedge position - asset | - | - | 326 | 57 | ||
Hedge position - liability | - | - | - | (29) | ||
Net hedge position | - | - | 326 | 28 |
Realized gains and losses and unrealized gains and losses on these contracts during the nine-month ended on September 30, 2020 are recorded as financial income (expenses), net and the balance receivable at fair value is R$326 (balance payable of R$28 as of December 31, 2019), recorded in line item “Financial” in the assets and “Borrowings and financing” in the liabilities.
The effects of hedge at fair value through the result of the nine-month period ended on September 30, 2020 resulted in a gain of R$463 (loss of R$66 on September 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 1.96% 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 September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
Market projection | ||||||||||
Operations | Risk (CDI variation) | Balance at 09.30.2020 | Scenario I | Scenario II | Scenario III | |||||
Fair value hedge of fixed rate | CDI + 0.03% per year | (77) | (211) | (214) | (218) | |||||
Fair value hedge of exchange rate | CDI + 0.82% per year | (896) | (909) | (912) | (921) | |||||
Debentures and promissory notes | CDI + 1.33% per year | (11,455) | (11,787) | (11,870) | (11,953) | |||||
Bank loans | CDI + 2.28% per year | (2,591) | (2,669) | (2,688) | (2,707) | |||||
Total borrowings and financing exposure | (15,019) | (15,576) | (15,684) | (15,799) | ||||||
Cash and cash equivalents (*) | 97.57% of CDI | 5,246 | 5,364 | 5,394 | 5,423 | |||||
Net exposure | (9,773) | (10,212) | (10,290) | (10,376) | ||||||
Net effect – loss | (439) | (517) | (603) |
(*) 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 1.702%.
Scenario II: 0.1702% increase in IBR and for Libor at 90 days an increase of 0.014825%
Scenario III: 0.1702% decrease in IBR and for Libor at 90 days a decrease of 0.014825%
Maket projection | ||||||||
Transactions | Balance 09.30.2020 | Scenario I | Scenario II | Scenario III | ||||
Bank loans and swap | 2,107 | 2,107 | 2,074 | 2,076 |
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 September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
Carrying amount | Fair value | ||
09.30.2020 | 09.30.2020 | Level | |
Financial assets and liabilities | |||
Trade receivables with credit card companies and sales vouchers | 276 | 276 | 2 |
Swaps of annual rate between currencies | 313 | 313 | 2 |
Swaps of annual rate | 11 | 13 | 2 |
Forward between Currencies | 8 | - | 2 |
Borrowings and financing (FVPL) | (1,299) | (1,299) | 2 |
Borrowings and financing and debentures (amortized cost) | (16,092) | (12,539) | 2 |
Disco Del Uruguay put option (*) | (581) | (581) | 3 |
Total | (17,364) | (13,817) |
(*) 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 nine-month period ended on September 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 September 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, Corficolombia, Santander, Banco Popular and Banco Occidente.
The consolidated position of outstanding derivative financial instruments are presented in the table below:
Consolidated | ||||
Risk | Reference value | Due date | 09.30.2020 | 03.31.2019 |
Debt | ||||
USD - BRL | US$ 160 | 2020 | 233 | 16 |
USD - BRL | US$ 50 | 2021 | 80 | - |
Interest rate - BRL | R$ 21 | 2026 | 2 | 2 |
Interest rate - BRL | R$ 106 | 2027 | 11 | 10 |
Derivatives - Fair value hedge – Brazil | 326 | 28 | ||
Debt | ||||
USD – COP | - | 2020 | - | 20 |
USD - COP | US$ 2 | 2022 | 2 | 1 |
Interest rate - COP | COP 49,950 | 2020 | (1) | (1) |
Interest rate - COP | COP 383,235 | 2021 | (3) | (1) |
Interest rate - COP | COP 132,917 | 2022 | (1) | - |
(3) | 19 | |||
Trade payables | ||||
EUR - COP | EUR 3 | 2020 | 1 | - |
USD - COP | USD 24 | 2020 | 4 | (8) |
USD - COP | USD 23 | 2021 | 4 | - |
9 | (8) | |||
Derivatives – Éxito Group | 6 | 11 |
