Earnings Release 4Q12 and 2012 - B2W · 2016-08-30 · Earnings Release 4Q12 and 2012 1 B2W DIGITAL ANNOUNCES GROWTH OF 38% IN THE CONSOLIDATED GROSS REVENUE COMBINED WITH AN IMPROVEMENT

Earnings Release 4Q12 and 2012

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B2W DIGITAL ANNOUNCES GROWTH OF 38% IN THE CONSOLIDATED GROSS REVENUE COMBINED WITH AN IMPROVEMENT OF 21 DAYS IN

THE CONSOLIDATED WORKING CAPITAL IN 4Q12

Rio de Janeiro, March 7th

, 2012 – B2W Digital (BOVESPA: BTOW3), the leading online retail company in Brazil, formed from the merger between Americanas.com and Submarino, announces today its results for the 4

th quarter of 2012 (4Q12) and for the year of 2012. The

accounting information that serves as basis for the comments that follow are presented according to the international financial reporting standards (IFRS), to the rules issued by the Brazilian Securities Exchange Commission (CVM), to the Novo Mercado listing rules and in Reais (R$). The follow analysis refer to the Consolidated results and the comparisons refer to the 4

th quarter of 2011 (4Q11) and the year of

2011, except where otherwise indicated.

B2W Digital’s portfolio is composed by the brands Americanas.com, Submarino, Shoptime, B2W Viagens, Ingresso.com, Submarino Finance,

BLOCKBUSTER® Online and SouBarato, offering over 35 categories of products and services through the Internet, telesales, catalogs, TV

and kiosks.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Executive Summary 4Q12 – Comparison to 4Q11

Gross Revenues (R$ million)

1,320

1,821

4Q11 4Q12

Consolidated

Gross Profit (R$ million)

274

362

4Q11 4Q12

Consolidated

Net Working Capital (Days)

119

98

12/31/2011 12/31/2012

Consolidated

PROCON-SP Complaints Ratings

6,355

2,586

2011 2012

4T12 4T11 Var. (%) Financial Highlights (R$ million) 2012 2011 Var. (%)

1,588.2 1,176.6 35.0% Net Revenue 4,812.4 4,232.1 13.7%

362.3 273.6 32.4% Gross Profit 1,145.5 1,059.7 8.1%

22.8% 23.3% -0.5 p.p. Gross Margin (%NR) 23.8% 25.0% -1.2 p.p.

109.6 101.7 7.8% Adjusted EBITDA 331.2 415.4 -20.3%

6.9% 8.6% -1.7 p.p. Adjusted EBITDA Margin (%NR) 6.9% 9.8% -2.9 p.p.

(43.7) (28.8) 51.7% Net Result (170.7) (89.2) 91.4%

-2.8% -2.4% -0.4 p.p. Net Margin (%NR) -3.5% -2.1% -1.4 p.p.

Consolidated Consolidated

Gross Revenue In 4Q12, the consolidated gross revenue reached R$ 1,821.4 million, a growth of 38.0%;

Net Revenue In 4Q12, the consolidated net revenue reached R$ 1,588.2 million, a growth of 35.0%;

Gross Profit In 4Q12, the consolidated gross profit reached R$ 362.3 million, a growth of 32.4% and the consolidated gross margin reached 22.8%;

Adjusted EBITDA In 4Q12, the consolidated adjusted EBITDA was R$ 109.6 million, a growth of 7.8%;

Improvement of 21 days in Consolidated Net Working Capital The consolidated net working capital at December 31, 2012 was 98 days, representing an improvement of 21 days when compared to the 119 days presented at December 31, 2011;

Evolution of the PROCON-SP Complaints Ratings In 2012, the number of complaints registered in PROCON-SP presented a significant reduction of 59% when compared to the year of 2011;

B2W was the winner of the “Consumidor Moderno” Award in 2 categories B2W, through its Submarino brand, won the ―Consumidor Moderno‖ Award in the ―Best Internet Shopping Experience‖ and ―Best Contact Experience‖ categories in 2012;

Submarino Card received the RA 1000 seal The Submarino Card received from Reclame Aqui the RA 1000 seal for its excelent Response, Solution and Evaluation ratings in the last-12-month indicator. Adjusted EBITDA (Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting).

.

53%

+32%

+38%

-59%

-21 days


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COMPANY STRUCTURE

B2W Digital is the leader in e-commerce in Brazil. Resulting from the merger between Americanas.com and

Submarino in 2006, the Company operates through a digital platform, with business that present a huge synergy

and a unique business model multichannel, multibrand and multibusiness.

B2W has a portfolio with the brands Americanas.com, Submarino, Shoptime, B2W Viagens, Ingresso.com,

Submarino Finance, BLOCKBUSTER® Online and SouBarato, that offer more than 35 categories of products

and services through the internet, telesales, catalogs, TV and kiosks distribution channels.

