SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of February, 2015
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
(Convenience Translation into English from the Original Previously Issued in Portuguese) |
Companhia Brasileira de Distribuição Consolidated Financial Statements for the Year Ended December 31, 2014 with Report of Independent Registered Public Accounting Firm Deloitte Touche Tohmatsu Auditores Independentes |
(Convenience Translation into English from the Original Previously Issued in Portuguese)
INDEPENDENT AUDITORS’ REPORT
To the Shareholders, Board of Directors and Management of
Companhia Brasileira de Distribuição
São Paulo - SP
We have audited the accompanying individual and consolidated financial statements of Companhia Brasileira de Distribuição (the “Company”), identified as Parent Company and Consolidated, respectively, which comprise the balance sheet as of December 31, 2014 and the related statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting practices and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these individual and consolidated financial statements in accordance with accounting practices adopted in Brazil and in accordance with International Financial Reporting Standards - IFRSs, issued by the International Accounting Standards Board - IASB, , and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion on the financial statements
In our opinion, the individual and consolidated financial statements present fairly, in all material respects, the individual and consolidated financial position of Companhia Brasileira de Distribuição as of December 31, 2014, and its individual and consolidated financial performances and its individual and consolidated cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and IFRSs issued by IASB.
Other matters
Statements of value added
We have also audited the individual and consolidated statements of value added (“DVA”) for the year ended December 31, 2014, prepared under the responsibility of the Company’s Management, the presentation of which is required by the Brazilian Corporate Law for publicly-traded companies, and as supplemental information for IFRSs, that does not require the presentation of DVA. These statements were subject to the same auditing procedures described above and, in our opinion, are fairly presented, in all material respects, in relation to the financial statements taken as a whole.
The accompanying financial statements have been translated into English for the convenience of readers outside Brazil.
São Paulo, February 12, 2015
DELOITTE TOUCHE TOHMATSU |
Edimar Facco |
Auditores Independentes |
Engagement Partner |
Companhia Brasileira de Distribuição
Consolidated Financial Statements
Years ended December 31, 2014 and 2013
Index
Management’s report |
1 |
Full report of audit committee’s |
7 |
Management statement on the financial statements |
13 |
Management statement on the independent registered Public Accounting Firm on Financial Statements |
14 |
Financial statements |
|
Consolidated Balance Sheet |
15 |
Consolidated Statement of income |
17 |
Consolidated Statement of income and comprehensive income |
18 |
Consolidated Statement of changes in shareholders’ equity |
19 |
Consolidated Statement of cash flows |
20 |
Consolidated Statement of value added |
22 |
Notes to the consolidated financial statements |
23 |
Other information deemed as relevant by the Company |
130 |
MESSAGE FROM THE MANAGEMENT
The year 2014 was one of major achievements for GPA. During this complex period, we made use of many levers that guaranteed the success of our strategy and the achievement of our goals, despite the challenges imposed by Brazil's macroeconomic scenario. Through sustainable and structured actions, we managed to guarantee profitability in all businesses, along with higher sales and market share gains.
This was a year of advances in operating efficiency, in which we improved our control of working capital and optimized capital expenditure, while also adopting greater discipline in the execution of our strategic plan. We posted net income(1) growth of 20.1% to R$2.084 billion. The period was also marked by strong cash generation, which allowed us to close the year with net cash 2.4 times higher than in 2013.
Anchored by our multi-format, multichannel and multi-region model and supported by the exchange of experiences and synergies with the Casino Group, we maintained a solid growth pace and improved our results. The diversity of the business, supported by a solid financial structure, attests to the effectiveness of our strategy, our competitive advantages and our strong focus on the customer.
GPA has over 2,000 points of sale that operate under the most recognized brands in Brazil's retail industry in various different formats. In the food segment, we have Assaí, with its Cash and Carry model, Extra, with 344 supermarkets and hypermarkets, and Pão de Açúcar, with a premium positioning, as well as our food e-commerce operation Pão de Açúcar Delivery. We also have the convenience store format with the Minimercado Extra and Minuto Pão de Açúcar stores, the latter launched in May 2014 to target the "AB" income segment.
In the non-food segment, we maintained our absolute leadership, with Via Varejo operating under the brands Casas Bahia and Pontofrio. In e-commerce, we were very proud to create, jointly with Casino and Via Varejo, Cnova, a company that combines the e-commerce operations in Brazil, France and nine other countries and is one of the largest international players in the segment, with shares listed on the NASDAQ and on the Euronext Paris.
To ensure the fulfillment of our strategic planning, we improved our management processes, adopting methods for the systematic monitoring of goals that includes the respective action plans and implementation of adjustments, if needed. This process is being carried out by GPA's executive team, whose professionals are recognized for vast experience in their respective operating segments.
In line with our strategic advantage as a multi-format company, we accelerated our operations on the multichannel platform by expanding the Click & Collect project, which is available at 100 stores, and also invested in organic growth by opening 212 new stores, 84 more than in the previous year. Through these initiatives, we reinforce our commitment to organic growth over the coming years in all our models, while strengthening our presence in current markets and expanding our operations in new markets.
1
In 2014, this expansion had a significant impact on Multivarejo. We opened 97 new stores in the convenience format, which included Minimercado Extra and Minuto Pão de Açúcar stores, and built a Distribution Center dedicated exclusively to the operation. In the premium supermarket segment, we strengthened our presence and competitive advantages through Pão de Açúcar by offering an innovative assortment and renovating and modernizing the store base, as well as by opening new units and converting existing units, adding a total of 17 new stores to the chain. In delivery, the e-commerce food segment in which Pão de Açúcar was a pioneer, we posted growth of over 20% in the year.
In the Extra banner, we launched a series of new measures to drive sales at hypermarkets, including operational improvements at stores, adjustments to assortments, better communication and continuous reinforcement of the price competitiveness strategy. These measures supported better customer traffic trends at stores and a recovery in market share. Within the one-stop shop concept and as a way to offer a complete shopping solution for our customers, we expanded the area of the commercial centers located inside our stores, adding 35,000 square meters in GLA under the management of GPA Malls, and including new services.
At Assaí, we continued to expand, opening nine new stores, which included the expansion of our operations in the Northeast, while reinforcing the strategy to grow the Cash and Carry operation. The chain's footprint currently covers 13 Brazilian states. This expansion has been making an important contribution to driving sales at Assaí, which registered net sales growth of 32.7% in the year.
At Via Varejo, the year was marked by important profitability gains, with EBITDA(1) margin expanding 220 bps to 10.4% significantly above retail industry benchmarks. During the year, the company focused on its expansion plan by opening 88 new stores and launching pioneering initiatives, such as opening of 20 new Mobile stores under the Casas Bahia and Pontofrio brands and expanding in the furniture segment by opening units focused on selling customized furniture, a segment in frank expansion.
One of the year's major achievements was the launch of Cnova, the product of the consolidation of Nova Pontocom and Cdiscount, present in France and another ten other countries, with the new company carrying out its IPO on the NASDAQ and Euronext Paris. In the year, the new company posted strong growth in gross merchandize volume of 28.6% as well as strong cash generation.
With sustainability as a strategic pillar, GPA also invested in dialogue and in creating value for its stakeholders. We made progress on our sustainable management platform by defining our social and environment principles based on five agents of change: valuing our people, conscientious consumerism and supply, transforming the value chain, environmental impact management and social engagement.
GPA is the largest private employer in the retail industry and one of Brazil's largest, with 160,000 employees firmly committed to meeting the Group's targets. This commitment is confirmed by the very positive results achieved in 2014, such as the 200 bps reduction in employee turnover, which reinforces GPA's position as one of the companies with the highest retention rates in the industry, as well as the 800 bps improvement in employee engagement. We also made progress on diversity and on our goal of promoting a workplace that represents the universe of society and our customers. In 2014, we developed special projects for hiring professionals with disabilities and created the career advancement program for women in leadership positions, which were important initiatives on this front.
Our workforce, combined with the value of our brands, operations in various business formats and, most importantly, the firm commitment to our stakeholders, reinforces our role as an agent of change in the value chain that works to mitigate negative impacts on the environment and expand its commitment to society in order to assure its sustainable growth.
2
Lastly, it is important to highlight the support provided by the Board of Directors, which in turn was supported by the committees and the company's commitment to continuous advances in governance processes. It is this principle that guides us to deliver results in each period, but that also ensures our continuous growth in the long run and establishes GPA as a company poised for further growth.
(1) Adjusted by the line Other Operating Income and Expenses to eliminate nonrecurring income and expenses
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OPERATING AND FINANCIAL PERFORMANCE
We present on the following pages our comments regarding the operating and financial performance of Grupo Pão de Açúcar (GPA) in 2014. The comments refer to the consolidated results of the Group or, where specifically stated, the operating units. GPA maintains a multi-business and multichannel platform formed by brick and mortar stores and e-commerce operations, divided as follows: GPA Food, formed by supermarkets (Pão de Açúcar and Extra Supermercado), hypermarkets (Extra Hiper), convenience stores (Minimercado Extra and Minuto Pão de Açúcar), Cash & Carry (Assaí), delivery (Pão de Açúcar and Extra), GPA Malls (Conviva and commercial centers), fuel stations and drugstores; Via Varejo, with brick-and-mortar electronics and home appliance stores under the Casas Bahia and Pontofrio banners; and Cnova, the e-commerce segment, which is formed by the operations of Cnova Brasil and Cdiscount in France, including their international websites.