80 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Taxes payable in installments - Law 11,941/09 | 302 | 354 | 304 | 355 | |
Taxes payable in installments – PERT | 156 | 162 | 156 | 162 | |
ICMS | 53 | 50 | 98 | 96 | |
PIS and COFINS | 30 | 4 | 40 | 7 | |
Provision for income tax and social contribution | 74 | - | 242 | - | |
Withholding Income Tax | 4 | 1 | 6 | 1 | |
INSS | 5 | 1 | 13 | 6 | |
Other | 15 | 7 | 77 | 60 | |
Taxes – Éxito Group | - | - | 175 | 220 | |
639 | 579 | 1,111 | 907 | ||
Current | 326 | 203 | 797 | 531 | |
Noncurrent | 313 | 376 | 314 | 376 | |
19.2. Maturity schedule of taxes payable in installments in noncurrent liabilities:
Parent Company and Consolidated | |
From 1 to 2 years | 79 |
From 2 to 3 years | 77 |
From 3 to 4 years | 65 |
From 4 to 5 years | 4 |
After 5 years | 89 |
314 |
81 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Restated | Restated | ||||
Income before income tax and social contribution | 532 | 199 | 804 | 568 | |
Expense of income tax and social contribution at the nominal rate | (133) | (50) | (287) | (250) | |
Tax penalties | (8) | (11) | (9) | (13) | |
Share of profit of associates | 160 | 182 | 12 | 5 | |
Interest on own capital (*) | (78) | 57 | 28 | 57 | |
Tax benefits | 4 | 4 | 21 | 17 | |
Other permanent differences | 3 | (5) | 23 | (12) | |
Effective income tax and social contribution | (52) | 177 | (212) | (196) | |
Income tax and social contribution for the period: | |||||
Current | (42) | 207 | (543) | (112) | |
Deferred | (10) | (30) | 331 | (84) | |
Deferred income tax and social contribution expense | (52) | 177 | (212) | (196) | |
Effective rate | 9.77% | -88.94% | 26.37% | 34.51% |
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 September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
20.2. | Breakdown of deferred income tax and social contribution |
Parent Company | |||||||
09.30.2020 | 12.31.2019 | ||||||
Asset | Liability | Net | Asset | Liability | Net | ||
Tax losses and negative basis of social contribution | 106 | - | 106 | 140 | - | 140 | |
Provision for risks | 227 | - | 227 | 212 | - | 212 | |
Goodwill tax amortization | - | (123) | (123) | - | (123) | (123) | |
Mark-to-market adjustment | - | (7) | (7) | - | (4) | (4) | |
Intangible, property and equipment | - | (154) | (154) | - | (149) | (149) | |
Unrealized gains with tax credits | - | (98) | (98) | - | (101) | (101) | |
Net leasing of the right to use | 320 | - | 320 | 252 | - | 252 | |
Other | 3 | - | 3 | 58 | - | 58 | |
Deferred income tax and social contribution assets (liabilities) | 656 | (382) | 274 | 662 | (377) | 285 | |
Compensation | (382) | 382 | - | (377) | 377 | - | |
Deferred income tax and social contribution assets (liabilities), net | 274 | - | 274 | 285 | - | 285 |
Consolidated | |||||||
09.30.2020 | 12.31.2019 | ||||||
Asset | Liability | Net | Asset | Liability | Net | ||
Tax losses and negative basis of social contribution | 502 | - | 502 | 453 | - | 453 | |
Provision for risks | 391 | - | 391 | 321 | - | 321 | |
Goodwill tax amortization | - | (632) | (632) | - | (604) | (604) | |
Mark-to-market adjustment | - | (7) | (7) | - | (7) | (7) | |
Intangible, property and equipment | - | (1,596) | (1,596) | - | (1,366) | (1,366) | |
Unrealized gains with tax credits | 123 | (186) | 63 | 82 | (322) | (240) | |
Net leasing of the right to use | 494 | - | 494 | 356 | - | 356 | |
Cash flow hedge | - | (65) | (65) | - | (80) | (80) | |
Other | 51 | - | 51 | 117 | - | 117 | |
Presumed tax on equity - Éxito | 227 | - | 227 | 192 | - | 192 | |
Deferred income tax and social contribution assets (liabilities) | 1,788 | (2,486) | (698) | 1,521 | (2,379) | (858) | |
Compensation | (1,449) | 1,449 | - | (1,184) | 1,184 | - | |
Deferred income tax and social contribution assets (liabilities), net | 339 | (1,037) | (698) | 337 | (1,195) | (858) |
(*) Originating mainly from the added value of Éxito. See note nº13.
