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B2W DIGITAL ANNOUNCES TOTAL GMV OF R$ 2.5 BILLION IN 1Q16
Marketplace continues rapid expansion, reaching R$ 348 million in GMV (up 327%) and achieving a share of 14% in total GMV
Rio de Janeiro, May 5, 2016: B2W Digital (Bovespa: BTOW3), the largest and most beloved digital company in Latin America, announces today its results for the 1st quarter of 2016. MESSAGE FROM MANAGEMENT
Despite the challenging macro-economic environment, B2W remains confident about the significant growth potential of e-commerce in Latin America. B2W’s Marketplace expanded by 543% in the last 12 months, generating over R$ 1.1 billion in GMV. A central part of the Company’s strategy, the Marketplace should drive strong future growth and profitability. In the next five years (2016-2020), B2W will continue investing in the digital platform it has built, monetizing all areas of the business, with the objective of generating free cash flow and value to its shareholders.
1Q16 HIGHLIGHTS
Marketplace connected over 1,000 new sellers: The Marketplace (3P) continues its rapid development, expanding from a base of 2,500 sellers at the end of 2015 to over 3,500 at the end of 1Q16. In line with B2W’s strategy of integrating new stores of various sizes and across multiple sectors, during the first quarter the Company integrated Brastemp and Consul, who now join important brands already present in the Marketplace, such as Sony, Lenovo, Acer, Positivo, Ambev and Multilaser, among others. In addition, the Company established partnerships with VTEX, one of the five largest e-commerce platform companies in the world, and Rakuten Brazil, the first Rakuten Group company in Latin America. These partnerships will allow the more than 2,500 sellers on the two platforms to offer their products on the largest and most beloved brands on the Brazilian internet: Americanas.com, Submarino and Shoptime.
Acquisition of BooLabs, artificial intelligence start-up in Brazil: BooLabs is specialized in emerging technologies, including machine learning, deep learning and natural language processing. With this movement, B2W gains important expertise to leverage its search algorithms and product recommendations in terms of relevance and personalization.
Americanas.com was named the most popular e-commerce site by Brazilian internet users: According to research conducted by Contecta-í/IBOPE in March 2016, 60% of Brazilian internet users routinely make their online purchases on Americanas.com (+15 p.p. compared to the #2 player). This achievement is the result of the investments made over the past three years to be closer to the customer, and demonstrates the strength and recognition of B2W Digital’s brands.
KEY INDICATORS 1Q16 1Q15 Delta 1Q16 - LTM 1Q15 - LTM Delta
Total GMV (R$ MM) 2,461 2,542 -3.2% 11,186 9,745 14.8%
Market Share 24.0% 24.0% - 25.5% 24.7% +0.8 p.p.
Marketplace (R$ MM) 348 82 327.0% 1,127 175 543.0%
Marketplace Participation (%) 14.2% 3.2% +10.9 p.p. 10.1% 1.8% +8.3 p.p.
Mobile (% of Traffic) 44.3% 32.0% +12.3 p.p. 37.8% 23.2% +14.6 p.p.
Net New Customers (K) 786 2,052 n.a. 786 2,052 n.a.
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STRATEGIC INITIATIVES ENHANCING THE DIGITAL PLATFORM
Commercial and Marketing o Since the beginning of the investment plan, B2W has expanded its market share by 4.1 percentage
points, from 19.9% in 1H12 to 24.0% in 1Q16. o This impressive sales performance is the result of excellence in operations and the management of the
main commercial variables. Selling success depends on a number of factors, such as wide product selection, appropriate inventory levels, means and conditions of payment, and delivery times, among others. Below we highlight key indicators from 1Q16:
Inventory management: B2W operates with a stock-out rate below 10%, and managed to improve this indicator by 3% in 1Q16, compared to 1Q15.
Product assortment increased by 35% in relation to 1Q15. Efficiency in delivery time: Productivity gains in the Distribution Centers (DCs) of 8%, driven by
process improvements and the implementation of automated billing lines, resulting in faster delivery times for customers.
o According to research conducted by Contecta-í/IBOPE in March 2016, 60% of Brazilian internet users routinely make their online purchases on Americanas.com (+15 p.p. compared to the #2 player). This achievement is the result of the investments made over the past three years to be closer to the customer, and demonstrates the strength and recognition of B2W’s brands.
o Submarino Prime, launched by B2W in beta version in December 2015, offers customers a superior shopping experience for a fixed annual fee. With Submarino Prime, the customer can make unlimited purchases with free shipping and fast delivery, participate in exclusive promotional events and receive dedicated customer service. In 1Q16, the Company expanded the product assortment available to Submarino Prime members by 40%, reaching 140,000 items.