The following chart presents an integrated vision of B2W:


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MESSAGE FROM THE MANAGEMENT

Since it was founded, in 2006, B2W has undergone strong growth, intense transformation and a significant learning curve to confront the many changes observed in the Brazilian digital retail market. During this period, based on a digital platform for businesses with strong synergies, B2W more than doubled in size. With its unique multichannel, multibrand and multibusiness model, the Company faced the challenges of a market that was expanding and becoming more diversified every day — and therefore more competitive and complex. In 2012, the Company posted consolidated gross revenue of R$ 5.4 billion, representing a 15.3% growth when compared to the same period of the previous year. During the fourth quarter of 2012, the Company posted growth of 38.0%. During 2012, a number of important measures that were implemented made it possible for the Company to advance its strategy for moving closer to its clients — offering them the best purchase experience, the best delivery option and the best customer service. In the month of October 2012, four new Distribution Centers were opened and at least another 10 Distribution Centers will be inaugurated over the next three years (2013, 2014 and 2015). As a reward for the mobilization of the entire Company to provide the best digital experience in Latin America, B2W received a series of honors and awards in 2012. It placed first, through the Submarino brand, in three categories of the ―Reclame Aqui Service Quality" website’s annual award competition and in two categories of the prize offered by ―Consumidor Moderno‖ Magazine; and it was elected, through Americanas.com, the preferred brand of consumers in the city of Rio de Janeiro, according to the O Globo newspaper. However, the greatest recognition was the trust placed in it by all of the clients who purchased and approved the products and services offered by B2W. The Company is totally engaged to continue transforming its processes and investing in the infrastructure necessary to enable B2W to expand its competitive advantages, thereby enabling it to capture the innumerable e-commerce opportunities that will be presenting themselves in the forthcoming years. To be even closer to its clients the Company will invest more R$ 1 billion in the next three years (2013, 2014 and 2015) in logistics, technology and innovation. B2W is prepared for 2013, a year which already is replete with opportunities. During this year, the Company will seek new and superior efficiency levels, expanding all of its operations and moving forward with its strategy to get closer to the clients, that is offering the best Internet purchase experience in Brazil and Latin America. We would like to express our appreciation to all of our Associates, who made the difference during the year and are part of the best and most successful digital team in Latin America. Our staff, one of the Company's main assets, is made up of e-commerce pioneers — with active participation in the development of the industry in Brazil and who have a privileged strategic vision about the digital retail market — and by the most brilliant people in the market, the result of a strong recruiting and professional development program to attract talented individuals. We also would like to thank the support and trust of all of our clients, suppliers and shareholders. THE MANAGEMENT


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OPERATIONAL PERFORMANCE COMMENTS

EVOLUTION OF COMPLAINTS RATINGS In 2012, we verified a significant evolution in the public numbers of the customers’ complaints ratings, when compared to the same period of the preceding year, reflecting a great evolution of our operational and logistical processes, which are the basis of our growth. Regarding the number of complaints registered in PROCON (Foundation of Consumer Protection and Defense) São Paulo, there was a significant reduction of 59%. In this period, the number of complaints registered in SINDEC (National System of Consumer Protection), presented a significant reduction of 47%. We have also observed a great improvement in the complaint indicators on file with Rio de Janeiro Court System (TJRJ), with a reduction of 43%.

21,907

11,547

2011 2012

6,355

2,586

2011 2012

6,842

3,870

2011 2012

In addition, we highlight the evolution regarding complaints registered on the Reclame Aqui website. In the indicator of the last 6 months, Americanas.com, Submarino and Shoptime are the online retail brands with the best customer service evaluation. All the three websites had their reputation classified as ―GOOD‖ in this period.

Americanas.com Submarino ShoptimeReputation Good Good Good

Evaluation 5.95 5.70 6.23

Answered 97.5% 98.7% 99.4%

Solution 86.1% 83.7% 87.9%

Business 59.9% 59.0% 57.9%

Response

Time* 1.63 days 1.82 days 1.83 days

Reputation Good Good Good

Evaluation 5.66 5.49 5.83

Answered 98.7% 99.2% 99.7%

Solution 84.0% 82.3% 83.9%

Business 57.0% 58.0% 55.4%

Response

Time* 1.63 days 1.82 days 1.83 days

Reclame Aqui

6

Months

Evolution

6 months

x

12 months

12 Months

PROCON - SP

-59% -47%

-43%

SINDEC TJRJ

* The response time refers to the last 3 months.


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SUBMARINO CARD RECEIVED RA 1000 SEAL

B2W Digital, winner in three categories of the ―RA Service Quality‖ Award through the Submarino and Submarino Viagens brands, received in December 2012, the RA 1000 Seal through its Submarino Card for results measured over the previous 12 months.

The seal was awarded for excellent ratings of Response, Solution and Evaluation. Over the period, 100% of the complaints received were handled, with 92% of the cases resolved acceptably and 82% of the clients considering to continue doing business.

The RA1000 Seal was created to highlight companies with excellent service ratings on the Reclame Aqui consumer complaint website. The companies who have been awarded the Seal demonstrate to their consumers they are committed to effective post-sale service, raising the level of trust in their brands, products and services.

Moreover, B2W Digital, through its Submarino brand, won the Consumidor Moderno (magazine) Award for ―Best Internet Shopping Experience‖ and ―Best Contact Experience‖ categories for 2012.

NET REVENUE In 4Q12, the consolidated net revenue reached R$ 1,588.2 million compared to R$ 1,176.6 million in 4Q11, a growth of 35.0%.

In 2012, the consolidated net revenue reached R$ 4,812.4 million compared to R$ 4,232.1 in 2011, a growth of 13.7%.

4,232

4,812

2011 2012

1,177 1,588

4Q11 4Q12

GROSS PROFIT In 4Q12, the consolidated gross profit reached R$ 362.3 million, a growth of 32.4% in relation to the R$ 273.6 million registered in 4Q11.

In 2012, the consolidated gross profit reached R$ 1,145.5 million, a growth of 8.1% in relation to the R$ 1,059.7 million registered in 2011.

1,060 1,146

2011 2012

274

362

4Q11 4Q12

+35%

+8%

+14%


+32%



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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES In 4Q12, the consolidated selling, general and administrative expenses totaled R$ 252.7 million, representing 15.9% of net revenue.

In 2012, the consolidated selling, general and administrative expenses totaled R$ 814.3 million, representing 16.9% of net revenue.