83 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | 128 | 311 |
From 1 to 2 years | 68 | 173 |
From 2 to 3 years | 44 | 196 |
From 3 to 4 years | 44 | 223 |
From 4 to 5 years | 44 | 207 |
Above 5 years | 329 | 678 |
656 | 1,788 |
20.3.Changes | in deferred income tax and social contribution |
Parent Company | Consolidated | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Restated | Restated | ||||
At the beginning of the period | 285 | 266 | (858) | (225) | |
Effects on net income: | |||||
Expense for the period – continuing operations | (10) | (30) | 331 | 84 | |
Expense for the period – discontinued operations | - | - | - | (122) | |
Income tax related to OCI - discontinued operations | - | 55 | - | 315 | |
Effects on net equity: | - | ||||
Income tax on other comprehensive income - Continued operations | - | 1 | - | 1 | |
Conversion currency adjustment | - | - | (172) | 122 | |
Assets held for sale and discontinued operations | - | - | - | 17 | |
Other | (1) | - | 1 | - | |
At the end of the period | 274 | 292 | (698) | 24 |
84 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | 22 | 87 | 35 | 144 |
Payments | (4) | (48) | (34) | (86) |
Reversals | (20) | (52) | (23) | (95) |
Monetary adjustment | 4 | 21 | 13 | 38 |
Balance at September 30, 2020 | 619 | 244 | 78 | 941 |
Tax | Social security and labor | Civil and Regulatory | Total | |
Balance at December 31, 2018 | 679 | 231 | 77 | 987 |
Additions | 118 | 91 | 47 | 256 |
Payments | (5) | (42) | (22) | (69) |
Reversals | (125) | (74) | (28) | (227) |
Monetary adjustment | 16 | 21 | 11 | 48 |
Balance at September 30, 2019 | 683 | 227 | 85 | 995 |
21.2.Consolidated |
Tax | Social security and labor | Civil and Regulatory | Total | |
Balance at December 31, 2019 | 841 | 319 | 145 | 1,305 |
Additions | 22 | 107 | 64 | 193 |
Payments | (8) | (50) | (58) | (116) |
Reversals | (22) | (62) | (35) | (119) |
Monetary adjustment | 6 | 27 | 14 | 47 |
Foreign currency translation adjustment | 14 | 3 | 3 | 20 |
Balance at September 30, 2020 | 853 | 344 | 133 | 1,330 |
Tax | Social security and labor | Civil and Regulatory | Total | |
Balance at December 31, 2018 | 828 | 291 | 116 | 1,235 |
Additions | 138 | 406 | 140 | 684 |
Payments | (5) | (313) | (78) | (396) |
Reversals | (244) | (176) | (77) | (497) |
Monetary adjustment | 16 | 57 | 19 | 92 |
Deconsolidation Via Varejo | 111 | 28 | 6 | 145 |
Balance at September 30, 2019 | 844 | 293 | 126 | 1,263 |
85 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 “basket 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$45 as of September 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$280 (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 110/2001
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 September 30, 2020 is R$100 (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 September 30, 2020 is R$337 (R$349 as of December 31, 2019).
Éxito Group
The subsidiary Éxito and its subsidiaries are parties to tax lawsuits related to value added tax, property tax and industry and commerce taxes in the amount of R$91 on September 30, 2020 (R$78 as of December 31, 2019).
86 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 September 30, 2020, the Company recorded a provision of R$344 (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 September 30, 2020, the amount accrued for these lawsuits is R$46 (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 September 30, 2020 the amount of this provision is R$30 (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 September 30, 2020 (R$17 on December 31, 2019). |
· | In relation to the provisioned amounts remaining for other civil jurisdiction matters on September 30, 2020, it is R$41 (R$36 on December 31, 2019). |
Total civil lawsuits and others as of September 30, 2020 amount to R$133 (R$145 as of December 31, 2019).