Marketplace Evolution o The Marketplace continues its rapid expansion, adding more than 1,000 new sellers in 1Q16,
increasing the base of sellers from 2,500 at the end of 2015 to over 3,500 at the end of the first quarter. o In 1Q16, Marketplace GMV grew by 327% yoy, reaching R$ 348 million in GMV with a participation of
14% in total GMV. o At the end of 1Q16, the number of items listed by Marketplace sellers increased by 3 times relative to
1Q15, reaching more than 1.1 million items. o In line with B2W’s strategy of integrating new stores of various sizes and across multiple sectors, during
the first quarter the Company integrated Brastemp and Consul, who now join important brands already present in the Marketplace, such as Sony, Lenovo, Acer, Positivo, Ambev and Multilaser, among others.
o In addition, the Company established partnerships with VTEX, one of the five largest e-commerce platform companies in the world, and Rakuten Brazil, the first Rakuten Group company in Latin America. These partnerships will allow the more than 2,500 sellers on the two platforms to offer their products on the largest and most beloved brands on the Brazilian internet: Americanas.com, Submarino and Shoptime.
Fulfillment Infrastructure o B2W Digital operates a total of 11 DCs throughout Brazil, with a total storage area of over 500,000
square meters, an increase of 35% compared to the end of 2014. o The Company opened three more hubs in 4Q15, totaling 145 hubs at the end of the year (+54% vs
1Q15), strategically located to support its verticalized delivery network. B2W’s hubs act as cargo consolidation centers and transit points.
o In 2013 and 2014 B2W Digital acquired two of the main providers of last mile transportation in Brazil (Click-Rodo and Direct), which have now been integrated to form the B2W Distribution Unit.
During the course of 1Q16, the participation of B2W Distribution Unit reached 74% of the Company’s total deliveries, compared to a share of 55% in 1Q15.
In 1Q16, B2W Distribution Unit began processing deliveries for 25 new customers, including Dafiti, Livraria Cultura and Netshoes, representing 1.6 million deliveries per year. Of these new customers, 8 are among the 20 largest sellers on the Marketplace.
o The Company’s verticalization of the last mile has made possible the creation of the Shipping Menu, which offers up to 6 delivery options for the whole country since its launch in 3Q14: Same Day, Next Day, Fast, Standard, Scheduled Delivery and Click & Collect.
In 1Q16, the number of daily deliveries via the “Next Day” option on the Shipping Menu increased by 8 times, driven by the expansion of this service into new cities (Rio de Janeiro and Belo Horizante) and the increase in the product weight limit to 30kg.
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Our “Fast” delivery option offers a 35% quicker delivery time compared to the market standard. This option is available for 100% of B2W’s product assortment and in all the states of Brazil, increasing its share of the Company’s deliveries from below 1% in 1Q15 to 10% in 1Q16.
The “Click and Collect” option is currently available in more than 200 Lojas Americanas stores, compared to 15 at the end of 1Q15, and its utilization, which increased by 14 times during the same period, was accelerated due to the implementation of an interactive map on our site, allowing the customer to conveniently choose the closest Lojas Americanas store.
The Shipping Menu has been a great success with customer, who receives the product faster, and allows B2W to increase its shipping coverage ratio (shipping revenue / shipping cost).
Mobile and Technology o In 1Q16, traffic from mobile devices reached 44.3% of total visits, an expansion of 12.3 p.p. compared
to 1Q15. o B2W’s four apps (Americanas.com, Submarino, Shoptime and SouBarato) accounted for 1.25 million
downloads during the course of the first quarter, representing a growth of 202% in relation to the same period in 2015.
o The Company continues investing in the development of its apps, in order to improve the customer shopping experience, which has already yielded significant gains in customer engagement, traffic growth and the number or orders made through mobile devices.
o The acquisition of BooLabs brings new expertise to the Company, allowing B2W to continue to boost its usage of data science, which has generated significant gains in the areas of dynamic pricing and intelligent purchasing. In addition, BooLabs allows the Company to accelerate the internal development of search engine algorithms and customer product recommendations.