14.6%

15.9%

4Q11 4Q12

15.2%

16.9%

2011 2012

ADJUSTED EBITDA In 4Q12, the consolidated Adjusted EBITDA reached R$ 109.6 million, a growth of 7.8% comparing to R$ 101.7 million registered in the same period of the preceding year. In 2012, the consolidated Adjusted EBITDA reached R$ 331.2 million, comparing to R$ 415.4 million registered in the preceding year.

102 110

4Q11 4Q12

415

331

2011 2012

Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and excluding other operating revenues/expenses and equity accounting) is presented as additional information because we believe it represents an important indicator of our operating performance besides being useful for keeping the comparability with previous reported results.


+8%

-20%

+1.3 p.p.

+1.7 p.p.



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EBITDA (CVM 527/12) On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12, which disposes about the voluntary disclosure of not of accounting information as EBITDA. The Instruction aims to standardize the disclosure, in order to improve the understanding of this information and making it comparable among the publicly listed companies. To keep the consistency and the comparability between previous periods, we present the reconciliation of EBITDA in the following table.

EBITDA Reconciliation - R$ MM 4Q12 4Q11 ∆ % 2012 2011 ∆ %

Gross Profit 362.3 273.6 32.4% 1,145.5 1,059.7 8.1%

(+) Selling Expenses (225.8) (146.5) 54.1% (732.7) (565.7) 29.5%

(+) General and Administrative Expenses (26.9) (25.4) 5.9% (81.6) (78.6) 3.8%

(=) Adjusted EBITDA 109.6 101.7 7.8% 331.2 415.4 -20.3%

(+) Other Operating Income (Expenses)* (25.6) (20.5) 24.9% (77.0) (106.1) -27.4%

(=) EBITDA (CVM 527/12) 84.0 81.2 3.4% 254.2 309.3 -17.8%

* In the old accounting rules, considered as "non operating income".

Consolidated

Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting.

EBITDA’s (CVM 527/12) calculation takes into account the net income of the period plus income taxes, net financial expenses of financial revenues and depreciation and amortization. NET FINANCIAL RESULT In 4Q12, the consolidated net financial expenses were R$ 126.2 million, a variation of 17.3% comparing to the consolidated net financial expense of R$ 107.6 million presented in 4Q11. In 2012, the consolidated net financial expenses were R$ 420.2 million, a variation of 13.0% comparing to the consolidated net financial expense of R$ 372.0 million presented in 2011. The growth of 13.0% in the consolidated net financial expenses in 2012 is related to the increase of the financial discounts granted because of the mean of payment chosen. The increase of this line is in line with the market practices observed during the period.

Consolidated Net Financial Result - R$ Million 4Q12 4Q11 Δ% 2012 2011 Δ%

Net Financial Result (126.2) (107.6) 17.3% (420.2) (372.0) 13.0%

The Company continues to reaffirm its commitment to a conservative cash investment policy, manifested by the use of hedge instruments in foreign currencies, to offset eventual exchanges fluctuations, whether relative to financial liabilities or total cash position. These instruments offset the foreign exchange risk, transforming the cost of the debt to local currency and interest rates (as a percentage of CDI*). Similarly, it is worth mentioning that the Company’s cash is invested with Brazil’s largest financial institutions. CDI - Certificado de Depósito Interbancário: average rate of borrowing in the interbank market.


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NET RESULT In 4Q12, the consolidated net result was R$ -43.7 million, compared to the R$ -28.8 million obtained in the same period of the preceding year. In 2012, the consolidated net result was R$ -170.7 million, compared to the R$ -89.2 million obtained in the preceding year.

Reconciliation of the Consolidated Net Result - R$ Million 4Q12 4Q11 Δ% Δ%

Adjusted EBITDA 109.6 101.7 7.8% 331.2 415.4 -20.3%

(+) Depreciation / Amortization (25.8) (16.0) 61.3% (94.3) (72.6) 29.9%

(+) Net Financial Result (126.2) (107.6) 17.3% (420.2) (372.0) 13.0%

(+) Other Operating Income (Expenses)* (25.6) (20.5) 24.9% (77.0) (106.1) -27.4%

(+) Income Tax and Social Contribution 24.3 13.6 78.7% 89.6 46.1 94.4%

(=) Net Result (43.7) (28.8) 51.7% (170.7) (89.2) 91.4%

* In the old accounting rules, considered as "non operating income".

2012 2011


INDEBTEDNESS

B2W uses its cash generation prioritizing investments that present better returns to shareholders. Thus, in the year of 2012, the consolidated investments in plant, property and equipment and intangible (development of websites and systems) totaled R$ 322.5 million. B2W’s cash balance at 12/31/2012 amounted R$ 1,370.2 million, amount higher than the Company's sum of short-term debt and debentures, which totaled R$ 617.1 million. At 12/31/2012, the Company’s net debt was R$ 641.0 million, representing 1.9 times the accumulated Adjusted EBITDA in the last 12 months, which shows an evolution when compared to the same indicator at 09/30/2012.