87 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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$10,923 as September 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 September 30, 2020 (R$453 as of December 31, 2019). The lawsuits are under administrative and court discussions. On August 28, 2020, the Supreme Court, in general repercussion, recognized the incidence of social security contributions on the constitutional third of vacations as constitutional. The Company has been following the development of these issues, and together with its legal advisors, concluded that the elements so far do not require a provision to be registered. |
· | 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$1,039 as of September 30, 2020 (R$1,055 as of December 31, 2019). |
· | COFINS, PIS and IPI – the Company has been challenged about compensations not approved, fine for failure to comply with accessory obligations, disallowance of COFINS and PIS credits, IPI requirement on resale of imported products, among others less significant taxes. These lawsuits await decision at the administrative and court levels. The amount involved in these assessments is R$2,008 in September 30, 2020 (R$2,022 as of December 31, 2019). Regarding the IPI assessments, there was a judgment in August 2020 in the STF that decided against taxpayers, however, in the analysis of the specific cases by our legal advisors, we consider that the risk of loss remained as possible. |
· | 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) arising from financed sales, and (v) among other matters. The total amount of these assessments is R$6,734, as of September 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$185 in September 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$412 in September 30, 2020 (R$403 as of December 31, 2019). |
· | The subsidiary Éxito and its subsidiaries have an amount of R$87 of lawsuits with probability of possible losses on September 30, 2020 (R$72 as of December 31,2019), mostly related to tax matters. |
88 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
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$1,428 in September 30, 2020 (R$1,409 in December 31, 2019).
The Company is responsible for the legal processes of GLOBEX prior to the association with Casas Bahia (Via Varejo). As of September 30, 2020, the amount involved in tax proceedings is R$452 (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 September 30, 2020 the estimated amount, in case of success in all lawsuits, is approximately R$187 (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 | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Tax | 135 | 172 | 201 | 242 | |
Labor | 452 | 424 | 502 | 474 | |
Civil and other | 24 | 43 | 57 | 79 | |
Total | 611 | 639 | 760 | 795 |
21.8. | Guarantees |
Consolidated | ||||||||
Lawsuits | Property and equipment | Letter of Guarantee | Total | |||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | |||
Tax | 750 | 843 | 10,607 | 9,162 | 11,357 | 10,005 | ||
Labor | - | - | 759 | 539 | 759 | 539 | ||
Civil and other | 9 | 11 | 526 | 469 | 535 | 480 | ||
Total | 759 | 854 | 11,892 | 10,170 | 12,651 | 11,024 |
The cost of guarantees (letters of guarantee and guarantee insurance) is approximately 0.50% per year of the amount of the lawsuits and is recorded as expense.
89 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 and for the Sendas subsidiary the amount of R$117.
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.
CBD has already recognized, based on the documentation analyzed so far, R$231 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$277.
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 September 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$10,250 as of September 30, 2020 (R$8,667 as of December 31, 2019), as shown in the table below:
Parent Company | Consolidated | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Lease liability –minimum rental payments: | |||||
Up to 1 year | 533 | 533 | 1,031 | 937 | |
1 - 5 years | 1,684 | 1,663 | 3,120 | 2,936 | |
Over 5 years | 3,078 | 2,725 | 6,101 | 4,794 | |
Present value of lease agreements | 5,295 | 4,921 | 10,252 | 8,667 | |
Future charges | 5,679 | 5,466 | 9,781 | 8,007 | |
Future value of lease agreements | 10,974 | 10,387 | 20,033 | 16,674 |
PIS and COFINS embedded in the present value of lease agreements
| 322 | 299 | 477 | 413 |
PIS and COFINS embedded in the gross value of lease agreements | 667 | 632 | 965 | 856 |
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 10.01% in the nine-month period ended September 30, 2020 (12.83% as of September 30, 2019).
If the Company had adopted the calculation methodology projecting the inflation embedded in the nominal incremental rate and bringing it to present value by the nominal incremental rate, the average percentage of inflation to be projected per year would have been approximately 6.25%. The average term of the contracts considered is 14.7 years. For international subsidiaries, the average nominal incremental rate is 7.1%, with 3.5% of built-in inflation. The average term of the contracts considered is 11.6 years.