Digital Services o The result of the acquisition of 12 companies (ten best-in-class IT companies and the two main
providers of last mile transportation in Brazil), B2W Services offers the full suite of IT and logistics solutions to support Marketplace sellers and the online stores of large brands, including [B] Seller (webstore and ERP solution) and [BFF] B2W Fulfillment (storage, delivery and customer service).
o Since the acquisition of Sieve Group in July 2015, we expanded the cross-sell rate by 58% (cross-sell defined as the use of more than one of B2W’s portfolio of services by the same partner).
o During the course of 1Q16, the solutions offered by the various B2W Services companies were contracted by several large brands, with select examples below:
Admatic (Digital marketing): Calvin Klein, Globo and Arezzo. [B] Seller (Webstore and ERP solution): Droga Raia and Drogasil. Infoprice (Pricing intelligence – offline stores): Carrefour and C&C. Sieve (Pricing intelligence – online stores): Dotz and O Boticário. Site Blindado (Online security): Osklen, Chili Beans and Paquetá. Skyhub (Marketplace integration): Claro, Netfarma, Onofre Eletro and Passarela.
o In March 2016, B2W Services held an inaugural event with the objective of promoting networking and the exchange of best practices and IT solutions for its main clients, bringing together 200 partners.
o Building on B2W’s drive to continue launching new technologies that help Marketplace sellers boost their sales, B2W launched B2W Ads, a proprietary ad management platform within the Company's sites. Currently in beta phase, B2W Ads allows sellers to purchase advertising space on our sites to give their products more visibility.
Financial Services o In 1Q16, B2W’s credit card operations (Submarino Finance and Digital Finance) registered approved
transaction volume of R$ 562 million, representing a growth of 12% compared to 1Q15. o Also in 1Q16, credit card receivables from these operations was R$ 1.0 billion, increasing by 26% over
1Q15. o At the end of the quarter, 1.9 million credit cards had been issued (1.5 million for Submarino Finance
and 375 thousand for Digital Finance). o Advantages to the customer include access to exclusive discounts, rewards program, and additional
credit limit to purchase on B2W websites. Meanwhile, advantages for B2W include lower MDR, greater customer loyalty (2.1 times higher purchase frequency) and higher average ticket (+24%).
o In the first quarter of 2016, the channels offering B2W’s Insurance and Services products were expanded to include the Company’s apps.
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o Driven by the expansion in assortment in recent years to include new services, including insurance against robbery, theft and accidental breakage and air-conditioning installation, the portfolio of Insurance and Services recorded a 17% increase in average ticket in 1Q16 compared with 1Q15.
Customer Service o B2W Digital’s main brands are regarded as industry benchmarks in customer service, having received,
since 2014, the RA 1000 seal, the maximum grade given by the Reclame Aqui website. o The average score given by customers on the Reclame Aqui site for B2W’s brands is 7.2, while its
main competitors have an average score of 4.9. o 78% of customers who registered complaints on the Reclame Aqui site indicated they intend to buy
again with B2W’s brands, while only 52% of customers indicated that they intended to buy again on the main competitors’ websites.
o The average solution rate of B2W’s brands on the Reclame Aqui website is 92.4%, while the average solution rate of competitors’ brands is 74.0%.
o These achievements are the result of the Company’s commitment to optimizing the quality of service for its customers.
Digital Talents o In June 2016, B2W Digital will hold for the second time, in its headquarters in Rio de Janeiro, its
international summer internship program, which aims to recruit college students from North America’s top universities. The Company plans to double the incoming class of interns, compared to the first phase of the program, which took place in December of 2015.
o The Company also started a part-time internship program in its advanced office of research and innovation in the city of Boston (USA), targeting undergraduate students from leading U.S. universities.
o B2W is expanding its recruitment in the fields of data science and analytics, in order to build a strong pipeline of talents to support new projects.