R$ million

Indebtedness 12/31/2012 09/30/2012

Short Term Debt 594.7 829.2

Short Term Debentures 22.4 31.1

Short Term Indebtedness 617.1 860.3

Long Term Debt 1,540.2 1,062.5

Long Term Debentures 601.5 599.1

Long Term Indebtedness 2,141.7 1,661.6

Total Debt (1) 2,758.8 2,521.9

Cash and Equivalents 1,370.2 1,167.4

747.6 686.0

Total Cash (2) 2,117.8 1,853.4

Net Cash (Debt) (2) - (1) (641.0) (668.5)

Net Cash (Debt) / EBITDA LTM 1.9 2.1

Average Maturity of Debt (days) 848 805

Consolidated

Credit Card Accounts Receivables Net of Discounts



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The accounts receivable is composed, mainly, by credit card receivables, net of the discounted value, which have immediate liquidity and can be considered as cash. The breakdown of B2W’s accounts receivable is demonstrated in the table below:

Accounts Receivable Conciliation 12/31/2012 09/30/2012

Gross Credit-Cards Receivable 1,835.5 1,859.7

Receivable Discounts (1,087.9) (1,173.7)

747.6 686.0

Present Value Adjustment (6.8) (3.5)

Allowance for Doubtful Accounts (49.7) (58.3)

Other Accounts Receivable 166.9 234.8

Net Accounts Receivable - Consolidated 858.0 859.0

Credit Card Accounts Receivables Net of Discounts

For calculation of the working capital purposes the consolidated gross credit cards receivables at 12/31/2011 were R$ 1,863.0 million.

Because of the adoption of the new CPCs/IFRS, in particular the CPC 38 and its corresponding IAS 39, the Company began to write off (derecognize) receivables from credit card administrators at the moment they are effectively discounted (as of the explanatory notes of the financial statements). However, to better demonstrate the volume of receivables discounted on the base-dates analyzed, in the table above the Company presents the accounts receivable adjusted by the discounts made until the base-dates under analysis. NO FOREIGN CURRENCY EXPOSURE At 12/31/2012, B2W’s balance sheet recorded foreign currency denominated debt. Such debt, however, is FULLY PROTECTED against any foreign exchange fluctuations through derivative operations (swap) that replace the foreign exchange risk for the variation in the basic Brazilian interest rate (CDI). SALES BY MEANS OF PAYMENT

Sales by means of payment can be seen in the following table:

Means of Payment 4Q12 4Q11 ∆% 2012 2011 ∆%

Credit Card 62% 71% -9 p.p 65% 73% -8 p.p

Other Means of Payment 38% 29% +9 p.p 35% 27% +8 p.p


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NET WORKING CAPITAL The consolidated net working capital at December 31, 2012 was 98 days, representing an improvement of 21 days when compared to the 119 days presented at December 31, 2011.

119

98

12/31/2011 12/31/2012 (Net Working Capital = Days of Inventory + Days of Accounts Receivable – Days of Suppliers)

B2W, confirming its commitment to maximize shareholder value, continues to manage working capital variables. Opportunities of improvement in internal processes and relationship with suppliers continue being implemented and we are certain that better levels can be achieved.

- 21 days


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INVESTMENT AND INNOVATION

We have adopted an investment plan which the main objective is to enable growth and improvements in our operations. In the year of 2012, B2W invested a total of R$ 322.5 million, mainly concentrated on logistics, technology and innovation. Logistics In line with its strategy of getting closer to its clients, during the month of October, B2W Digital opened 4 new Distribution Centers, located in the states of SP, RJ, MG and PE. The new distribution centers will guarantee speedier delivery of products purchased from the Company's websites and better client service. B2W Digital has been constantly investing to optimize its logistical systems and distribution chain. During the last months, new equipment was installed and a number of construction projects at the Company’s Distribution Centers were concluded, expanding the level of automation and thereby reducing the time needed to deliver merchandise and also reducing human error. Likewise, systems were installed to better satisfy new tax and legal requirements. Another important investment front has been the development of a new customer service system, which is used in the Distribution Center for localization and dispatch of orders processed and it will allow B2W to operate more efficiently and assertively. In addition, the Company established strategic alliances with the leading transporters of the country, ensuring the joint commitment to offer the best level of service to the customers. Technology One of the goals of the technology investments is the creation of a robust infrastructure by optimizing back office systems, sales layers and accessory systems, such as means of payment and management information systems. This way, the Company is able to benefit from productivity gains and to prepare itself for supporting the future growth of its operations. It’s worth mentioning other important gains, such as the increase of the browsing speed of the Internet sites, the greater agility in commercial actions and the notable advances in management information systems. The investments in technological platforms of the operational/logistics, television, customer service and telephone sales areas seek to improve the quality and efficiency of Company’s operations, with the goal of giving the client an even better purchasing experience. Following its path of innovation, B2W Digital has proceeded to invest in new features, designed mainly to improve the purchase experience, increase the conversion rate and strengthen the positioning of its brands. During last year, a lot of projects were implemented involving from improvements in the structure of the technological platform to new features. We highlight the following recently introduced projects:

Launch of the new search system in Submarino. Seeking to enhance the purchase experience of its clients and offer greater convenience and speed, Submarino introduced its new search system. In books, movies, music and games categories, clients can search by title, author, publisher, and many others key words. For other categories, Submarino offers a refurbished and more assertive search system focused on the relevance and popularity of each item and including new services that provide greater ease of use for clients, such as ―auto-complete,‖ search suggestions and automatic filters;

Launch of the “Eu vi na TV” (I Saw It on TV) application by Shoptime. The iPhone-platform-based application exhibits the latest offers available on TV with an easy shortcut to finalize the purchase process;


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New home page for the Americanas.com iPhone app. Seeking to offer its clients greater speed and convenience, Americanas.com introduced a new home page for its iPhone application. The new site highlights the main services available and is simpler to browse, as well as being lighter and loading faster, and is equipped with a more assertive search feature;

Implementation of the “Buy Later” tool. Now, clients of Americanas.com, Submarino and Shoptime will be able to select their product preferences and use the "Buy Later" tool to place them in their shopping carts and conclude purchases at a later time of their own choosing;

Implementation of the “Chat Service” tool. Clients of Americanas.com, Submarino and Shoptime now can count on a fast and easy service option, known as Chat Online. Through this option, clients can more comfortably clarify doubts, make suggestions or resolve eventual problems;