91 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
22.2. | Movement of leasing liability |
Parent Company | Consolidated | ||
At December 31, 2019 | 4,921 | 8,667 | |
Additions | 603 | 1,287 | |
Remeasurement | 271 | 771 | |
Accrued interest | 402 | 717 | |
Payments | (711) | (1,260) | |
Anticipated lease contract closure | (182) | (316) | |
Transfer to subsidiary | (9) | - | |
Conversion currency adjustment | - | 386 | |
At September 30, 2020 | 5,295 | 10,252 | |
Current | 533 | 1,031 | |
Noncurrent | 4,762 | 9,221 | |
Parent Company | Consolidated | ||
At December 31, 2018 | 4,670 | 5,787 | |
Additions | 61 | 308 | |
Remeasurement | 200 | 428 | |
Accrued interest | 400 | 671 | |
Payments | (652) | (1,202) | |
Anticipated lease contract closure | (76) | (101) | |
Desconsolidation Via Varejo | - | 136 | |
At September 30, 2019 | 4,603 | 6,027 | |
Current | 438 | 587 | |
Noncurrent | 4,120 | 5,440 |
22.3. | Lease expense on variable rents, low value assets and short-term agreements |
Parent Company | Consolidated | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Expenses (income) for the period: | Restated | Restated | |||
Variable (0.1% to 4.5% of sales) | 39 | 20 | 51 | 32 | |
Sublease rentals (*) | (128) | (149) | (141) | (163) |
(*) Refers to lease agreements receivable from commercial shopping malls.
92 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
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 | ||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||
Future revenue agreement | 12 | 10 | 61 | 10 | |
Additional or extended warranties | 12 | 16 | 13 | 16 | |
Services rendering agreement - Allpark | 8 | 9 | 8 | 9 | |
Revenue from credit card operators and banks | 10 | 42 | 49 | 84 | |
Back lights | - | - | 38 | 142 | |
Gift Card | 8 | 6 | 80 | 99 | |
Others | 1 | 1 | 41 | 31 | |
51 | 84 | 290 | 391 | ||
Current | |||||
Noncurrent | 30 | 60 | 268 | 365 | |
21 | 24 | 22 | 26 |
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-in capital stock, on September 30, 2020, is represented by 268,336 (267,997 on December 31, 2019) thousands of registered shares with no par value. On March 2, the process was concluded conversion of preferred shares into common shares 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, May 13, 2020 and July 29, 2020 it was approved a capital increase of R$8 (R$32 on December 31, 2019) through the issuance of 339 thousands common shares (1,152 thousands of preferred shares on December 31,2019). On September 30, 2020, the capital stock is R$ 6,865 (R$ 6,857 on December 31, 2019).
93 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
24.2. | Stock option plan for common shares current |
09.30.2020 | |||||||
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 | (443) | (55) | 39 |
Series C4 | 05/31/17 | 05/31/20 | 56.78 | 537 | (316) | (60) | 161 |
Series B5 | 05/31/18 | 05/31/21 | 0.01 | 594 | (152) | (49) | 393 |
Series C5 | 05/31/18 | 05/31/21 | 62.61 | 594 | (142) | (58) | 394 |
Series B6 | 05/31/19 | 05/31/22 | 0.01 | 434 | (13) | (29) | 392 |
Series C6 | 05/31/19 | 05/31/22 | 70.62 | 331 | (5) | (37) | 289 |
3,027 | (1,071) | (288) | 1,668 |
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 | (69) | 42.60 | |
Exercised during the period | (416) | 19.12 | |
Outstanding at the end of the period | 1,668 | 32.50 | 0,99 |
At September 30, 2020 | 1,668 | 32.50 | 0,99 |
The recorded amounts at the Parent Company and Consolidated’s statement of operations at the September 30, 2020 were R$17 (R$27 at the December 31, 2019).
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$187 and (ii) Colombian pesos to Reais, corresponding to the investment by CBD Sendas in the subsidiary Éxito generating a gain of R$1,558. The total effect in the Parent Company was R$1,371 (R$151 on December 31, 2019).