Corporate Sustainability o A new strategic partnership has been developed with MIT Sloan (MIT Sloan Sustainability Initiative) to
assess the maturity of Digital B2W sustainability practices through a benchmarking study with other large companies.
o B2W Digital has continued its partnership with CDI (Committee for the Democratization of Information Technology) and the Secretary of Education of the State of Rio de Janeiro (SEEDUC), through TecEscola, an innovative project that is training 150 teachers in 50 local schools, ultimately benefiting about 15,000 students.
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FINANCIAL HIGHLIGHTS
The financial information serving as the basis for the comments below refer to 1Q16, and are in accordance with international financial reporting standards (IFRS), with the standards issued by the Securities and Exchange Commission of Brazil (CVM), as well as the listing rules of the Novo Mercado and in Brazilian reais (R$). Definitions for adjusted financial metrics can be found in Annex IV and Annex VI.
GMV: In 1Q16, GMV was 2,461.3 million, compared to R$ 2,541.8 million in 1Q15, representing a reduction of 3.2%.
Gross Revenue: In 1Q16, gross revenue was R$ 2,152.9 million, compared to R$ 2,469.9 million in 1Q15, representing a decrease of 12.8%.
Net Revenue: In 1Q16, net revenue was R$ 1,732.6 million, compared to R$ 2,137.8 million in 1Q15, representing a reduction of 19.0%. The higher reduction in net revenue compared to the reduction in gross revenue (by 6.1 p.p.) was principally due to changes in VAT taxation in the country, which went into effect in January 2016.
Adjusted Gross Profit: In 1Q16, adjusted gross profit was R$ 403.3 million, compared to the R$ 501.3 million registered in 1Q15, representing a decrease of 19.5%. As a result, adjusted gross margin declined by 0.2 p.p., from 23.5% in 1Q15 to 23.3% in 1Q16.
Adjusted Selling, General and Administrative (SG&A) Expenses: In 1Q16, adjusted selling, general and administrative expenses were R$ 276.2 million, or 15.9% of net revenue, a reduction of 1.4 p.p. compared to 1Q15, when adjusted SG&A accounted for 17.4% of net revenue.
Adjusted EBITDA: In 1Q16, Adjusted EBITDA was 127.2 million, compared to R$ 130.0 million in 1Q15, representing a reduction of 2.2%. Adjusted EBITDA margin in 1Q16 increased by 1.2 p.p., expanding from 6.1% in 1Q15 to 7.3% in 1Q16.
Net Financial Result: In 1Q16, net financial result was R$ 249.6 million, representing an increase of 61.9% in relation to the R$ 154.1 million registered in 1Q15.
Net Result: In 1Q16, net result was R$ -132.6 million, compared to R$ -50.4 million in 1Q15.
Cash Management: o Working Capital: Net working capital days as of March 31, 2016 was 44, an increase of 10 days compared
to March 31, 2015. Compared to December 31, 2012, when the Company announced its 3-year investment cycle, net working capital days improved by 30 days compared to the 74 days registered on that date. This result reinforces the Company’s efforts to manage the main variables of working capital and its commitment to maximize shareholder value.
o Capex: B2W uses its cash generation prioritizing investments that present optimal returns to shareholders. Thus, in 1Q16 consolidated investments in plant, property and equipment and intangibles (development of websites and systems) totaled R$ 129.2 million, or 5.2% of GMV, a 0.2 p.p. reduction compared to 1Q15, when capex was 5.4% of GMV. Accordingly, Adjusted EBITDA in 1Q16 covered 98.4% of Capex, compared to 95.5% in 1Q15.
Financial Debt: B2W’s cash balance at 3/31/2016 amounted to R$ 2,512.7 million, 4.0 times the sum of the Company's short-term debt and debentures, which totaled R$ 628.8 million. The Company’s leverage level (defined as Net Debt / Adjusted EBITDA) was 2.8x on 3/31/2016, compared to 1.5x on 12/31/2015.
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ANNEX I: ABOUT B2W DIGITAL
B2W is a digital company, leader in Latin America, whose history coincides with the development of e-commerce
in Brazil. The Company operates in the following areas: e-commerce through the brands Americanas.com,
Submarino, Shoptime and SouBarato; consumer finance platforms (Submarino Finance and Digital Finance);
technology platform; logistics platform, distribution and customer service; and Marketplace.