Implementation of “Product Evaluation.” Through the Americanas.com and Shoptime websites, clients now have the opportunity to evaluate products, grading them and posting their opinions. As a result, other clients can make use of these evaluations for their own purchase decisions;

Implementation of the “Store Payment” option. Besides the different options available on the Americanas.com website itself, clients now have a new alternative: payment in the nearest Lojas Americanas store;

Implementation of “1-Click Buy” tool in Shoptime. After the implementation of the fastest purchase tool on the Internet by Americanas.com, Submarino and Ingresso.com, now its Shoptime’s turn to offer the comfort and speed of “1-Click Buy‖ on its website;

Personalized offers in Submarino e-mails. Submarino now sends personalized offers by e-mail, using behavior information in real time. Besides improving the relevance of the offers for clients, the practice improves conversion of the average ticket;

Launch of the Nokia Cellphone Application. To offer more comfort to clients and strengthen its strategy of expanding product offerings to more mobile devices, B2W launched an Americanas.com and Submarino application for Nokia cell phones. Then besides clients who have iPhone or Android devices, now Nokia clients can also have this feature for greater ease of purchases;

Launch of suggestions channel by Shoptime and Submarino. A channel was developed for the clients of Shoptime and Submarino websites make suggestions regarding new products, improvements, clarify doubts and other possibilities. This channel is designed to improve our services and to enhance the client's online experience;

New generation search engine at Americanas.com. The Americanas.com search system continues being developed, becoming more assertive in its results, making use of such new features as ―autocomplete‖, search suggestions, automatic filters by model, size and color, as well as it’s a more intelligent system that learns through the ―clicks‖ made by each user;

Launch of the functionality of product evaluation by the customers - Bazaar Voice of Submarino. It’s a

platform that was created to host Submarino’s clients evaluations, reviews and contents, allowing a greater interaction with consumers, who can post their assessments of products and leave comments through images and videos.

http://americanas.com/





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OPERATIONAL HIGHLIGHTS

B2W Digital, always seeking to strengthen its multibusiness, multichannel and multibrand strategy, continues investing in a digital platform with business that presents huge sinergy. The Company has a portfolio with the most known and beloved brands in the internet. Americanas.com

The largest Store. The lowest prices. Operating for the past 13 years in e-commerce, Americanas.com is Brazil’s largest and most complete Internet store. The brand offers more than 500,000 items distributed in 32 categories — such as computers, home appliances, electronics, cellphones, furniture, domestic utensils, toys, books and much more. Besides the online channel, the marketing operation is also conducted through telephone sales and more than 700 kiosks located inside Lojas Americanas stores. In 2012, the brand launched a ―Jet Delivery‖ service for more than 10,000 items for same-day-purchase delivery to clients in the city of São Paulo. In 2012, the brand was six-time champion in the Datafolha Institute’s Top of Mind Award in the e-commerce category, and elected the preferred brand of residents of Rio de Janeiro in the Purchase Site category, according to the ―O Globo‖ newspaper. Submarino

The products you like and the best Internet service. Operating in the sector for 13 years, Submarino – a pioneering online store and the benchmark for technology and innovation – offers more than 30 product categories through its sales channels: Internet, telephone sales and catalogs, with a strong emphasis on the sale of books, CDs, DVDs, electronics, computers, telephone products, games and online services. Moreover, Submarino has been consolidating itself through other services, such as Submarino Viagens travel site, Submarino on Demand (sale of streaming digital films), B2B (business-to-business) services and the Submarino card, that offers exclusive advantages on the Submarino and Submarino Viagens websites. Designed to serve consumers in an easier, faster and fully encompassing manner, Submarino has developed cell phone apps for models such as iPhone, Nokia and Android, with the following features: search by QRCode, search by barcode, native (faster) browsing, product promotions on the home page and 1-Click purchasing. Submarino sponsors a number of events, and is present at national and international activities such as Campus Party Brasil, the São Paulo Book Biennial and Rock in Rio. Shoptime

Exclusive products and live demonstration. Shoptime is Brazil’s first home shopping (television sales) and operates through internet, telesales and catalogues. The TV channel reaches more than 28 million Brazilian households, of which more than 12 million with pay-TV subscriptions (Sky 19 and Net 31 channels) and more than 16 million connected to satellite television (Vertical 5B), with interactive transmission including more than 11 hours of live programming 7 days a week. Since 1995, the television channel broadcasts 24 hours a day, ensuring speed and improved interaction for clients’ shopping experiences. The catalogue is distributed five times a year throughout Brazil with a printing run of 400,000 copies each. Shoptime currently offers 23 product categories. Shoptime’s assortment focus is on articles marketed under the Shoptime brand, with an emphasis on portable appliances (Fun Kitchen), bed, bath & dining (Casa & Conforto), housewares (La Cuisine) and sports & leisure products (Life Zone). The computer and technology department also plays an important role in the brand’s product mix. Furthermore, Shoptime operates a travel agency through Shoptime Viagens.


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B2W Viagens B2W Viagens operates through: Americanas Viagens, Submarino Viagens, Shoptime Viagens and Submarino Viajes brands, and offers tour packages, plane tickets, online hotel reservations, cruises, travel insurance, car rentals and tourist attractions packages in Brazil and abroad. The Company markets its services through the Internet, telephone sales and television, and has been working to expand product assortment aiming to aggregate the largest and best travel content in Latin America. B2W Viagens’ objective is to build a platform that allows each brand’s clients to quickly and easily plan and purchase their travel packages, so that the Company pursues a leadership position in Latin America’s online travel market on account of the Company’s innovation, excellent customer service, outstanding content and competitive prices. In 2011, B2W Viagens began its international expansion with the official launching of the travel operation in Argentina through the brand Submarino Viajes. Ingresso.com Ingresso.com provides technology and services of online purchase of tickets online for movies, theater productions, concerts, soccer games and cultural events. With more than 4 million registered clients, Ingresso.com is the biggest online ticket seller in Brazil. The Company also allows clients to make seat assignments online, which enables the client to comfortably choose his or her preferred movie or theater seat. In addition, the Company has invested heavily in commercialization of tickets for concerts. Ingresso.com is the operator ticket sales for Rock in Rio 2013. Another area in which Ingresso.com operates involves marketing its ticketing software in Brazil. The Company is currently responsible for computerizing various movie theaters, theaters, sports stadiums and concert venues. Furthermore, Ingresso.com is present in Latin America and currently operates in Mexico, Argentina and Chile through movie ticket sales in a partnership with Cinemark. This initiative allows B2W to explore and study new markets with low entry costs. Submarino Finance Submarino Finance offers the Submarino Mastercard Card, which makes a number of special advantages available on Submarino website like installment payments in up to 15 times without interest charges, exclusive discounts, differentiated credit limit and the Léguas Program, which permits accumulation of rewards so that one can exchange for products on Submarino. For B2W, the Submarino Card represents an opportunity to leverage sales, especially high-cost items, to reduce the costs associated with credit-card administrative fees, to promote client’s loyalty and to improve business revenue resulting from consumer financing. During the year, we have reached the target of more than 790 thousand cards and participation of 40% of the sales on the Submarino website. BLOCKBUSTER® Online B2W acquired the right to use the BLOCKBUSTER® trademark online in Brazil and started offering in 2008 online DVD and Blu-ray Disk rentals. BLOCKBUSTER® Online is a rental store that allows clients online to choose the movies they want to watch, to create their wish list, and to receive and return movie rentals from the comfort of their homes. It offers monthly plans that allow clients to always have movies at home without worrying about return dates and late-return fines. BLOCKBUSTER® Online currently includes the largest online selection of movies in Brazil, with more than 20,000 titles, and it provides services to the states of São Paulo, Rio de Janeiro, Minas Gerais, Paraná, Santa Catarina and Rio Grande do Sul. It also has the largest Blu-ray Discs collection available for rent in Latin America, with about 2,000 titles. Lastly, it also offers the service of rental of videogame games, being the unique online rental store offering DVD, Blu-ray and games in Brazil.


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SouBarato At the end of 2011, it was launched the SouBarato website, aimed at factory outlet inventory selling. Since then, the site has been performing excellently, becoming a great way to reach a distinctive audience, thereby contributing to the Company's growth. SouBarato website is an e-commerce store whose great competitive advantage consists of lower-than-market average price promotions offered to customers. The products sold are all new and repackaged, passing strict quality testing and are in flawless condition to be sold.


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CORPORATE GOVERNANCE AND CAPITAL MARKETS

B2W is subject to the BM&FBOVESPA’s Novo Mercado, the highest Corporate Governance level in Brazil, listing rules. These include an ownership structure exclusively comprised of common shares and the election of independent members to the Board of Directors. B2W’s Board of Directors is comprised of seven members, four of whom are appointed by the controlling shareholders and another three independent members.

The requests to be registered as a publicly-traded Company and the listing of its shares under the Novo Mercado were approved by the Brazilian Securities Exchange Commission (CVM) and the BM&FBOVESPA on July, 25 and 26, 2007, respectively.

B2W’s common shares are listed on the BM&FBOVESPA and have been traded under the ticker symbol BTOW3 (common) since August 8, 2007. Below is a short description of the main events occurred during the year: On April 30, 2012 the Company’s General and Extraordinary Shareholders Meetings were held, at which the following resolutions were approved: 1- To take recognizance of the accounts prepared by the managers and related financial statements for the fiscal year ended December 31, 2011. 2- Setting the global compensation to be paid to officers; 3- Inclusion of a statutory provision for adoption on the part of the Company of mechanisms that assure compensation of the officers and members of the Fiscal Council and technical bodies; 4- Detailing of the Company’s corporate purpose; 5- Change in the wording of Art. 5th of the Bylaws to reflect the canceling of shares held in the treasury. 6- Fiscal Council Installation and election of Messrs. Carlos Alberto de Souza, Pedro Carvalho de Mello and Peter Edward Cortes Marsden Wilson to the position of full members and Messrs. Ricardo Scalzo, Luciano Mancini and Marcos Duarte Santos to the position of alternate members. On May 25, 2012, at a meeting of the Board of Directors, the third public issuance of Company’s debentures was approved, in single series, unsecured, registered and book-entry, for public distribution with restricted placement efforts. The debentures were issued on June 13, 2012 in the total amount of R$ 300 million, maturing on June 13, 2017. The funds obtained through the issue of the debentures will be used to strengthen the Company’s working capital. On July 2, 2012, a meeting of the Board of Directors was held to elect Mr. Carlos Eduardo Rosalba Padilha as Chief Operating Officer, for mandate that shall expire, along with the other members of the Management, as of the holding of the General Shareholders Meeting in 2013.