94 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
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 | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Gross sales | |||||
Goods | 21,721 | 20,342 | 67,057 | 42,475 | |
Services rendered | 310 | 296 | 1,238 | 331 | |
Sales returns and cancellations | (157) | (148) | (283) | (189) | |
21,874 | 20,490 | 68,012 | 42,617 | ||
Taxes on sales | (1,911) | (1,607) | (6,275) | (3,303) | |
Net operating revenues | 19,963 | 18,883 | 61,737 | 39,314 |
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 | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Restated | Restated | ||||
Cost of inventories | (13,810) | (12,888) | (46,511) | (29,605) | |
Personnel expenses | (2,357) | (2,479) | (5,543) | (3,717) | |
Outsourced services | (339) | (346) | (779) | (492) | |
Functional expenses | (870) | (974) | (2,047) | (1,394) | |
Selling expenses | (722) | (718) | (1,581) | (1,026) | |
Other expenses | (454) | (344) | (1,120) | (499) | |
(18,552) | (17,749) | (57,581) | (36,733) | ||
Cost of sales | (14,767) | (13,819) | (48,466) | (30,814) | |
Selling expenses | (3,257) | (3,380) | (7,589) | (5,116) | |
General and administrative expenses | (528) | (550) | (1,526) | (803) | |
(18,552) | (17,749) | (57,581) | (36,733) | ||
95 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Restated | Restated | ||||
Tax installments and other tax risks | (39) | (111) | (58) | (129) | |
Restructuring expenses (*) | (277) | (127) | (405) | (128) | |
Losses on disposals of fixed assets (**) | 359 | 27 | 324 | 15 | |
Covid-19 spending on prevention(***) | (82) | - | (200) | - | |
Others | (2) | - | (2) | - | |
Total | (41) | (211) | (341) | (242) |
(*) 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$174 (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 | ||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||
Restated | Restated | ||||
Finance expenses: | |||||
Cost of debt | (209) | (249) | (574) | (337) | |
Cost of discounting receivables | (44) | (80) | (70) | (108) | |
Monetary restatement loss | (133) | (95) | (280) | (103) | |
Interest on lease liability | (399) | (384) | (702) | (482) | |
Other finance expenses | (60) | (64) | (169) | (80) | |
Total financial expenses | (845) | (872) | (1,795) | (1,110) | |
Financial income: | |||||
Income from short term investments | 58 | 47 | 164 | 81 | |
Monetary restatement gain | 75 | 68 | 235 | 256 | |
Other financial income | 3 | 6 | 10 | 8 | |
Total financial income | 136 | 121 | 409 | 345 | |
Total | (709) | (751) | (1,386) | (765) |
The gains or losses on derivative financial instruments are recorded as cost of debt and disclosed in Note 18.
96 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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.
09.30.2020 | 09.30.2019 | ||
Restated | |||
Basic numerator | |||
Net income allocated to common shareholders – continued operations | 480 | 372 | |
Net income allocated to common shareholders - discontinued operations | 101 | 325 | |
Net income allocated to common shareholders | 581 | 697 | |
Basic denominator (millions of shares) | |||
Weighted average of shares | 268 | 267 | |
Basic earnings per millions of shares (R$) – continued operations | 1.79194 | 1.39393 | |
Basic earnings per millions of shares (R$) - discontinued operations | 0.37706 | 1.21781 | |
Basic earnings per millions of shares (R$) - total | 2.16900 | 2.61174 | |
Diluted numerator | |||
Net income allocated to common shareholders – continued operations | 480 | 372 | |
Net income allocated to common shareholders - discontinued operations | 101 | 325 | |
Net income allocated to common shareholders | 581 | 697 | |
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$) – continued operations | 1.78972 | 1.39136 | |
Diluted earnings per millions of shares (R$) – discontinued operations | 0.37659 | 1.21555 | |
Diluted earnings per millions of shares (R$) – total | 2.16631 | 2.60691 |
97 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
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:
· | 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 September 30, 2019. The other businesses are composed of the results of James, Cheftime, Stix and Cnova N.V. 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 September 30, 2020 is included in the table below:
98 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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 | |||||||||||
09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | 09.30.2020 | 09.30.2019 | ||||||
Restated | Restated | Restated | Restated | ||||||||||||||
Net operating revenue | 20,792 | 19,508 | 25,254 | 19,804 | 15,653 | - | - | - | 38 | 2 | 61,737 | 39,314 | |||||
Gross profit | 5,339 | 5,289 | 4,082 | 3,212 | 3,835 | - | - | - | 15 | (1) | 13,271 | 8,500 | |||||
Depreciation and amortization | (794) | (715) | (360) | (281) | (522) | - | - | - | (4) | (1) | (1,680) | (997) | |||||
Share of profit of subsidiaries and associates | 88 | 76 | - | - | 18 | - | - | - | (51) | (85) | 55 | (9) | |||||
Operating income | 723 | 445 | 1,303 | 1,002 | 303 | - | - | - | (139) | (114) | 2,190 | 1,333 | |||||
Net financial expenses | (711) | (604) | (180) | (145) | (494) | - | - | - | (1) | (16) | (1,386) | (765) | |||||
Profit(loss) before income tax and social contribution | 12 | (159) | 1,123 | 857 | (191) | - | - | - | (140) | (130) | 804 | 568 | |||||
Income tax and social contribution | (66) | 73 | (264) | (276) | 115 | - | - | - | 3 | 7 | (212) | (196) | |||||
Net income (loss) for continued operations | (54) | (86) | 859 | 581 | (76) | - | - | - | (137) | (123) | 592 | 372 | |||||
Net income (loss) for discontinued operations | 102 | 321 | - | - | (1) | - | - | 36 | - | - | 101 | 357 | |||||
Net income (loss) of year end | 48 | 235 | 859 | 581 | (77) | - | - | 36 | (137) | (123) | 693 | 729 | |||||
09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | 09.30.2020 | 12.31.2019 | ||||||
Current assets | 8,347 | 8,002 | 6,367 | 5,292 | 6,028 | 6,664 | - | - | 77 | 10 | 20,819 | 19,968 | |||||
Noncurrent assets | 15,506 | 15,568 | 8,281 | 7,475 | 18,583 | 15,438 | - | - | 51 | 26 | 42,421 | 38,507 | |||||
Current liabilities | 8,923 | 11,557 | 4,249 | 4,317 | 9,666 | 7,252 | - | - | 113 | 9 | 22,951 | 23,135 | |||||
Noncurrent liabilities | 12,159 | 9,810 | 3,422 | 2,295 | 8,463 | 9,686 | - | - | 3 | 1 | 24,047 | 21,792 | |||||
Shareholders' equity | 2,771 | 2,203 | 6,977 | 6,155 | 6,482 | 5,164 | - | - | 12 | 26 | 16,242 | 13,548 |
99 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 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:
09.30.2020 | 09.30.2019 | ||
Brazil | 46,084 | 39,314 | |
Assai | 25,254 | 19,803 | |
Extra / Compre Bem | 12,349 | 11,357 | |
Pão de Açúcar | 5,370 | 5,103 | |
Proximidade | 900 | 835 | |
Stations / Drugstores / Delivery | 1,690 | 1,741 | |
Other business | 521 | 475 | |
Êxito Group (*) | 15,653 | - | |
Total net operating revenue | 61,737 | 39,314 |
(*) Includes sales in Colombia of R$ 11,950, in Uruguay of R$ 2,719 and in Argentina of R$ 984.
31. | Non cash transactions |
During the nine months ended on September 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. | Assets held for sale |
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 | |||||||
09.30.2020 | 12.31.2019 | 09.30.2019 | 12.31.2019 | |||||
Property/lands held for sale | 78 | 171 | 78 | 171 | ||||
Éxito real estate enterprises | - | - | 32 | 52 | ||||
Assets held for sale and discontinued operations | 78 | 171 | 110 | 223 |
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 September 30, 2020, the Company transferred the deed (legal title), at the buyer's request, in accordance with and as provided for in the contract, recognized a gain of R$174 (see note 27) recorded in the result line with fixed assets. The transaction resulted in the recognition of an amount receivable of R$200, presented in note 8, maturing in September 2023, for which the Company obtained bank guarantee as a guarantee of receipt of such amount.
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.