With the objective of connecting people, businesses, products and services on a single digital platform, B2W
constantly invests in its strategy of being closer to the customer, offering the best shopping experience, attracting
the best talent, and creating barriers to entry. As a result of these developments, the Company continues to gain
market share, year by year.
The following chart illustrates the current organizational structure of B2W:
Evolution of the business platform:
2013 2014
[BFF] Management Systems
Last Mile Solution/ Delivery
Scalable IT Patform
Customer Eperience
Intelligence/Analytics
Marketplace Integration
[B] Seller
[BFF] B2W Fulfillment
IT/Online Solutions
Online
Security
Marketplace
Whatsapp /
Magento
Technology
Marketing
Campaigns
Pricing
Intelligence
(online /offline)
SEO,
Algorithms
Delivery
(large
packages)
Delivery
(small
packages)
Front-
office
Systems
Back-office
Systems
Full suite of value-added services to support marketplace sellers and online vendors, including BFF (B2W Fulfillment) and [B] Seller (technology services)
Companies comprising the Sieve Group, acquired during 2Q15
TECHNOLOGY
Description
LOGISTICS
A+B – B2W SERVICES
A - TECHNOLOGY
B - LOGISTICS
Marketplace
IntegrationTracking
software
(TMS)
20162015
Artificial
Intelligence
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ANNEX II: MARKET SHARE
MARKET SHARE EVOLUTION
Source: e-Bit (market) and public filings (#2 player). * e-Bit estimate for market size in 1Q16.
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ANNEX III: FINANCIAL STATEMENTS
INCOME STATEMENT EXCLUDING THE EFFECTS OF THE CONSOLIDATION OF B2W’S TRANSPORTATION SUBSIDIARIES
Effects of the consolidation of B2W Digital’s transportation subsidiaries.
INCOME STATEMENT (NON-ADJUSTED)
B2W - Companhia Digital
Income Statements
(in million of Brazilian reais) 1Q16 1Q15 Variation
Gross Merchandise Volume (GMV) 2,461.3 2,541.8 -3.2%
Gross Sales and Services Revenue 2,152.9 2,469.9 -12.8%
Taxes on sales and services (420.3) (332.1) 26.6%
Net Sales and Services Revenue 1,732.6 2,137.8 -19.0%
Cost of goods and services sold (1,329.2) (1,636.5) -18.8%
Gross Profit 403.3 501.3 -19.5%
Gross Margin (% NR) 23.3% 23.5% -0.2 p.p.
Operating Revenue (Expenses) (349.7) (418.6) -16.5%
Selling expenses (254.4) (336.3) -24.4%
General and administrative expenses (21.8) (35.0) -37.8%
Depreciation and amortization (73.6) (47.3) 55.5%
53.6 82.7 -35.2%
Net Financial Result (249.6) (154.1) 61.9%
Financial revenues 137.8 86.8 58.8%
Financial expenses (387.4) (240.9) 60.8%
Other operating income (expenses) (11.6) (5.9) 95.1%
Income tax and social contribution 74.9 26.9 178.3%
Net Result (132.6) (50.4) 163.0%
Net Margin (% NR) -7.7% -2.4% -5.3 p.p.
Adjusted EBITDA 127.2 130.0 -2.2%
Adjusted EBITDA Margin (% NR) 7.3% 6.1% 1.2 p.p.
Consolidated
Period ended on March 31
Operating Result before Net Financial Result and
Equity Accounting
B2W - Companhia Digital
Income Statements
(in million of Brazilian reais) 1Q16 1Q15 Variation
Gross Merchandise Volume (GMV) 2,461.3 2,541.8 -3.2%
Gross Sales and Services Revenue 2,152.9 2,469.9 -12.8%
Taxes on sales and services (420.3) (332.1) 26.6%
Net Sales and Services Revenue 1,732.6 2,137.8 -19.0%
Cost of goods and services sold (1,409.6) (1,665.5) -15.4%
Gross Profit 323.0 472.4 -31.6%
Gross Margin (% NR) 18.6% 22.1% -3.5 p.p.