On August 7, 2012, in the Meeting of the Board of Directors was approved the election of Mr. Fabio da Silva Abrate, in substitution to Mr. François Pierre Bloquiau, as Investor Relations Officer, for mandate that shall expire, along with the other members of the Management, as of the holding of the General Shareholders Meeting in 2013. On August 9, 2012, the shareholders were informed through the publication of Material Fact that Lojas Americanas S.A. (LASA), the controller Company, had ended a partnership with Itaú Unibanco Holding S.A for the distribution and sales of financial products and services exclusively through FAI – Financeiras Americanas Itaú. Pursuant to the obligations assumed in the constitution of the Company on November 23, 2006, LASA will offer to B2W the portion of the right to exclusivity, acquire by it, to offer, distribute and sell financial products and services through Company's distribution channels. It was further communicated that the Company will consider LASA’s offer, when received, and will keep the market informed regarding the outcome of the negotiations of this matter. On September 24, 2012, a General Meeting of Holders of the Second Issue of Simple Debentures was held, approving on the occasion new wording of the definition of Consolidated Net Debt and the signing of the second amendment to the issue registration to change the financial index related to the Consolidated Net Debt/Adapted EBITDA ratio.


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On September 26, 2012 a Market Announcement was published reporting that the controller, Lojas Americanas, had acquired 234,400 common shares issued by the Company, representing 0.15% of its Capital Stock. Through this acquisition, the Company's parent company reached 93,263,207 shares, representing 59.58% of its Capital Stock. On September 28, 2012, a General Meeting of Holders of the First Issue of Simple Debentures was held, approving on the occasion new wording of the definition of Consolidated Net Debt, and the signing of the second amendment to the Issue Registration to change the financial index related to the Consolidated Net Debt/Adapted EBITDA ratio. On November 1, 2012, through the Consolidated Form for Trading between Administrators and Connected Persons (Art. 11 of CVM Instruction 358/02), it was communicated that the controller, Lojas Americanas, had acquired 950,100 of the Company's common shares. With this acquisition, the participation of the controller in the Company reached 94,558,106 shares, corresponding to 60.47% of the Social Capital. On December 10, 2012, through the Consolidated Form for Trading between Administrators and Connected Persons (Art. 11 of CVM Instruction 358/02), it was communicated that the controller, Lojas Americanas, had acquired 2,200,800 of the Company's common shares. With this acquisition, the participation of the controller in the Company reached 96,758,906 shares, corresponding to 61.81% of the Social Capital. On January 2, 2013 through a Material Fact, the Company reported it had been informed, through its controller’s management Lojas Americanas S.A., that Brazilian Central Bank had approved the acquisition of the total shares owned by LASA in FAI - Financeira Americanas Itaú S.A. Crédito, Financiamento e Investimento by Itaú Unibanco Holding S.A.. On January 10, 2013, through the Consolidated Form for Trading between Administrators and Connected Persons (Art. 11 of CVM Instruction 358/02), it was communicated that the controller, Lojas Americanas, had acquired 1,426,300 of the Company's common shares. With this acquisition, the participation of the controller in the Company reached 98,185,206 shares, corresponding to 62.72% of the Social Capital. On January 11, 2013 through a Material Fact, the Company reported it had been offered, through its controller, LASA, the exclusive right to offer, distribute and market financial services, securities and pension products through its distribution channels, as part of the process ending its partnership with Itaú Unibanco Holding S.A. in FAI, and that B2W had paid LASA the amount of R$ 16,500,000.00 as agreed on January 11, 2013. Minutes of the last meetings and other financial or corporate information about B2W are available on our website (www.b2winc.com).

http://www.b2winc.com/


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EXHIBIT I – INCOME STATEMENT

B2W

Income Statements

(in million of Brazilian reais, except result per share) 4Q12 4Q11 Variation 2012 2011 Variation

Gross Sales and Services Revenue 1,821.4 1,319.9 38.0% 5,421.0 4,702.5 15.3%

Taxes on sales and services (233.2) (143.3) 62.7% (608.6) (470.4) 29.4%

Net Sales and Services Revenue 1,588.2 1,176.6 35.0% 4,812.4 4,232.1 13.7%

Cost of goods and services sold (1,225.9) (903.0) 35.8% (3,666.9) (3,172.4) 15.6%

Gross Profit 362.3 273.6 32.4% 1,145.5 1,059.7 8.1%

Gross Margin (% NR) 22.8% 23.3% -0.5 p.p. 23.8% 25.0% -1.2 p.p.

Operating Revenue (Expenses) (278.5) (187.9) 48.2% (908.6) (716.9) 26.7%

Selling expenses (225.8) (146.5) 54.1% (732.7) (565.7) 29.5%

General and administrative expenses (26.9) (25.4) 5.9% (81.6) (78.6) 3.8%

Depreciation and amortization (25.8) (16.0) 61.3% (94.3) (72.6) 29.9%

83.8 85.7 -2.2% 236.9 342.8 -30.9%

Net Financial Result (126.2) (107.6) 17.3% (420.2) (372.0) 13.0%

Financial Revenues 43.9 45.9 -4.4% 206.1 219.1 -5.9%

Financial Expenses (170.1) (153.5) 10.8% (626.3) (591.1) 6.0%

Other operating income (expenses)* (25.6) (20.5) 24.9% (77.0) (106.1) -27.4%

Income tax and social contribution 24.3 13.6 78.7% 89.6 46.1 94.4%

Net Result (43.7) (28.8) 51.7% (170.7) (89.2) 91.4%

Net Margin (% NR) -2.8% -2.4% -0.4 p.p. -3.5% -2.1% -1.4 p.p.

Adjusted EBITDA 109.6 101.7 7.8% 331.2 415.4 -20.3%

Adjusted EBITDA Margin (% NR) 6.9% 8.6% -1.7 p.p. 6.9% 9.8% -2.9 p.p.

Weighted average of outstanding shares (thousand) 156,536 135,627 156,536 135,627

(0.2791) (0.2124) 31.4% (1.0903) (0.6575) 65.8%

* In the the former accounting rules, considered as "non-operating income".

Consolidated

Period ended on December 31

Consolidated

Period ended on December 31

Operating Result before Net Financial Result and

Equity Accounting

Net Result per Outstanding Share (R$)


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EXHIBIT II – BALANCE SHEET

B2WBalance Sheet

(in million of Brazilian reais)

ASSETS

CURRENT ASSETS

Cash and banks 36.3 34.4

Marketable securities 1,333.9 1,133.0

Accounts receivable 858.0 859.0

Inventories 726.2 611.0

Recoverable taxes 127.5 182.7

Prepaid expenses and other accounts 54.9 35.8

Total Current Assets 3,136.8 2,855.9

NON CURRENT ASSETS

Marketable securities - -

Deferred income tax and social contribution 256.9 321.6

Recoverable taxes 85.1 -

Escrow deposits and other receivables 57.1 41.3

Investments - -

Plant, property and equipment 262.0 251.1

Intangible assets 988.8 970.1

Deferred assets - -

Total Non-Current Assets 1,649.9 1,584.1

TOTAL ASSETS 4,786.7 4,440.0

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Suppliers 960.2 686.0

Loans and financing 594.7 829.2

Debentures 22.4 31.1

Salaries and social contribution 28.4 28.1

Taxes payable 13.1 17.5

Other accounts payable 28.6 33.0

Total Current Liabilities 1,647.4 1,624.9

NON-CURRENT LIABILITIES

Long-term liabilities:

Loans and financing 1,540.2 1,062.5

Debentures 601.5 599.1

Taxes payable - 88.8

Provision for contingencies and other accounts payable 28.6 52.4

Total Non-Current Liabilities 2,170.3 1,802.8

SHAREHOLDERS' EQUITY

Capital 1,182.5 1,182.5

Capital reserves 1.7 1.3

Income reserves and others (215.2) (171.5)

Total Shareholders' Equity 969.0 1,012.3

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 4,786.7 4,440.0

12/31/2012

Consolidated

09/30/2012


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EXHIBIT III – CASH FLOW STATEMENT

B2W

Cash Flow Statement

(in million of reais)

Operating Activities 12/31/2012 12/31/2011 Variation

Net Result for the Period (170.7) (89.2) (81.5)

Adjustment to the Net Result:

Depreciation and amortization 94.3 72.6 21.7

Deferred income tax and social contribution (95.5) (62.4) (33.1)

Interest, monetary and currency changes (91.3) 221.1 (312.4)

Equity accounting - - -

Others (33.9) 26.7 (60.6)

Adjusted Net Result (297.1) 168.8 (465.9)

Change in Working Capital:

Accounts receivable 115.0 140.4 (25.4)

Inventories (211.7) 37.9 (249.6)

Suppliers 257.0 (89.9) 346.9

Change in Working Capital: 160.3 88.4 71.9

Change in Assets:

Prepaid expenses 0.8 1.0 (0.2)

Escrow deposits (5.7) (6.0) 0.3

Recoverable taxes (92.3) (61.7) (30.6)

Other accounts receivable (current and non-current) 34.9 (16.7) 51.6

Change in Assets: (62.3) (83.4) 21.1

Change in Liabilities

Salaries and social charges security 11.5 5.4 6.1

Deferred income tax and social contribution 12.4 1.7 10.7

Other liabilities (current and non-current) 7.8 (9.3) 17.1

Change in Liabilities: 31.7 (2.2) 33.9

Cash Flow from Operating Activities (167.4) 171.6 (339.0)

Investing Activities

Marketable securities (411.7) (131.9) (279.8)

Investment in subsidiaries - - -

Purchases of property, plant and equipment assets (70.0) (100.3) 30.3

Intangible assets (252.5) (276.5) 24.0

Cash Flow from Investing Activities (734.2) (508.7) (225.5)

Financing Activities

Additions 1,362.9 670.2 692.7

Payments (923.6) (405.0) (518.6)

Debentures 300.0 (453.7) 753.7

Discount of receivables 183.4 (468.2) 651.6

Capital increase in cash - 1,000.0 (1,000.0)

Dividends (0.1) (6.2) 6.1

Cash Flow from Financing Activities 922.6 337.1 585.5

Change in cash balance 21.0 - 21.0

Beginning Cash Balance 15.3 15.3

Ending Cash Balance 36.3 15.3

Consolidated


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INFORMATION ABOUT THE WEBCAST AND THE CONFERENCE CALL

Conference calls with simultaneous translation into English, followed by a bilingual Q&A session will be held as follows:

Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and excluding other operating revenues/expenses and equity accounting) is presented as additional information because we believe it represents an important indicator of our operating performance and in order to maintain comparability with the results previously reported. On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12, which disposes about the voluntary disclosure of not of accounting information as EBITDA. The Instruction aims to standardize the disclosure, in order to improve the understanding of this information and making it comparable among the publicly listed companies. EBITDA’s (CVM 527/12) calculation takes into account the net income of the period plus income taxes, net financial expenses of financial revenues and depreciation and amortization. We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements include statements regarding our intent, belief or current expectations or that of our directors or executive officers. Forward-looking statements also include information concerning our possible or assumed future results of operations, as well as statements preceded by, followed by, or that include the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'' ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond B2W ability to control or predict. BLOCKBUSTER®: BLOCKBUSTER® trademarks are owned by Blockbuster Inc, and B2W – Companhia Global do Varejo has the sublicense to use these trademarks in the activities of video rental on internet.

Documents

Earnings Release 4Q12 and 2012 - B2W · 2016-08-30 · Earnings Release 4Q12 and 2012 1 B2W DIGITAL ANNOUNCES GROWTH OF 38% IN THE CONSOLIDATED GROSS REVENUE COMBINED WITH AN IMPROVEMENT