100 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
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 | 09.30.2020 | 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 | 101 | (91) | |
Gain on the sale of discontinued operations (note 12.3) | - | 398 | |
Profit from discontinued operations presented in the consolidated income statement of the Company | 101 | 357 | |
Attributable: | |||
Controlling shareholders of the Company | 101 | 325 | |
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$101 on September 30, 2020 (R$78 on September 30, 2019). The amount of R$101 includes the amount of R$231 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).
101 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
Other information deemed as relevant by the Company
Shareholder position - 09/30/2020 | |||||||
SHAREHOLDERS 'POSITION OF THE COMPANY'S CONTROLLERS, UP TO THE LEVEL OF INDIVIDUAL | |||||||
COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO (Publicly held company) | Shareholding at 09/30/2020 (In units) Total | ||||||
Shareholder | Common Shares | Preferred Shares | Total | ||||
Number | % | Number | % | Number | % | ||
Wilkes Participações S/A | 94,019,178 | 35.04% | 0 | 0.00% | 94,019,178 | 35.04% | |
Jean-Charles Naouri* | 1 | 0.00% | 0 | 0.00% | 1 | 0.00% | |
Geant International BV* | 9,423,742 | 3.51% | 0 | 0.00% | 9,423,742 | 3.51% | |
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.* | 13,396,829 | 4.99% | 0 | 0.00% | 13,396,829 | 4.99% | |
Board of Directors | 563,804 | 0.21% | 0 | 0.00% | 563,804 | 0.21% | |
Board of Executive Officers | 241,807 | 0.09% | 0 | 0.00% | 241,807 | 0.09% | |
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 | 143,381,075 | 53.43% | 0 | 0.00% | 143,381,075 | 53.43% | |
Total | 268,336,226 | 100.00% | 0 | 0.00% | 268,336,226 | 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% | |
102 |
Companhia Brasileira de Distribuição
Notes to the interim financial information September 30, 2020 (In millions of Brazilian reais, unless otherwise stated) |
|
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 09/30/2020 (In units) Total | ||||||
Shareholder | Common Shares | Preferred Shares | |||||
Number | % | Number | Number | % | Number | ||
Controlling parties | 110,476,573 | 41.17% | - | - | 110,476,573 | 41.17% | |
Management | |||||||
Board of Directors | 563,804 | 0.21% | - | - | 563,804 | 0.21% | |
Board of Executive Officers | 241,807 | 0.09% | - | - | 241,807 | 0.09% | |
Fiscal Council | 37,078 | 0.01% | - | - | 37,078 | 0.01% | |
Treasury Shares | 239,060 | 0.09% | - | - | 239,060 | 0.09% | |
Other Shareholdersas | 156,777,904 | 58.43% | - | - | 156,777,904 | 58.43% | |
Total | 268,336,226 | 100.00% | - | - | 268,336,226 | 100.00% | |
Outstanding Shares | 157,620,593 | 58.74% | - | - | 157,620,593 | 58.74% | |
CONSOLIDATED SHAREHOLDING OF CONTROLLING PARTIES AND MANAGEMENT AND OUTSTANDINGSHARES | Shareholding at 09/30/2019 (In units) Total | ||||||
Shareholder | Common Shares | Preferred Shares | |||||
Number | % | Number | Number | % | Number | ||
Controlling parties | 99,619,230 | 99.94% | 10,857,343 | 6.46% | 110,476,573 | 41.26% | |
Management | |||||||
Board of Directors | - | 0.00% | 563,804 | 0.34% | 563,804 | 0.21% | |
Board of Executive Officers | - | 0.00% | 93,924 | 0.06% | 93,924 | 0.04% | |
Treasury Shares | - | 0.00% | 232,586 | 0.14% | 232,586 | 0.09% | |
Other Shareholdersas | 60,621 | 0.06% | 156,338,615 | 93.01% | 156,399,236 | 58.41% | |
Total | 99,679,851 | 100.00% | 168,086,272 | 100.00% | 267,766,123 | 100.00% | |
Outstanding Shares | 60,621 | 0.06% | 156,996,343 | 93.40% | 157,056,964 | 58.65% |
[1] It is a mere estimate and should not be understood or treated as guidance.
103 |
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: October 28, 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.