Operating Revenue (Expenses) (269.4) (389.7) -30.9%
Selling expenses (174.0) (307.3) -43.4%
General and administrative expenses (21.8) (35.0) -37.8%
Depreciation and amortization (73.6) (47.3) 55.5%
53.6 82.7 -35.2%
Net Financial Result (249.6) (154.1) 61.9%
Financial revenues 137.8 86.8 58.8%
Financial expenses (387.4) (240.9) 60.8%
Other operating income (expenses) (11.6) (5.9) 95.1%
Income tax and social contribution 74.9 26.9 178.3%
Net Result (132.6) (50.4) 163.0%
Net Margin (% NR) -7.7% -2.4% -5.3 p.p.
Adjusted EBITDA 127.2 130.0 -2.2%
Adjusted EBITDA Margin (% NR) 7.3% 6.1% 1.2 p.p.
Consolidated
Period ended on March 31
Operating Result before Net Financial Result and
Equity Accounting
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BALANCE SHEET
B2W - Companhia Digital
Balance Sheet
(in million of Brazilian reais)
ASSETS
CURRENT ASSETS
Cash and banks 193.8 329.4
Marketable securities 1,736.0 2,239.2
Accounts receivable 722.2 858.4
Inventories 976.9 1,425.9
Recoverable taxes 228.1 205.9
Prepaid expenses and other accounts 242.5 198.9
Total Current Assets 4,099.5 5,257.7
NON CURRENT ASSETS
Deferred income tax and social contribution 551.6 474.3
Recoverable taxes 866.6 872.7
Escrow deposits and other receivables 93.9 95.1
Plant, property and equipment 564.0 566.0
Intangible assets 2,739.4 2,682.8
Total Non-Current Assets 4,815.4 4,690.7
TOTAL ASSETS 8,914.9 9,948.4
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Suppliers 1,370.8 2,200.7
Loans and financing 420.8 353.8
Debentures 208.0 200.7
Salaries and social contribution 65.6 70.2
Taxes payable 53.3 51.1
Deferred income tax and social contribution 2.4 13.9
Other accounts payable 346.3 371.7
Total Current Liabilities 2,467.2 3,262.1
NON-CURRENT LIABILITIES
Loans and financing 3,592.1 3,646.6
Related parties 2.6 16.6
Provision for contingencies and other accounts payable 277.3 316.9
Total Non-Current Liabilities 3,872.0 3,980.1
SHAREHOLDERS' EQUITY
Capital 3,636.0 3,636.0
Capital reserves 30.4 27.7
Equity valuation adjustment (0.8) (0.4)
Accumulated income (losses) (1,089.9) (957.3)
Minority interest 0.1 0.1
Total Shareholders' Equity 2,575.7 2,706.1
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 8,914.9 9,948.4
03/31/2016
Consolidated
12/31/2015
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CASH FLOW STATEMENT
B2W - Companhia Digital
Cash Flow Statement
(in million of reais)
Operating Activities 31/03/2016 31/03/2015 Variation
Net Result for the Period (132,6) (50,4) (82,2)
Adjustment to the Net Result:
Depreciation and amortization 73,6 47,3 26,3
Deferred income tax and social contribution (77,3) (31,7) (45,6)
Interest, monetary and currency changes 127,4 55,1 72,3
Others (23,1) (12,9) (10,2)
Minority participation 0,0 - 0,0
Adjusted Net Result (32,0) 7,4 (39,4)
Change in Working Capital:
Accounts receivable 242,8 72,0 170,8
Inventories 448,2 164,3 283,9
Suppliers (906,6) (511,7) (394,8)
Change in Working Capital: (215,6) (275,4) 59,8
Change in Assets:
Prepaid expenses 4,4 (1,5) 5,8
Escrow deposits 1,2 1,4 (0,3)
Recoverable taxes (16,2) (66,6) 50,4
Other accounts receivable (current and non-current) (48,5) (18,8) (29,7)
Change in Assets: (59,1) (85,4) 26,3
Change in Liabilities
Salaries and social security charges (4,6) 6,4 (11,0)
Recoverable taxes (current and non-current) 2,2 4,3 (2,1)
Other liabilities (current and non-current) (141,5) (46,9) (94,6)
Change in Liabilities: (143,9) (36,2) (107,7)
Cash Flow from Operating Activities (450,6) (389,6) (61,0)
Investing Activities
Marketable securities 503,2 172,8 330,5
Purchases of property, plant and equipment assets (16,2) (24,3) 8,1
Intangible assets (113,0) (111,9) (1,1)
Value paid for the acquisition of subsidiaries (0,2) (40,2) 40,0
Cash Flow from Investing Activities 373,8 (3,6) 377,4
Financing Activities
Funding 6,9 415,9 (409,1)
Payments (65,7) (59,1) (6,6)
Capital reserves - 2,2 (2,2)
Cash Flow from Financing Activities (58,9) 359,0 (417,9)
Change in cash balance (135,7) (34,2) (101,5)