NET OPERATING REVENUE
Net sales grew 13.3% to R$65,525 million, with the highlight the strong organic growth in the period, with 212 new stores opened, with 124 launched by GPA Food and 88 by Via Varejo. With this volume of openings, GPA registered 84 more new stores than in 2013.
GROSS PROFIT
Gross profit grew 12.2%, from R$15,104 million to R$16,945 million. Gross margin stood at 25.9% in 2014, down 20 basis points from 2013, impacted primarily by the higher revenue contributions by Assaí and Cnova.
OPERATING EXPENSES
Operating expenses before depreciation and amortization increased by 6.6%, from R$11,368 million in 2013 to R$12,121 million in 2014. The ratio of operating expenses to net sales decreased from 19.6% in 2013 to 18.5% in 2014, mainly owing to the reduction in corporate expenses, the better control of selling expenses at GPA Food and the operating efficiency gains at Via Varejo.
FINANCIAL PERFORMANCE
The net financial result was an expense of R$1,508 million, increasing 26.3% from 2013, lagging the cumulative increase in the CDI overnight rate in the period (33.9%). The higher cash generation and evolution in working capital, with improvement of 19 days (in days of COGS) in the difference between inventories and trade accounts payable in relation to 2013, had a positive impact on the financial result.
INDEBTEDNESS
Gross debt, comprising loans, borrowings and debentures, stood at R$6.852 billion at the end of December 2014, stable in comparison with the position a year earlier. However, due to the higher cash generation in the period, improvement in working capital and inflow of proceeds from the Cnova IPO, the Company ended 2014 with a net cash position including the debt from the Via Varejo payment book operation of R$1.421 billion, compared to the net debt position including the payment book operations of R$1.104 billion in 2013.
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The company held cash reserves of approximately R$11.1 billion, compared to R$8.4 billion at the end of 2013, which attests to its solid capital structure, especially given the economic environment marked by high volatility.
NET INCOME
Consolidated net income amounted to R$1,760 million in 2014, representing growth of 26.0% from 2013. Net margin in the period increased by 30 basis points, from 2.4% in 2013 to 2.7% in 2014, mainly due to the higher profitability of GPA Food and Via Varejo.
CAPITAL EXPENDITURE
In 2014, the Group’s investments came to R$1.896 billion, with the highlight the unprecedented number of openings in a single year, with 212 new stores opened, of which 124 stores were in the Food segment and 88 Via Varejo stores, which represents 84 more stores than in 2013.
The expansion in the Group's sales area, excluding the effect from the closure of Via Varejo stores due to the decision of Brazil’s antitrust agency CADE, reached 5% in 2014.
An important factor in the period was the optimization in expansion and renovation capex compared to 2013, due to the greater discipline in expenditures due to better negotiations and a review of construction methods, among other initiatives.
The Company plans to maintain the same pace of organic growth in the coming years.
BALANCE SHEET
ASSETS
Total current assets on December 31, 2014 amounted to R$24,133 million. The Company's cash on said date was R$11,149 million, compared to R$8,392 million in 2013, explained by the higher cash flow in the period, the improvement in working capital and the proceeds from the Cnova IPO. The stronger cash generation in the period enabled the Company to close 2014 with net cash 2.4 times higher than in the previous year.
Total noncurrent assets amounted to R$21,367 million. Property and equipment, net increased by R$646 million, mainly due to investments in opening new stores (construction and equipment purchases), acquiring land and maintaining existing stores.
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LIABILITIES
Total current liabilities on December 31, 2014 amounted to R$23,848 million. Noncurrent liabilities came to R$7,1708 million. Short and long-term loans and borrowings amounted to R$9,728 million, stable compared to 2013.
Total liabilities and equity came to R$45,500 million.
OWNERSHIP STRUCTURE
The subscribed and paid-up capital on December 31, 2014, was represented by 265,283,308 registered shares without par value, consisting of 99,679,851 common shares and 165,603,457 preferred shares.
DECLARED DIVIDENDS
In a meeting held on April 24, 2014, the Board of Directors approved the payment of interim dividends for 2014. The payments of interim dividends for 1Q14, 2Q14 and 3Q14 amounted to R$108 million and were made on May 15, August 13 and November 21, 2014, respectively. The amount corresponded to R$0.127270 per common share and R$0.14 per preferred share.
Management proposed the payment of dividends of R$302 million for the fiscal year ended December 31, 2014. Excluding the prepayments of quarterly interim dividends in 2014, the amount referring to the remaining portion of dividends is R$194.0 million, corresponding to R$0.6890176962 per common share and R$0.7579194658 per preferred share, calculated as shown below. The proposal for payment of dividends for fiscal year 2014 will be submitted to the Annual Shareholders’ Meeting, to be held on April 24, 2015.
Shareholders of record on April 24, 2015 will be entitled to the payment. As of April 27, 2015, the shares will trade ex-dividends. The dividends will be paid by June 23, 2015, within 60 days of the date of the Annual Shareholders’ Meeting.
INDEPENDENT AUDITORS
The individual and consolidated financial statements of GPA were audited by Deloitte Touche Tohmatsu Auditores Independentes (“Deloitte”). The hiring of independent auditors is based on principles that safeguard the independence of the auditor, which are: (a) auditors may not audit their own work; (b) auditors may not exercise managerial functions; and (c) auditors should not advocate on behalf of GPA or provide any services that may be considered prohibited by the regulations in force.
In compliance with Instruction 381/03 issued by the Securities and Exchange Commission of Brazil, we hereby declare that for the fiscal year ended December 31, 2014, Deloitte did not provide any services other than those related to the independent audit.
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FULL REPORT OF THE AUDIT COMMITTEE – 2014
Introductory remarks
The Audit Committee of Companhia Brasileira de Distribuição (“Company”) is defined in the bylaws as an advisory body directly linked to the Board of Directors, with its creation deliberated in that Board’s meeting of 27 September, 2012 and formally included in the bylaws as approved by the Extraordinary Shareholders’ Meeting of 18 October, 2012.
The Audit Committee members, appointed in the Board of Directors’ Meeting of 16 October, 2013, started effectively to operate in calendar 2014, with its first meeting having taken place in 07 February, 2014. Until then, the Company had a Fiscal Council (as defined in the Brazilian Company law) and that operated until the closing of the financial statements for calendar 2013, having not being reappointed after that.
The current Committee is composed of a Board member and two more, all independent, appointed for a two-year term and with the possibility of reappointment. They are appointed by Board members, taking into consideration Brazilian legal and regulatory requirements and also best international practices.
Duties and responsibilities
Company’s Management
Management is responsible for defining and implementing processes and procedures aiming to collect data for preparation of the financial statements, observing the requirements of the Brazilian Company law, the accounting practices generally accepted in Brazil besides those issued by the International Accounting Standards Board (IASB), the rulings issued by the Brazilian Securities and Exchange Commission (“Comissão de Valores Mobiliários”) and, as the Company is also listed in the New York Stock Exchange, the requirements by the U.S.Securities and Exchange Commission (SEC) and those of the U. S. Sarbanes-Oxley Act must also be observed and complied with under Management supervision.
Management is also responsible for internal control processes, policies and procedures to ensure safeguard of assets, timely recognition of liabilities and elimination, or reduction to acceptable levels, of risk factors.
In October 2013 the Directory of Risks was created, with the mission to identify and monitor, at the Business Units level, the main risks that may challenge the strategies of the Company in pursuing its business objectives, structuring the process for management of those risks and for mitigating their impact in the operations.
Additionally, such Directory assists management in developing standards, policies, procedures and redesign of processes, besides the control activities to ensure risk mitigation.
Starting in 2014 it was also assigned to this Directory the duty to coordinate and monitor the internal control tests aiming to comply with the requirements of the U.S. Sarbanes-Oxley Act (S-Ox).
Internal Audit
Internal Audit is charged with the duty to assess the quality of the Company’s internal control systems and compliance with policies and procedures set out by Management, including those related to the main accounting records that result in the preparation of financial statements. It performs its task in an ample and independent way, observing, mainly, the coverage of áreas and activities that present the most sensitive risks to operations and to the strategies. There was in the end of 2014 a replacement of the Director of Internal Audit, and the new Director, just recruited, started working in 19 January, 2015.
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Independent Auditors
Independent auditors, under the responsibility of Deloitte Touche Tohmatsu since the financial statements of 31 December, 2013, is responsible for examining such financials aiming at issuing a report with their opinion about compliance with the applicable standards. As a result of their work, independent auditors also issue a recommendation report about accounting procedures and internal controls, besides other reports it is also engaged to prepare like those of the quarterly reviews. It is also Deloitte’s responsibility to audit the internal controls as required by U. S. Sarbanes-Oxley Act (S-Ox).
Audit Committee
As determined by paragraph 3 of Article 20 of the Company´s bylaws and by Article 13 of the Internal Ruling of the Audit Committee (available at www.gpabr.com, under “RI”, in “Bylaws, Code of Moral Conduct, Policies and Rulings”) among the main duties of this body are to ensure that quality and integrity of financial statements and Management Report are achieved, as well as compliance with legal and regulatory requirements, performance, Independence and quality of the work of independent and of internal auditors, quality and effectiveness of internal control systems, assessment and monitoring of risks, be informed and analyze related party transactions and preparation of an annual report to be presented together with the financial statements.
The Audit Committee bases its judgements and forms its opinions taking into account information from Management, presentations about information systems, financial statements and internal controls, as well as results of the work of the Director of Risks, Director of Accounting, Director of the Legal Department (Counsel) and of the Internal and the Independent Auditors.
Activities of the Audit Committee in 2014
The Audit Committee met regularly in 16 occasions, in which 80 individual meetings were carried out with senior Management, Internal and Independent Auditors and other members of the Management team of the Company. The Coordinator of the Audit Committee is invited as a permanent observer of the meetings of the Fiscal Council (as defined in the Brazilian Company Law) of Via Varejo S.A., aiming at being currently informed of relevant issues of the financial statements and/or of internal controls that deserve to be taken into consideration when financial data from that investee affect the equity method of accounting and consolidation at the Parent Company CBD. The Coordinator of the Audit Committee meets periodically with the Director of Internal Audit of Group CASINO based in France. The Chairwoman of the Corporate Governance Committe of the Company is a permanent invitee to the Audit Committee meetings, attending them whenever possible. The Audit Committee reported periodically the main subjects under its scope to the Board of Directors in their regular meetings.
Meetings with Management
The Audit Committee met with Management and respective teams to discuss, in this first year of activities, the structures and operations of the areas, their work processes, eventual deficiencies already identified in their controls, mitigating mechanisms in place and improvement plans.
Among the subjects that most called attention of the Committee are:
Contingencies and Provisions – The criteria for classifying the chances of success in administrative and legal cases were analyzed and discussed with Legal Counsel and senior Management in charge of Accounting, Tax, Risks and with the Independent Auditors, with the objective to inform decisions about the accounting recognition of amounts involved, mainly in relation to civil and legal claims.
As regards the monitoring of related balances by Legal Counsel, it was requested an analysis of amounts deposited as guarantees of the cases having in mind the large number of employees of the Company and, in consequence, the also large number of labor claims open against the Company.
8
The Committee was informed about an Action Plan already under way aiming to adopt more effective and modern systems and processes to monitor legal claims against the Company, under supervision of the Head of Legal Counsel and his team.
Related Party Transactions – In 2014 it was approved by the Board of Directors, as recommended by the Corporate Governance Committee, a policy for Related Party Transactions. Under such policy it was determined that the Audit Committee is required to assess whether the guidance contemplated in said policy was observed in certain transactions of this nature to be brought to the Board of Directors for approval. In several Audit Committee meetings such transactions among related parties were analyzed to ensure the policy had been complied with.
Information Technology and Security – the Audit Committee prioritized the monitoring of progress of the processes and controls involving information technology issues as well as related long and medium term action plans aiming at improvements in Information Security.
Highlighting this last subject, it is worth mentioning that an Information Security Committee was formed, reporting to senior Management; its members are the heads of IT, Risks and Legal Counsel, who meet on a monthly basis to deal with the matters of greater risk and monitor the action plans for improvement and mitigation. Matters discussed in this information security committee are reported on a quarterly basis to the Audit Committee.
In meetings with the head of Information Technology and Security and his team the improvements in processes with IT support were discussed with the objective of optimizing and improving the availability and control of information in the areas of Human Resources, Internal Audit, Accounting and Taxes; updates on this front are also reported quarterly to the Audit Committee.
With this objective in mind, improvements in specific systems are beind developed for each of these áreas, with their respective peculiarities, supported by the IT department.
Human Resources – With senior Management of HR it was discussed the Action Plan already under way that intends to implement a new management and control system of personnel of the entire GPA group, to achieve a better control of all aspects related to history of employment and related documentation of each and all employees, in such a way that such system improves the processes of managing personnel and assists the Legal Counsel in obtaining better documentation support to discuss labor claims and consequently to improve chances of success in courts.
Accounting – With the head of Accounting Department and his team the Audit Committee analyzed and discussed, before issuance, the quarterly results and those for the financial year ended 31 December, 2014, as well as information in the Notes to those financial statements, always with support of the independent auditors.
It is under development a Project to implement a system to consolidate all financial and accounting information of the GPA group, with the objective to enhance the quality and control of the consolidation of such information.
It were also discussed aspects related to manual journal entries, searching to analyze and discuss the controls in force in the quality of the adjusting entries and/or of manual intervention in inherited non-integrated systems up to now. In relation to this subject, levels of review and approvals were adopted based on materiality and nature, as well as suggestions and opportunities to reduce manual intervention in the accounting process routines by means of systems improvements. To monitor this work it was requested the assistance of the independent auditors to test and validate the manual journal entries.
9
Inventory controls and taxes on purchases, transfers and sales – The Audit Committee was informed about an Action Plan that intends to optimize the management of inventories involving Distribution Centers, Transfers to and Controls at stores, as well as timing and amounts of taxes applicable in each of these steps. The Plan contemplates to achieve significant improvements in issues related to inventory shrinkage and risk of inexistence of products at sales areas in stores, checking of quantities shipped at Distribution Centers and quantities arrived at stores, scheduled physical count of inventories and logistic procedures related to such inventories.
Real Estate management (“GPA Malls”) – the Audit Committee was informed by the Director of Risks of studies in the area of “Malls” aiming to achieve more effectiveness in management and reduction of compliance risks in real estate activities.
Internal and Risks Controls
During 2014 the Audit Committee accompanied and made recommendations about internal controls encompassing:
- Policies and codes of the Company, like the Insurance Policy, Policy for appointing independent auditors and their internal control letter;
- Intensive monitoring, together with the Corporate Governance Committee, of progressive compliance with Brazilian Anti-brybery Act (“Anti Corruption Act number 12.846”), attempting to analyze and discuss all procedures to be set in place and related controls;
- Procedures to fully comply with the requirements of U.S. Sarbanes-Oxley Act;
- The Audit Committee was periodically informed of communication received by the Company from regulatory agencies and governamental entities in what concerns matters within the scope of the Audit Committee.
Independent Auditors
Among the work performed by the independent auditors it should be mentioned that the Audit Committee accompanied and discussed the results of their reports on the financial statements before disclosure to users, contemplating the recomendations and suggestions made by the external auditors.
Another work of the auditors supervised by the Audit Committee was Management of Fraud Risks, where an extensive mapping was carried out in all areas of the Company by interviews with key personnel to identify potential risks and design preventive or mitigation procedures.
Internal Audit
The Audit Committee had an intensive and constant interaction with the Internal Auditors, and among the subjects discussed it is worth mentioning:
- Monthly report of claims and wrongdoing reports (“whistleblowing”) received through the internal communication channel, that come in to the Internal Audit area in a confidential way - without identification of the whistleblower. The flows to investigate the claims and the steps taken when they proved valid, as well as the financial impact of each confimed claim, were discussed.
- Revision of the corporate standards and procedures of the Company’s internal audit department.
- Accompanying the studies and beginning of implementation of an IT-based system for Continuous Auditing of several areas of the Company, like sales, information from electronic checkout points, inventory controls, tax information, accounts receivable and accounts payable, among other. This project was named Continuous Auditing and based in the initial analyses the Audit Committee agreed that large benefits shall stem from improvement in controls and time saving in processing the audited information.
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The Audit Committee approved the 2015 work plan developed by the former Internal Audit Director, and such plan is being implemented.
The Audit Committee also approved a revision of the Company’s Internal Audit ruling; subsequent updates of it must be submitted to approval of the Audit Committee.
Recommendations of the Audit Committee
The Audit Committee recommends to Senior Management (Executive Directors):
- That they rigorously monitor and follow the consolidation, scheduled for 2015, of the Compliance area of the Group, with the formation of an expert team under the responsibility of the Director of Risks, that shall be responsible to assist management in monitoring compliance with legislation, rules, policies, codes and commitments applicable to the Company, ensuring a process for building capacity in all business areas to adhere to the related requirements.
- That they make sure all necessary resources are made available to a complete implementation of the following Action Plans under way and room is open in the ordinary Executive Directors’ meetings for them to be informed of progress and of eventual new obstacles identified, making efforts for shortening scheduled completion dates:
· In the Legal Counsel Department, aiming to adopt more effective and modern systems and processes to monitor all legal cases involving the Company;
· In the Information Technology Department, aiming at improvements in processes supported by this area for the purpose of optimizing availability and control of information in the areas of Human Resources, Internal Audit, Accounting and Taxes.
· In the area of Human Resources, aiming at implementing a new system to manage and control all personnel information of the entire GPA group.
· In the area of Accounting, aiming at implementing a new system to consolidate all financial information and accounting data of all companies of the GPA Group.
· Still in the Accounting area, constant high level monitoring of the subject “manual journal entries”, aiming at ensuring that the mitigating controls are effective while systemic solutions – naturally more complex and costly, are not defined and adopted, with emphasis in recommending that such systemic solutions be persistently searched for.
· In the area of Inventory Controls and related taxes on purchases, transfers and sales, aiming at optimizing the permanent accuracy of physical and accounting control of inventories and of computation of applicable taxes in inventory movements.
· In the area of “Malls”, the conclusion and implementation of strategies aiming to achieve greater effectiveness in managing real estate assets.
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Conclusion
The Audit Committee is of the opinion that the matters highlighted under “Recommendations” above for which Action Plans are stil under way were supported by satisfactory mitigation procedures to minimize the Internal Control risks that might impact the Financial Statements as of 31 December, 2014.
The Audit Committee is of the opinion that all relevant facts that came to its attention from the work described in this Report are adequately disclosed in the Management Report and in the audited Financial Statements as of 31 December 2014 and recommends their approval by the Board of Directors.
São Paulo, February 12, 2015
L. Nelson Carvalho – Coordinator of the Audit Committee and Accounting, Auditing and Financial Expert
Eleazar de Carvalho Filho, Board Member and equally Financial Expert
Pedro Oliva Marcílio de Sousa
12
Management statement on the financial statements
In accordance with the item V of article 25 of Instruction CVM no. 480, of December 7, 2009, the Directors stated that have reviewed, discussed and agreed with the Company´s Financial Statement related to the year ended December 31, 2014, authorizing the conclusion on this date.
São Paulo, February 12, 2015.
Directors
Ronaldo Iabrudi
President
Christophe José Hidalgo
Vice President of Finance
Daniela Sabbag
Investor’s relationship Director
13
Management statement on the independent auditor’s report
In accordance with the item V of article 25 of Instruction CVM no. 480, of December 7, 2009, the Directors stated that have reviewed, discussed and agreed with to the Independent Registered Public Accounting Firm Report over the Company´s Financial Statements for the year ended December 31, 2014, issued on this date.
São Paulo, February 12, 2015.
Directors
Ronaldo Iabrudi
President
Christophe José Hidalgo
Vice President of Finance
Daniela Sabbag
Investor’s relationship Director
14
Companhia Brasileira de Distribuição
Consolidated Balance Sheet
December 31, 2014 and 2013
(In millions of reais)
|
|
|
Parent Company |
|
Consolidated | ||||
Assets |
Notes |
|
12.31.2014 |
|
12.31.2013 |
|
12.31.2014 |
|
12.31.2013 |
Current |
|
|
|||||||
Cash and cash equivalents |
7 |
|
2,923 |
2,851 |
11,149 |
8,367 | |||
Marketable securities |
|
|
- |
- |
- |
24 | |||
Trade accounts receivable |
8 |
|
305 |
312 |
3,210 |
2,516 | |||
Other accounts receivable |
9 |
|
75 |
48 |
295 |
227 | |||
Inventories |
10 |
|
2,487 |
2,166 |
8,405 |
6,382 | |||
Recoverable taxes |
11 |
|
105 |
148 |
808 |
908 | |||
Assets held for sale |
|
|
2 |
4 |
22 |
39 | |||
Dividends receivable |
|
|
154 |
41 |
26 |
12 | |||
Prepaid Expenses |
|
|
41 |
27 |
130 |
92 | |||
Other receivables |
|
|
26 |
25 |
88 |
42 | |||
Total current assets |
|
|
6,118 |
5,622 |
24,133 |
18,609 | |||
|
|
|
|||||||
Noncurrent |
|
|
|||||||
Trade accounts receivable |
8 |
|
- |
- |
105 |
115 | |||
Other accounts receivable |
9 |
|
82 |
31 |
636 |
630 | |||
Inventories |
10 |
|
- |
- |
172 |
172 | |||
Recoverable taxes |
11 |
|
392 |
351 |
2,136 |
1,429 | |||
Deferred income and social contribution taxes |
21 |
|
56 |
121 |
491 |
951 | |||
Related parties |
12 |
|
398 |
647 |
313 |
172 | |||
Restricted deposits for legal proceedings |
23 |
|
420 |
427 |
857 |
815 | |||
Prepaid expenses |
|
|
25 |
38 |
37 |
50 | |||
Investments |
13 |
|
8,391 |
7,774 |
401 |
310 | |||
Investment properties |
|
|
24 |
- |
25 |
- | |||
Property and equipment |
15 |
|
6,125 |
6,075 |
9,699 |
9,053 | |||
Intangible assets |
16 |
|
1,195 |
1,127 |
6,495 |
5,701 | |||
Total noncurrent assets |
|
|
17,108 |
16,591 |
21,367 |
19,398 | |||
Total assets |
|
|
23,226 |
22,213 |
45,500 |
38,007 |
The accompanying notes are an integral part of these financial statements.
15
Companhia Brasileira de Distribuição
Consolidated Balance Sheet
December 31, 2014 and 2013
( In millions of reais)
|
|
|
Parent company |
|
Consolidated | ||||
Liabilities |
Notes |
|
12.31.2014 |
|
12.31.2013 |
|
12.31.2014 |
|
12.31.2013 |
Current |
|
|
|
|
|
|
|
| |
Trade accounts payable |
17 |
|
3,180 |
2,632 |
13,322 |
8,547 | |||
Loans and financing |
18 |
|
2,895 |
1,973 |
6,594 |
5,172 | |||
Payroll and related charges |
|
|
335 |
368 |
864 |
796 | |||
Taxes, contributions payable and taxes payable in installments |
20 |
|
183 |
366 |
867 |
969 | |||
Related parties |
12 |
|
1,751 |
2,224 |
261 |
33 | |||
Dividends payable |
26.8 |
|
194 |
151 |
321 |
152 | |||
Accounts payable related to acquisition of companies |
22 |
|
- |
- |
73 |
69 | |||
Financing related to acquisition of real estate |
|
|
80 |
36 |
98 |
36 | |||
Rent payable |
|
|
52 |
53 |
115 |
112 | |||
Deferred revenue |
25 |
|
4 |
- |
214 |
115 | |||
Pass-through liabilities |
|
|
8 |
9 |
429 |
226 | |||
Other accounts payable |
|
|
143 |
210 |
690 |
783 | |||
Total current liabilities |
|
|
8,825 |
8,022 |
23,848 |
17,010 | |||
|
|
|
|||||||
Noncurrent |
|
|
|||||||
Loans and financing |
18 |
|
2,631 |
3,142 |
3,134 |
4,323 | |||
Deferred income and social contribution taxes |
21 |
|
- |
- |
1,133 |
1,061 | |||
Tax payable in installments |
20 |
|
617 |
992 |
617 |
1,073 | |||
Provision for contingencies |
23 |
|
483 |
496 |
1,344 |
1,147 | |||
Accounts payable related to acquisition of companies |
22 |
|
- |
- |
57 |
108 | |||
Deferred revenue |
25 |
|
65 |
30 |
834 |
456 | |||
Other accounts payable |
|
|
25 |
48 |
51 |
117 | |||
Total noncurrent liabilities |
|
|
3,821 |
4,708 |
7,170 |
8,285 | |||
Shareholders’ equity |
|
|
|||||||
Capital stock |
26 |
|
6,792 |
6,764 |
6,792 |
6,764 | |||
Capital reserves |
26 |
|
282 |
233 |
282 |
233 | |||
Profit reserves |
26 |
|
3,505 |
2,486 |
3,505 |
2,486 | |||
Equity valuation adjustments |
|
|
1 |
|
- |
|
1 |
|
- |
|
|
|
10,580 |
9,483 |
10,580 |
9,483 | |||
Non-controlling interest |
|
|
- |
- |
3,902 |
3,229 | |||
Total shareholders’ equity |
|
|
10,580 |
9,483 |
14,482 |
12,712 | |||
|
|
|
|||||||
Total liabilities and shareholders’ equity |
|
|
23,226 |
22,213 |
45,500 |
38,007 |
The accompanying notes are an integral part of these financial statements.
16
Companhia Brasileira de Distribuição
Consolidated Statements of Income
Years ended December 31, 2014 and 2013
(In millions of reais)
Notes |
Parent company |
|
Consolidated | |||||
12.31.2014 |
12.31.2013 (Reclassified) |
12.31.2014 |
12.31.2013 (Reclassified) | |||||
Net sales from goods and/or services |
27 |
22,249 |
21,670 |
65,525 |
57,854 | |||
Cost of goods sold and/or services sold |
28 |
(16,015) |
(15,802) |
(48,580) |
(42,750) | |||
Gross profit |
6,234 |
5,868 |
16,945 |
15,104 | ||||
Operating income (expenses) |
||||||||
Selling costs |
28 |
(3,622) |
(3,275) |
(10,303) |
(9,257) | |||
General and administrative |
28 |
(562) |
(633) |
(1,484) |
(1,485) | |||
Depreciation and amortization |
(435) |
(411) |
(821) |
(787) | ||||
Equity pickup |
13 |
775 |
655 |
108 |
47 | |||
Other operating income (expenses), net |
29 |
(354) |
(519) |
(441) |
(673) | |||
(4,198) |
(4,183) |
(12,941) |
(12,155) | |||||
Profit before financial results |
2,036 |
1,685 |
4,004 |
2,949 | ||||
Net financial results |
30 |
(614) |
(525) |
(1,508) |
(1,193) | |||
1,422 |
1,160 |
2,496 |
1,756 | |||||
Profit before income and social contribution taxes |
|
1,422 |
1,160 |
2,496 |
1,756 | |||
Income and social contribution taxes |
21 |
(152) |
(108) |
(736) |
(360) | |||
Net income for the year |
1,270 |
1,052 |
1,760 |
1,396 | ||||
Attributed to: |
||||||||
Controlling shareholders |
1,270 |
1,052 |
1,270 |
1,052 | ||||
Noncontrolling shareholders |
- |
- |
490 |
344 | ||||
- |
- | |||||||
Earnings per share (weighted average for the year R$) |
31 |
31.12.2014 |
31.12.2013 |
|||||
Basic |
||||||||
Preferred |
4.96661 |
4.12670 |
||||||
Common |
4.51445 |
3.75201 |
||||||
Diluted |
||||||||
Preferred |
4.95197 |
4.11039 |
||||||
Common |
4.51276 |
3.75092 |
The accompanying notes are an integral part of these financial statements.
17
Companhia Brasileira de Distribuição
Consolidated Statements of Comprehensive Income
Years ended December 31, 2014 and 2013
(In millions of reais)
Parent company |
Consolidated | |||||||
12.31.2014 |
12.31.2013 |
12.31.2014 |
12.31.2013 | |||||
Net income for the year |
1,270 |
1,052 |
1,760 |
1,396 | ||||
-Items that may be reclassified subsequently to profit or loss: |
||||||||
Defined benefit pension plan – actuarial gain or loss |
(1) |
- |
(2) |
- | ||||
-Items that will not be reclassified to profit or loss |
||||||||
Translation adjustment of the year |
2 |
- |
6 |
- | ||||
Comprehensive income for the year |
1,271 |
1,052 |
1,764 |
1,396 | ||||
Attributed to: |
||||||||
Controlling shareholders |
1,271 |
1,052 | ||||||
Noncontrolling shareholders |
493 |
344 | ||||||
1,764 |
1,396 |
The accompanying notes are an integral part of these financial statements.
18
Companhia Brasileira de Distribuição
Consolidated Statements of Changes in Shareholder’s Equity
Years ended December 31, 2014 and 2013
(In millions of reais)
Capital reserves |
Profit Reserves |
|||||||||||||||||||||||||
Description |
Paid- in |
Special |
Other Reserves |
Granted Options |
Legal |
Expansion |
Treasury Shares |
Profit Retention |
Accumulated Profit/Loss |
Equity valuation adjustments |
Shareholders’ Equity |
Non-controlling Interest |
Total | |||||||||||||
Balance at December 31, 2012 |
6,710 |
38 |
7 |
183 |
302 |
461 |
(7) |
802 |
- |
- |
8,496 |
2,574 |
11,070 | |||||||||||||
Capital increases |
- |
|||||||||||||||||||||||||
Reserve capitalization (note 26.3) |
38 |
(38) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- | |||||||||||||
Subscribed capital |
16 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
16 |
- |
16 | |||||||||||||
Stock options granted (note 26.6) |
- |
- |
- |
43 |
- |
- |
- |
- |
- |
- |
43 |
- |
43 | |||||||||||||
Profit for the year |
- |
- |
- |
- |
- |
- |
- |
- |
1,052 |
- |
1,052 |
344 |
1,396 | |||||||||||||
Appropriation of profit to legal reserve (note 26.5) |
- |
- |
- |
- |
52 |
- |
- |
- |
(52) |
- |
- |
- |
- | |||||||||||||
Proposed dividends (note 26.8) |
- |
- |
- |
- |
- |
- |
- |
- |
(250) |
- |
(250) |
(186) |
(436) | |||||||||||||
Transfer to profit retention reserve |
- |
- |
- |
- |
- |
- |
- |
750 |
(750) |
- |
- |
- |
- | |||||||||||||
Transactions with non-controlling interest (note 26.9) |
- |
- |
- |
- |
- |
- |
- |
126 |
- |
- |
126 |
497 |
623 | |||||||||||||
Balance at December 31, 2013 |
6,764 |
- |
7 |
226 |
354 |
461 |
(7) |
1,678 |
- |
- |
9,483 |
3,229 |
12,712 | |||||||||||||
- |
- | |||||||||||||||||||||||||
Capital increase (note 26.1) |
28 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
28 |
- |
28 | |||||||||||||
Transfer to expansion reserve (note 26.5) |
- |
- |
- |
- |
- |
674 |
- |
(674) |
- |
- |
- |
- |
- | |||||||||||||
Stock options granted (note 26.6) |
- |
- |
- |
37 |
- |
- |
- |
- |
- |
- |
37 |
- |
37 | |||||||||||||
Stock options granted - subsidiaries (note 26.6) |
- |
- |
- |
12 |
- |
- |
- |
- |
- |
- |
12 |
17 |
29 | |||||||||||||
Profit for the year |
- |
- |
- |
- |
- |
- |
- |
- |
1,270 |
- |
1,270 |
490 |
1,760 | |||||||||||||
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cumulated Translation Adjustment |
- |
- |
- |
- |
- |
- |
- |
- |
- |
2 |
2 |
4 |
6 | |||||||||||||
Defined benefit pension plan - actuarial losses |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(1) |
(1) |
(1) |
(2) | |||||||||||||
Comprehensive income for the year |
- |
- |
- |
- |
- |
- |
- |
- |
1,270 |
1 |
1,271 |
493 |
1,764 | |||||||||||||
Appropriation of profit to legal reserve (note 26.5) |
- |
- |
- |
- |
63 |
- |
- |
- |
(63) |
- |
- |
- |
- | |||||||||||||
Proposed dividends (note 26.8) |
- |
- |
- |
- |
- |
- |
- |
- |
(302) |
- |
(302) |
(126) |
(428) | |||||||||||||
Transfer to profit retention reserve |
- |
- |
- |
- |
- |
- |
- |
905 |
(905) |
- |
- |
- |
- | |||||||||||||
Transactions with non-controlling interest (note 26.9) |
- |
- |
- |
- |
- |
- |
- |
(28) |
- |
- |
(28) |
24 |
(4) | |||||||||||||
Cnova N.V IPO (note 13.1 iv) |
132 |
- |
132 |
279 |
411 | |||||||||||||||||||||
Corporate restructuring (note 13.1 v) |
(53) |
- |
(53) |
(14) |
(67) | |||||||||||||||||||||
Balance at December 31, 2014 |
6,792 |
- |
7 |
275 |
417 |
1,135 |
(7) |
1,960 |
- |
1 |
10,580 |
3,902 |
14,482 |
The accompanying notes are an integral part of these financial statements.
19
Companhia Brasileira de Distribuição
Consolidated Statements of Cash Flows
Years ended December 31, 2014 and 2013
(In millions of reais)
Parent company |
Consolidated | ||||||
12.31.2014 |
12.31.2013 |
12.31.2014 |
12.31.2013 | ||||
Net cash provided by operating activities |
953 |
1,865 |
4,841 |
4,892 | |||
Cash flow provided by operating activities |
|||||||
Profit for the year |
1,270 |
1,052 |
1,760 |
1,396 | |||
Adjustment to reconcile profit |
|||||||
Deferred income tax |
68 |
65 |
222 |
89 | |||
Gain (loss) on permanent assets written off |
22 |
(2) |
58 |
45 | |||
Depreciation and amortization |
477 |
448 |
931 |
865 | |||
Financial charges |
581 |
567 |
1,118 |
1,000 | |||
Present value adjustment |
- |
2 |
- |
(10) | |||
Equity pickup (note 13) |
(775) |
(655) |
(108) |
(47) | |||
Provision for contingencies |
109 |
145 |
309 |
249 | |||
Provision for disposals and impairment of property and equipment |
- |
2 |
- |
- | |||
Share-based payment |
47 |
43 |
47 |
43 | |||
Allowance for doubtful accounts |
(3) |
3 |
518 |
451 | |||
Gain (loss) in equity interest |
- |
- |
- |
- | |||
Provision for obsolescence, losses and breakage |
(2) |
4 |
35 |
(1) | |||
Other operating expenses |
310 |
289 |
150 |
323 | |||
Deferred revenue |
(15) |
- |
(32) |
(43) | |||
Other operating expenses |
- |
- |
- |
- | |||
Pension plan |
- |
- |
- |
- | |||
Gain in the fair value investment |
- |
- |
- |
(100) | |||
Gain in sale of subsidiaries |
- |
- |
(16) |
- | |||
2,089 |
1,963 |
4,992 |
4,260 | ||||
Changes in assets and liabilities |
|||||||
Trade accounts receivable |
10 |
151 |
(922) |
(333) | |||
Inventories |
(319) |
(37) |
(1,503) |
(582) | |||
Recoverable taxes |
3 |
(88) |
(476) |
(284) | |||
Other assets |
(25) |
- |
(69) |
- | |||
Related parties |
(375) |
(390) |
(253) |
(34) | |||
Restricted deposits for legal proceedings |
9 |
(93) |
(20) |
(186) | |||
Trade accounts payable |
548 |
273 |
3,556 |
2,270 | |||
Payroll, related charges and taxes payable |
(33) |
37 |
72 |
59 | |||
Taxes and social contributions payable |
(606) |
(197) |
(432) |
(128) | |||
Payments of contingencies |
(163) |
- |
(257) |
0 | |||
Deferred revenue |
54 |
- |
492 |
- | |||
Other liabilities |
(239) |
246 |
(188) |
(126) | |||
Marketable securities |
- |
- |
24 |
(24) | |||
(1,136) |
(98) |
24 |
632 | ||||
Net cash provided by operating activities |
953 |
1,865 |
5,016 |
4,892 |
20
Companhia Brasileira de Distribuição
Consolidated Statements of Cash Flows – Continued
Years ended December 31, 2014 and 2013
(In millions of reais)
Parent company |
Consolidated | ||||||
12.31.2014 |
12.31.2013 |
12.31.2014 |
12.31.2013 | ||||
Cash flow used in investing activities |
|||||||
Acquisition of property and equipment (note 15) |
(438) |
(709) |
(1,379) |
(1,656) | |||
Increase in intangible assets (note 16) |
(118) |
(87) |
(518) |
(193) | |||
Sales of property and equipment |
19 |
31 |
59 |
97 | |||
Net cash of subsidiary acquisition and corporate reorganization |
3 |
- |
168 |
1 | |||
Net cash received on sale of subsidiary (note 13.1 vii) |
- |
- |
20 |
- | |||
Subsidiary acquisition |
- |
(80) |
- |
(276) | |||
Net cash flow investment activities |
(534) |
(845) |
(1,650) |
(2,027) | |||
Cash flow from financing activities |
|||||||
Capital increase |
28 |
16 |
28 |
16 | |||
Loans obtained and refinancing (note 18.2) |
1,661 |
- |
6,780 |
5,278 | |||
Payments (note 18.2) |
(1,761) |
(1,689) |
(7,519) |
(7,239) | |||
Interest paid |
- |
- |
- |
- | |||
Payments of dividends |
(258) |
(265) |
(258) |
(453) | |||
Transactions with non-controlling interest |
(8) |
- |
(8) |
- | |||
Sale of interest |
- |
879 |
- |
814 | |||
Subsidiary acquisition |
- |
- |
(67) |
- | |||
Cash from shares offering, net from issuance costs |
(9) |
- |
408 |
- | |||
Net cash flow financing activities |
(347) |
(1,059) |
(636) |
(1,584) | |||
Net increase (decrease) in cash and cash equivalents |
72 |
(39) |
2,730 |
1,281 | |||
Exchange rate in cash and cash equivalents |
52 |
||||||
Cash and cash equivalents at the beginning of the year |
2,851 |
2,890 |
8,367 |
7,086 | |||
Cash and cash equivalents at the end of the year |
2,923 |
2,851 |
11,149 |
8,367 | |||
Net increase (decrease) in cash and cash equivalents |
72 |
(39) |
2,782 |
1,281 |
The accompanying notes are an integral part of these financial statements.
The main non-cash transactions are disclosed in the Notes 1.6,13.1 (iii), 13.1 (v), 13.1 (vi), 15.3, 16.6, 20, 21, 23, 26.9 and 29.
21
Companhia Brasileira de Distribuição
Consolidated Statements of Value Added
Years ended December 31, 2014 and 2013
(In millions of reais)
Parent company |
Consolidated | ||||||
12.31.2014 |
12.31.2013 |
12.31.2014 |
12.31.2013 | ||||
Revenue |
(Reclassified) |
Reclassified | |||||
Sales of goods, products and services |
24,144 |
23,605 |
72,803 |
64,541 | |||
Allowance for/reversal of doubtful accounts |
3 |
(3) |
(518) |
(451) | |||
Other revenues |
39 |
9 |
14 |
206 | |||
24,186 |
23,611 |
72,299 |
64,296 | ||||
Raw materials acquired from third parties |
|||||||
Cost of products, goods and services sold |
(16,569) |
(16,642) |
(49,959) |
(44,162) | |||
Materials, energy, outsourced services and others |
(2,196) |
(2,034) |
(6,120) |
(5,759) | |||
(18,765) |
(18,676) |
(56,079) |
(49,921) | ||||
Gross added value |
5,421 |
4,935 |
16,220 |
14,375 | |||
Retentions |
|||||||
Depreciation and amortization |
(477) |
(448) |
(931) |
(865) | |||
Net value added produced by the Company |
4,944 |
4,487 |
15,289 |
13,510 | |||
Value added received in transfer |
|||||||
Equity pickup |
775 |
655 |
108 |
47 | |||
Financial revenue |
201 |
244 |
687 |
643 | |||
Others |
- |
- |
9 |
- | |||
976 |
899 |
804 |
690 | ||||
Total value added to distribute |
5,920 |
5,386 |
16,093 |
14,200 | |||
Personnel |
2,399 |
2,163 |
6,440 |
5,775 | |||
Direct compensation |
1,633 |
1,447 |
4,664 |
4,140 | |||
Interest |
84 |
13 |
241 |
152 | |||
Benefits |
538 |
572 |
1,141 |
1,099 | |||
Charges |
144 |
131 |
394 |
384 | |||
Taxes, fees and contributions |
974 |
951 |
4,185 |
3,790 | |||
Federal |
692 |
650 |
2,935 |
2,141 | |||
State |
187 |
207 |
1,012 |
1,434 | |||
Municipal |
95 |
94 |
238 |
215 | |||
Value distributed to providers of capital |
1,277 |
1,220 |
3,708 |
3,239 | |||
Interest |
815 |
769 |
2,195 |
1,836 | |||
Rentals |
462 |
451 |
1,513 |
1,403 | |||
Value distributed to shareholders |
1,270 |
|
1,052 |
|
1,760 |
|
1,396 |
Dividends |
302 |
250 |
302 |
250 | |||
Retained earnings |
968 |
802 |
968 |
802 | |||
Non-controlling interest in retained earnings |
- |
- |
490 |
344 | |||
Total value added distributed |
5,920 |
5,386 |
16,093 |
14,200 |
The accompanying notes are an integral part of this financial statement.
22
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
1. Corporate information
Companhia Brasileira de Distribuição ("Company" or “CBD”), directly or by its subsidiaries (“Group” or “GPA”) operates in the food retailer, clothing, home appliances, electronics and other products segment through its chain of hypermarkets, supermarkets, specialized and department stores principally under the trade names "Pão de Açúcar, "Extra Hiper", “Extra Super”, “Minimercado Extra”, “Assai”, “Ponto Frio” and “Casas Bahia", in addition to the e-commerce platforms “CasasBahia.com,” “Extra.com”, “Pontofrio.com”, “Barateiro.com”, “Partiuviagens.com” and “Cdiscount,com” and neighborhood shopping mall brand. Its headquarter is located at São Paulo, SP, Brazil.
The Company’s shares are listed in the Level 1 of Corporate Governance trading segment of the São Paulo Stock Exchange (“BM&FBovespa”), under the code “PCAR4” and its shares are also listed on the New York Stock Exchange (ADR level III), under the code “CBD”.
The Company is controlled by Wilkes Participações S.A. ("Wilkes") that is controlled by Casino Guichard Perrachon (“Casino”).
1.1. Casino arbitration
During 2011, Casino filed two arbitration proceedings at the International Arbitration Court of the International Chamber of Commerce against Mr. Abílio dos Santos Diniz and his related parties. On September 6, 2013, Casino group and Mr. Abilio dos Santos Diniz, jointly with their related parties, filed a petition for the conclusion of all arbitration procedures and entered into a Private Instrument of Transaction and Waiver of Rights.
The parties also agreed to conclude any and all disputes against each other and any other third party (related to the parties’ disputes), as well as not to practice any act or file any suit based on rights set forth in any agreements previously entered into between the parties or on the understandings between the parties prior to September 6, 2013.
1.2. Arbitration request by Morzan
In June, 2012, the Company received a letter from the International Chamber of Commerce -ICC regarding a notification about the request for the filing of an arbitration proceedings (“Proceedings”) submitted by Morzan Empreendimentos e Participações Ltda, (“Morzan”), former controlling shareholder of Globex Utilidades S.A. (Pontofrio banner), currently referred to as Via Varejo S.A. (“Via Varejo”).
The Proceedings are associated with issues originating from the Share Purchase Agreement executed between the subsidiary Mandala Empreendimentos e Participações S.A. at June 8, 2009 (“Agreement”) for acquisition of 86,962,965 registered common shares with no par value, which then represented 70.2421% of the total and voting capital of Via Varejo. The arbitration terms are subject to confidentiality requirements.
Until the present date, there were no developments in this arbitration, thus not causing any impact on this financial statement.The Company will maintain its shareholders and the market informed of any material developments regarding the Proceedings.
23
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
1. Corporate information – Continued
1.3. Performance Commitment Agreement
The Company, its subsidiary Via Varejo and Casa Bahia Comercial Ltda. (“CB”), jointly “Compromisers”, and the Brazilian Antitrust Agency ("CADE") entered into a Performance Commitment Agreement ("PCA") to approve the Partnership Agreement signed between CBD and CB on December 4, 2009 and amended on July 1, 2010. As the main purpose of PCA, Via Varejo had the major obligation of selling 74 stores located in 54 municipalities distributed in six states and the Federal District.
In relation to the “PCA”, between October 2013 and January 2014, the subsidiary Via Varejo sold 42 stores, which were already approved by CADE in September and October, 2014. The Company awaits for the attainment of preceding conditions set forth in the Sales and Purchase agreements, which can influence the final sales price of such stores as well as the effective transfer of stores to purchasers. The accounting effects related from the stores sale will be recognized when such conditions are satisfied. There are no other expected adjustments than the already recognized in these financial statements.
For the remaining 32 stores, between May and June of 2014, the Company has terminated its activities with a penalty payment for not selling the stores of R$12 as established in the “PCS”.
The Company understands that met the obligation described in the “PCS” and awaits the formal ruling of CADE.
1.4. Acquisition of interest in Nova Pontocom
At October 17, 2013, the subsidiary Via Varejo sold 6.20% of Nova Pontocom’s capital stock to the parent company CBD. Via Varejo’s interest changed from 52.10% to 43.90%. The amount paid by the Company was R$80, in cash, generating a net effect of R$73, recorded directly in the Company shareholders´ equity, since it is not a business combination but a transaction involving only shareholders.
On the same date CBD bought 1.95% interest in Nova Pontocom held by noncontrolling shareholders for R$25, being R$7 offsetting balances due by noncontrolling shareholders to CBD and the remaining paid in cash. After the transaction, the Company has been owned of 47.21% of direct interest plus 23.88% indirectly in the Nova Pontocom.
The abovementioned transactions were classified as “capital transaction” and their effects were recorded directly under the parent company shareholders’ equity, in the total amount of (R$73), and under non-controlling interest, in the amount of R$24.
On this same date, a new shareholders’ agreement of Nova Pontocom was signed, which stablished new corporate governance rules.
24
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
1. Corporate information – Continued
1.5. Merger of subsidiaries
The Extraordinary Shareholders’ Meeting held on December 29, 2014 approved the merger of the wholly-owned subsidiaries Vedra Empreendimento e Participações S/A, ECQD Participações Ltda., APE SPE 06 – Planejamento e Desenvolvimento de Empreendimentos Imobiliários Ltda., GPA 5 Empreendimentos e Participações S/A, GPA 4 Empreendimentos e Participações S/A., Monte Tardeli Empreendimentos e Participações S/A, P.A. Publicidade Ltda., Vancouver Empreendimentos e Participações Ltda. and Duque Conveniências Ltda. by the Company in order to unify these companies’ activities and management. This merge will result in substantial administrative, economic and financial benefits.
The effects on the parent company’s balance sheet of December 31, 2014, as a result of the above merger of the subsidiaries above are described below. There were no impacts on the consolidated financial statements or in the individual statement of income since the incorporated companies are fully consolidated subsidiaries.
Assets |
12.31.2014 |
| |
Cash and cash equivalents |
1 |
Other accounts receivable |
2 |
Recoverable taxes |
1 |
Total current assets |
4 |
| |
Other accounts receivable |
54 |
Deferred income and social contribution taxes |
3 |
Related parties |
38 |
Investments |
12 |
Intangible |
39 |
Total noncurrent assets |
146 |
|
|
Total Assets |
150 |
| |
Liabilities |
|
| |
Related parties |
24 |
Other accounts payable |
3 |
Total current liabilities |
27 |
| |
Other accounts payable |
1 |
Total noncurrent liabilities |
1 |
| |
Total liabilities |
28 |
| |
Net assets |
122 |
25
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
2. Basis of preparation
The individual and consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board (“IASB”) and accounting practices adopted in Brazil (Law 6,404/76 and standards issued by Comitê de Pronunciamentos Contábeis (“CPC”) and approved by Brazilian Securities and Exchange Commission (“CVM”)).
The financial statements have been prepared on the historical cost basis except for certain financial instruments measured at their fair value.
The financial statements were measured in million of Reais (“R$”). The reporting currency of this entity is the Real.
The financial statements for the year ended December 31, 2014 were approved by the Board of Directors on February 12, 2015.
The Company made certain reclassifications in the statements of income and value added statement, for the year ended December 31, 2013, presented for comparative purposes, in order to adapt them to the presentation criteria adopted in the current quarter. The reclassifications performed were:
Parent Company | ||||
Balances at 12.31.2013 |
Published balance |
GPA Malls galeries – cost |
GPA Malls galleries revenue |
Reclassified balance |
Net Sales |
21,580 |
- |
90 |
21,670 |
Cost of Goods Sold |
(15,769) |
(33) |
- |
(15,802) |
Gross Profit |
5,811 |
(33) |
90 |
5,868 |
Operating Expenses/revenues |
(4,126) |
33 |
(90) |
(4,183) |
Selling Costs |
(3,218) |
33 |
(90) |
(3,275) |
Consolidated | |||||
Balances at 12.31.2013 |
Published balance |
GPA Malls Galeries – cost |
GPA Malls galleries |
Reclassified balance | |
Net Sales |
|
57,731 |
- |
123 |
57,854 |
Cost of Goods Sold |
|
(42,704) |
(46) |
- |
(42,750) |
Gross Profit |
|
15,027 |
(46) |
123 |
15,104 |
Operating Expenses/revenues |
|
(12,078) |
46 |
(123) |
(12,155) |
Selling Costs |
|
(9,180) |
46 |
(123) |
(9,257) |
a) Income statement: Revenues and costs with commercial galleries rental, which were previously recorded as selling expenses recovery, were reclassified to "sales revenue of goods and/or services" and "cost of goods sold and/or services" respectively due to a participation increase of this activity in the Multivarejo segment and considering the expectations of the "Conviva" ventures new releases ventures and the increase in future operations, better displaying this activity in the Company's financial statements. The Management of the Company believes it is best to proceed with the current classification as to allow comparability and a final classification of revenues and costs.’
b) Statement of Value Added: According to the amendment mentioned in the section above, the changed rows in the statement of value added refer to the sale of goods R$99 and R$136, other revenues and expenses R$90 and R$123, cost of goods sold and materials, energy, services and others in the amounts of R$33 and R$46 and taxes and contributions of R$9 and R$13, parent company and consolidated, respectively.
26
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
3. Basis for consolidation
3.1. Interest in subsidiaries and associated companies:
Investments Interest - % | ||||||||
12.31.2014 |
12.31.2013 | |||||||
Companies |
Company |
Indirect interest |
Company |
Indirect interest | ||||
Subsidiaries |
||||||||
Novasoc Comercial Ltda. (“Novasoc”) |
10 |
- |
10 |
- | ||||
Sé Supermercado Ltda. (“Sé”) |
100 |
- |
100 |
- | ||||
Sendas Distribuidora S.A. (“Sendas”) |
100 |
- |
100 |
- | ||||
Bellamar Empreend. e Participações Ltda. |
100 |
- |
100 |
- | ||||
GPA Malls & & Properties Gestão de Ativos e Serviços Imobiliários Ltda. (“GPA M&P”) |
100 |
- |
100 |
- | ||||
PA Publicidade Ltda. (“PA Publicidade”) |
- |
- |
100 |
- | ||||
Vancouver Empreend. e Participações Ltda. |
- |
- |
100 |
- | ||||
CBD Holland B.V. |
100 |
- |
100 |
- | ||||
CBD Panamá Trading Corp. |
- |
100 |
- |
100 | ||||
Barcelona Comércio Varejista e Atacadista S.A. (“Barcelona”) |
68.86 |
31.14 |
82.75 |
17.25 | ||||
Xantocarpa Participações Ltda. (“Xantocarpa”) |
- |
100 |
- |
100 | ||||
Vedra Empreend. e Participações S.A. |
- |
- |
99.99 |
0.01 | ||||
Monte Tardeli Empreendimentos e Participações S.A. |
- |
- |
99.91 |
0.09 | ||||
GPA 2 Empreend. e Participações Ltda. |
100 |
- |
99.99 |
0.01 | ||||
GPA 4 Empreend. e Participações S.A. |
- |
- |
99.91 |
0.09 | ||||
GPA 5 Empreend. e Participações S.A. |
- |
- |
99.91 |
0.09 | ||||
GPA 6 Empreend. e Participações Ltda. ( GPA Logística e Transporte Ltda. ) |
100 |
- |
99.99 |
0.01 | ||||
ECQD Participações Ltda. |
- |
- |
100 |
- | ||||
API SPE Planej. e Desenv. de Empreed. Imobiliários Ltda. |
- |
- |
100 |
- | ||||
Posto Ciara Ltda. |
100 |
- |
- |
100 | ||||
Auto Posto Império Ltda. |
100 |
- |
- |
100 | ||||
Auto Posto Duque Salim Maluf Ltda. |
100 |
- |
- |
100 | ||||
Auto Posto GPA Santo André Ltda. |
100 |
- |
- |
100 | ||||
Auto Posto Duque Lapa Ltda. |
100 |
- |
- |
100 | ||||
Duque Conveniências Ltda. |
- |
- |
- |
100 | ||||
Nova Pontocom Comércio Eletrônico S.A (“Nova Pontocom”) (*) |
47.48 |
23.90 |
47.43 |
23.99 | ||||
CNova Comércio Eletrônico S/A (Bruxellas Empreend. e Participações S.A.) |
- |
35.73 |
99.99 |
0.01 | ||||
Cnova N.V |
- |
35.73 |
- |
- | ||||
E-Hub Consult. Particip. e Com. S.A. |
- |
71.39 |
- |
71.42 | ||||
CDiscount Group S.A.S. (note 13.1) |
- |
35.73 |
- |
- | ||||
CDiscount Colombia S.A. |
- |
18.20 |
- |
- | ||||
C Distribution Asia Pte. Ltd |
- |
21.40 |
- |
- | ||||
C Distribution (Thaïland) Ltd |
- |
14.98 |
- |
- | ||||
C-Discount Vietnam Co Ltd |
- |
17.12 |
- |
- | ||||
Dutchco - Marneylectro B.V (former Jaipur Financial Markets B.V) |
- |
71.52 |
- |
- | ||||
Luxco – Marneylectro S.A.R.L (former Jaipur Financial Markets S.A.R.L) |
2.65 |
68.87 |
- |
- | ||||
Via Varejo S.A.(“Via Varejo”) |
43.35 |
- |
43.35 |
- | ||||
Nova Extra Eletro Comercial Ltda. (Átino Comunicação Ltda) |
- |
- |
0.10 |
43.31 | ||||
Sabara S.A. |
- |
43.35 |
- |
43.35 | ||||
Indústria de Móveis Bartira Ltda. (“Bartira”) |
- |
43.35 |
- |
43.35 | ||||
Ponto Frio Adm e Importação de Bens Ltda. |
- |
43.35 |
- |
43.34 | ||||
PontoCred Negócio de Varejo Ltda. |
- |
43.35 |
- |
43.35 | ||||
Globex Adm e Serviços Ltda. (“GAS”) |
- |
43.35 |
- |
43.35 | ||||
Rio Expresso Com. Atacad. de Eletrodoméstico Ltda. |
- |
43.35 |
- |
43.35 | ||||
Lake Niassa Empreend. e Participações Ltda. |
- |
43.35 |
- |
43.35 | ||||
Globex Adm. Consórcio Ltda. |
- |
43.35 |
- |
43.35 | ||||
Nova Experiência PontoCom S.A. |
- |
71.39 |
- |
71.42 | ||||
Casas Bahia Contact Center Ltda. (“CBCC”) |
- |
- |
- |
43.35 | ||||
(*) Excluding treasury shares
27
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
3. Basis for consolidation – Continued
3.1. Interest in subsidiaries and associated companies – Continued
|
Investments interest- % | |||||||||||||||
|
12.31.2014 |
12.31.2013 | ||||||||||||||
Companies |
Company |
Direct interest |
Company |
Direct interest | ||||||||||||
Associates |
| |||||||||||||||
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento (“FIC”) |
- |
41.93 |
- |
41.93 |
| |||||||||||
Banco Investcred Unibanco S.A. (“BINV”) |
- |
21.67 |
- |
21.67 |
| |||||||||||
FIC Promotora de Vendas Ltda. |
- |
41.93 |
- |
41.93 |
| |||||||||||
Financière MSR S.A.S.U |
- |
35.66 |
- |
- |
| |||||||||||
E-Trend S.A.S. |
- |
35.66 |
- |
- |
| |||||||||||
CDiscount International B.V. |
- |
35.66 |
- |
- |
| |||||||||||
C-Discount Afrique S.A.S.U |
- |
35.66 |
- |
- |
| |||||||||||
In the individual financial statements, all interests are calculated considering the percentages held by GPA or its subsidiaries. In the consolidated financial statements, the Company fully consolidates all its subsidiaries, keeping the non-controlling interest in a specific line in shareholders’ equity.
3.2. Subsidiaries
The consolidated financial statements include the financial information of all subsidiaries over which the Company exercises control directly or indirectly. The determination of which subsidiary are controlled by the Company and the proceedings of integral consolidation are in accordance with the principles and concepts established by IFRS 10 (CPC 36- R3)
The financial statements of the subsidiaries are prepared on the same end of the reporting period as those of the Company, using consistent accounting policies, All intragroup balances, including income and expenses, unrealized gains and losses and dividends resulting from intragroup transactions are eliminated in full.
Gains or losses resulting from changes in equity interest in subsidiaries, not resulting in loss of control are directly recorded in equity.
Losses are attributed to the non-controlling interest, even if it results in a deficit balance.
The main direct or indirect subsidiaries, included in the consolidation and the percentage of the Company’s interest comprise:
(i) Novasoc
Although the Company’s interest in Novasoc represents 10% of its shares units, Novasoc is included in the consolidated financial statements, as the Company controls 99.98% of the Novasoc’s voting rights, pursuant to the shareholders’ agreement. Moreover, under the Novasoc shareholders’ agreement, the allocation of its profit or loss does not require to be proportional to the interest held in the company, being attributable 99.98% of interest to the Company.
28
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
3. Basis for consolidation – Continued
3.2. Subsidiaries - continued
(ii) Via Varejo
The Company holds 43.35% of Via Varejo’s total shares and holds 62.3% of Via Varejo’s voting shares, giving the control of this subsidiary”. See Note 14 (a) (ii).
On January 2, 2013 at the Extraordinary Shareholders’ Meeting approved the merger of the subsidiary NCB into its parent company Via Varejo. With this merger, there were no impact on the individual or consolidated financial statements.
(iii) Sé Supermercados and Sendas
The Company holds, directly or indirectly, 100% of the capital of Sendas, which operates in the retail trade segment, mainly in the State of Rio de Janeiro, additionally, Sé Supermercados operates supermarkets and hypermarkets, mainly in the State of São Paulo.
(iv) Barcelona and Xantocarpa
Company holds direct or indirectly, 100% of the capital of this entities, that combined hold cash and carry segments operation.
(v) GPA M&P
The GPA M&P has as objective manage and operate the Company’s real estate activities.
(vi) Nova Pontocom
On October 17, 2013, the Company obtained direct control over Nova Pontocom, which was previously exercised through the subsidiary Via Varejo, Nova Pontocom is the holding Company of the e-commerce segment that sells products of any type to final customers through the websites: www.extra.com.br, www.pontofrio.com.br, www.casasbahia.com.br, www.barateiro.com.br, www.partiuviagens.com.br and the Cdiscount group company, as described in the note 13.1.
29
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
3. Basis for consolidation – Continued
3.3. Associates – BINV and FIC
O The accounting treatments used by the Company for the purposes of calculation purposes of the effects from its affiliates, representing entities in which the Company has significant influence but does not control their activities, follow the CPC 18 R2 determinations (IAS 28), as follows:
· Initial recognition at cost or fair value, as each case, and its results are accounted for under the equity method.
· Changes recognized directly in equity of associated companies, the Company recognizes its share of any changes and discloses, as appropriate, in the statement of changes in equity.
· Any gains or unrealized losses resulting from transactions between the Company and the associates are eliminated to the extent of the interest in the associates.
· The financial statements of associates are prepared on the same closing date as the Company and when necessary, adjustments made to harmonize the accounting policies of the Company.
The Company’s investments in its associated companies FIC and BINV, both entities that finance sales directly to GPA and Via Varejo customers are resulted from an association between Banco Itaú Unibanco S.A. (“Itaú Unibanco”) with GPA and Via Varejo.
The Company has significant influence in operating decisions of FIC through the Board of Directors of this associate.
FIC’s summarized financial statements are as follows:
|
FIC - Consolidated | |
|
12.31.2014 |
12.31.2013 |
|
| |
Current assets |
3,815 |
3,522 |
Noncurrent assets |
35 |
32 |
Total assets |
3,850 |
3,554 |
|
| |
Current liabilities |
2,963 |
2,827 |
Noncurrent liabilities |
15 |
23 |
Shareholders |
872 |
704 |
Total liabilities and equity |
3,850 |
3,554 |
|
|
|
Income statement: |
12.31.2014 |
12.31.2013 |
Revenues |
1,025 |
895 |
Operating income |
397 |
158 |
Profit (Loss) for the year |
220 |
88 |
For the purposes of calculating the investment on summarized financial information of FIC , the investee’s equity should be deducted from the special goodwill reserve, which is exclusive right of Itaú Unibanco.
30
Companhia Brasileira de Distribuição
Notes to the consolidated financial statements
December 31, 2014 and 2013
(In millions of Brazilian reais, unless otherwise stated)
4. Significant accounting policies
4.1. Financial instruments
Financial assets are initially recognized at fair value when the Company or its subsidiaries assume contractual rights to receive cash or other financial asset contracts in which they are part. Financial assets are derecognized when the rights to receive cash linked to the financial asset expire or have been transferred substantially all the risks and benefits to third parties. Assets and liabilities are recognized when rights and obligations are retained by the company.
Financial liabilities are recognized when the Company or its subsidiaries assume contractual obligations for settlement in cash or in the assumption of third-party obligations through a contract in which they are part of. Financial liabilities are initially recognized at fair value and are derecognized when they are settled, extinguished or expired.
Financial instruments measured at amortized cost are subsequently measured at initial recognition at the effective interest rate. Interest income and expenses, monetary and exchange variation, net of estimated losses for not receiving financial assets, are recognized when incurred in the statement of income as financial income and expenses.
The Company, montly, evaluates the monthly estimated amount of loss by not received financial assets. An estimate of loss is recognized when there is objective evidence that the Company or its subsidiaries will not collect all amounts to receive based on their due dates. For the calculation, the Company considers historical losses, historical statistical data, portfolio aging and the assessment of the likelihood of further deterioration of the portfolio, taking into account macro-economic factors and market. When the collection of accounts receivable is unlikely, both book value and its loss estimate are recognized in the income statement. Subsequent recoveries are recognized when incurred under the caption selling expenses in the income statement for the year.
Note 19 provide detailed information about financial instruments and further details on how it is measured.
(i) Financial assets
Initial recognition and measurement
The financial assets held by the Company and its subsidiaries within the scope of IAS 39 are classified according the purpose for which they were acquired or contracted within the following categories: (i) assets measured at fair value through profit or loss; (ii) loans and receivables, and (iii) investments held to maturity. The Company determines the classification of their financial assets at inception.
Financial assets are initially recognized at fair value, and transaction costs are expensed in the income statement. Loans and receivables are accounted for at amortized cost.
Purchases or sales of financial assets that require the assets to be delivered within a time frame established by regulations or market conventions (negotiations under regular conditions) are recognized on the trade date, i.e., on the date that the Company commits to purchase or sell the asset.
The financial assets of the Company and its subsidiaries includes cash and cash equivalents, trade accounts receivable, related parties receivables and derivative financial instruments.