Beginning Cash Balance 329,4 195,3
Ending Cash Balance 193,8 161,2
Consolidated
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ANNEX IV: NOTE REGARDING THE FINANCIAL STATEMENTS
Effects in the consolidation of B2W Digital’s transportation subsidiaries Click-Rodo and Direct (subsidiaries of B2W Digital) provide merchandise distribution services to the Company, generating an elimination effect in consolidated gross revenue and selling, general and administrative expenses (distribution expenses), according to the present accounting rules. The consolidated gross profit is reduced in an amount equal to the positive effect observed in the selling, general and administrative expenses, but with no effect on Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12, regarding the voluntary disclosure of non-accounting information such as EBITDA. The Instruction aims to standardize the disclosure, in order to improve the understanding of this information and make it comparable among publicly listed companies. To keep the consistency and the comparability between previous periods, we present the reconciliation of EBITDA. In 1Q16, Adjusted EBITDA was R$ 127.2 million. Including other operating income and expenses, EBITDA, according to CVM Instruction 527/12, would be R$ 115.6 million in 1Q16, representing 6.7% of net revenue.
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ANNEX V: INDEBTEDNESS
Accounts receivable are mainly composed of credit card receivables, net of the discounted value, which have immediate liquidity and can be considered as cash. The breakdown of B2W’s accounts receivable is demonstrated in the following table:
Consolidated Indebtedness - R$ MM 3/31/2016 12/31/2015
Short Term Debt 420.8 353.8
Short Term Debentures 208.0 200.7
Short Term Indebtedness 628.8 554.6
Long Term Debt 3,592.1 3,646.6
Long Term Debentures - -
Long Term Indebtedness 3,592.1 3,646.6
Total Debt (1) 4,221.0 4,201.2
Cash and Equivalents 1,929.8 2,568.6
583.0 713.8
Total Cash (2) 2,512.7 3,282.5
Net Debt (Cash) (2) - (1) 1,708.2 918.7
Net Debt (Cash) / Adjusted EBITDA LTM 2.8 1.5
Average Maturity of Debt (days) 910 998
Credit Card Accounts Receivables Net of Discounts
Consolidated Accounts Receivable Reconciliation - R$ MM 3/31/2016 12/31/2015
Gross Credit Cards Receivables 2,051.6 2,172.5
Discounted Receivables (1,468.6) (1,458.7)
583.0 713.8
Present Value Adjustment (34.3) (2.9)
Allowance for Doubtful Accounts (10.6) (21.7)
Other Accounts Receivable 184.3 169.2
Net Accounts Receivable - Consolidated 722.3 858.4
Credit Card Receivables - Net of Discounted Amount
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ANNEX VI: DEFINITIONS
Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting.
Adjusted Gross Profit: Gross profit excluding the effects of the consolidation of B2W Digital’s transportation subsidiaries.
Adjusted SG&A: SG&A excluding the effects of the consolidation of B2W Digital’s transportation subsidiaries.
GMV (Gross Merchandise Volume): Sales of own merchandise, sales realized on the Marketplace, and other revenues (excluding commissions from Marketplace sales), after returns and including taxes.
Market Share: Total sales on B2W sites, including those made on the Marketplace, divided by total market sales (source: e-Bit).
Marketplace Participation: Marketplace sales as a percentage of total consolidated GMV.
Net Debt (Cash): Calculated as the sum of short-term and long-term indebtedness, less the sum of cash & equivalents and credit card accounts receivables (net of the discounted balance).
Net New Customers: Increase in active customer base during the trailing 12 months.
Net Working Capital Days: Calculated as the sum of credit card accounts receivable days (using GMV as the base) and inventory days, less accounts payable days; considering GMV and COGS over the past 12 months.
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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 followed:
