Grupo Casas Bahia S A : Q4'23 ITR

Individual and Consolidated

Financial Statements

Grupo Casas Bahia S.A.

Year ended December 31, 2023 with Independent Auditor's Report

Financial statements

Contents

Management Report ............................................................................................................................................. 2

Executive Board's Representation on the financial statements .......................................................................... 10

Executive Board's Representation on the independent auditor's report on financial statements ....................... 11

Supervisory Board's Opinion on the financial statements .................................................................................. 12

Summary of the Annual Audit, Risk and Compliance Committee Report ........................................................... 13

Independent auditor's report on financial statements ......................................................................................... 15

Statement of Financial Position - Assets ............................................................................................................ 21

Statement of Financial Position - Liabilities ........................................................................................................ 22

Statement of profit or loss ................................................................................................................................... 23

Statement of comprehensive income .................................................................................................................. 24

Statement of cash flows ...................................................................................................................................... 25

Statement of changes in equity ........................................................................................................................... 26

Statement of value added ................................................................................................................................... 27

• 1. Operations ................................................................................................................................................ 28

• 2. Presentation and preparation of individual and consolidated financial statements .................................. 29

• 3. Revised pronouncements and interpretations issued but not yet adopted .............................................. 30

• 4. Significant accounting policies .................................................................................................................. 31

• 5. Cash and cash equivalents ....................................................................................................................... 37

• 6. Trade accounts receivable ........................................................................................................................ 37

• 7. Inventories ................................................................................................................................................ 40

• 8. Taxes recoverable .................................................................................................................................... 41

• 9. Related parties .......................................................................................................................................... 43

• 10. Investments ............................................................................................................................................... 45

• 11. Property and equipment ........................................................................................................................... 47

• 12. Intangible assets ....................................................................................................................................... 51

• 13. Trade accounts payable, trade accounts payable - portal and trade accounts payable - agreement ...... 55

• 14. Loans and financing .................................................................................................................................. 56

• 15. Financial risk management ....................................................................................................................... 59

• 16. Taxes payable ........................................................................................................................................... 62

• 17. Current and deferred income and social contribution taxes ..................................................................... 63

• 18. Provision for contingencies ....................................................................................................................... 65

• 19. Leases ...................................................................................................................................................... 69

• 20. Deferred revenues .................................................................................................................................... 71

• 21. Equity ........................................................................................................................................................ 73

• 22. Sales and service revenue ....................................................................................................................... 75

• 23. Expenses by nature .................................................................................................................................. 77

• 24. Other operating income (expenses), net .................................................................................................. 77

• 25. Finance income (costs), net ...................................................................................................................... 78

• 26. Earnings (loss) per share .......................................................................................................................... 78

• 27. Insurance coverage .................................................................................................................................. 79

• 28. Segment information ................................................................................................................................. 80

• 29. Events after the reporting period .............................................................................................................. 80

Management Report

Message from Management

2023 Highlights

The fourth quarter of 2023 (4Q23) was marked by important advances in our Transformation Plan, which prioritizes a more robust free cash flow and improved return on invested capital, through synergies and a focus on our core activity. The Transformation Plan initiatives evolved on schedule in 2023 and, after some necessary restructuring within the year, we expect to gradually reap benefits throughout 2024. This will leave us in a strengthened position to grow structurally as of 2025.

In 2023, the highlight initiative was the cost reduction front, with the streamlining of the Company's structures. This resulted in a reduction of more than 8,000 positions (including a 42% reduction in senior leadership positions), reduction of marketing expenses, closing of 55 contribution margin detractor stores, and optimization of 4 DC's.

On the cost of capital front, we highlight an adjustment to the purchasing plan, a reduction of excess inventory (R$1,221) and the reduction in the storage period from 94 to 76 days - a record level in the Company, bearing in mind that the initial objective was to reach a period below 90 days.

In 2023 we launched the new Casas Bahia Ads platform, which explores the concept of retail media and contributes to increasing revenue. On this platform, the partner will have the entire ecosystem of Grupo Casas Bahia at their disposal, with access to all our omnichannel to use the most appropriate channel for their product. With full autonomy through the platform, the partner monitors and optimizes their campaigns, reaching a qualified and segmented audience, which consequently brings greater visibility and conversion.

The credit facility is a lever of sales and profitability for the Company, and its financing through FIDC (Receivables Investment Fund) represents a paradigm shift, given decades of its CDCI-based model. The fund's regulation was filed with the Brazilian Securities and Exchange Commission (CVM), as signaled last quarter, and the process is ongoing.

At the end of February 2024, we announced the extension of debt schedule, in the amount of R$1,519 for a term of 3 years - reinforcing the understanding and confidence of financial institutions about the evolution of the Transformation Plan. Thus, short-term gross debt, which previously accounted for 58.5% of indebtedness, now represent 32.4% of the total.

Despite the short period - considering the changes in management, the conception of the Plan, its announcement in the 2Q23 and the implementation of most of the initiatives in the second half of 2023 -, we are convinced that we are on the right track to make Grupo Casas Bahia increasingly perennial, resilient to adverse scenarios and with robust and sustainable liquidity for the coming years.

2023 Profit or Loss

The Company expects to capture all of the gains from the Transformation Plan in 2024. However, its effects in 2023 can already be observed, with emphasis on the 4.6% reduction in personnel expenses, reduction in credit losses and, especially, the rationalization of marketing expenses, which represent an overall improvement in cost containment for the period. Net finance costs totaled R$3,041, still reflecting the high level of interest rates.

Inventories

In 2023 profit or loss was impacted by the Transformation Plan actions, we believe that cash flow is the best metric to measure our performance.

This year, the Company focused on reducing slower-moving and older inventory items, since they bring higher loading costs and have a lower commercial sales value due to technological lag. The decrease in inventory items above 90 days was 63%, whereas those items below 90 days had only a 2% decrease, in order to ensure an adequate level of recent inventories, without impact on breakage.

As a result, the average storage period improved from 94 days in 2022 to 76 days in 2023, the lowest historical level ever recorded at the Company, even exceeding the initial target of the Transformation Plan, i.e., less than 90 days.

Financial Cycle and Capex

This movement is intended for greater efficiency in the Company's capital management. As a result, there is a gradual improvement, quarter by quarter, in the financial cycle variation, which ended the year in (36) days, an improvement of 11 days compared to the previous year.

The investment level also reflects a moment of greater rationality and liquidity preservation. Thus, capex goes from R$1,006 in 2022 to R$386 in 2023, due to the less expansionary moment and the ending of long payback projects that are not core to what we do. It is important to note that we continue investing in essential projects, such as infrastructure and technology to improve the customer's experience on Company's platforms, increase conversion and systems that promote greater productivity.

Taxes and Legal Proceedings

There was a gradual and upward evolution in the net tax balance throughout 2023, this reflects our efforts to have our tax credit rights validated before the government's Departments of Finance, greater logistical-tax efficiency in the operation and, consequently, a decrease in the balance of taxes recoverable in the face of greater efficiency in monetization.

Offsetting this effect on cash, payments of lawsuits totaled R$1,228 in 2023, the same level as in the previous year. This amount mainly reflects legacy labor lawsuits, with older and more onerous lawsuits. We emphasize that the issue is under control, as expected, and that the Company's internal processes and controls have been revisited, so that we have been more successful in defenses related to these suits. The expectation is to reduce this more onerous legacy liability throughout 2024, so we expect to have a better trend for 2025.

Leverage and Liquidity

In 2023, the Company's liquidity balance was impacted by credit limit reduction, as a result of market events in early 2023. In addition, when comparing the Company's liquidity in 2023 with its liquidity in 2022, the impact of renewing our co-branded card partnership, which took place in 4Q22 and impacted the Company's cash by

R$1,750, must be taken into account.

12.31.2023	12.31.2022
Cash and cash equivalents	2,573	2,019
Credit card companies	273	3.426
Other accounts receivable and B2B accounts receivable	733	708
Cash and cash equivalents (managerial)	3,579	6,153

It is important to point out that we are in compliance with the financial covenants and we continue to work to strengthen the Company's capital structure.

2023 key messages

In 2023, we took important steps to build a profitable and long-lasting company. We revisited our strategy for a specialist approach, focusing on what we have expertise in and know how to operate profitably. We changed the corporate name to Grupo Casas Bahia and rescued the Dedicação Total a Você (Total Dedication to You) culture, corroborating the "back to basics" mindset internally and the recognition of thousands of customers.

We structured and advanced in performing our Transformation Plan, which will allow additional gains of R$1,500 to R$1,600 in pretax income related to already structured and partially implemented opportunities, to be captured in the short term.

We worked on improving the capital structure and launched Grupo Casas Bahia's 1st FIDC, which will allow growth of the credit facility portfolio, diversification of its financing and release of the overdraft facility.

We closed the year with a liquidity position of R$3,579 and once again, we point out the short- and medium-term debt schedule extension and that we have a satisfactory liquidity position for the Company's requirements.

Short-term vision

We are focusing primarily on what depends on our work, irrespectively of external factors. The Transformation Plan is being executed, with the implementation of important actions whose benefits are expected to be more and more noticeable each quarter.

Our revenue will reflect our positioning as a specialist player that does not give up profitability and that will keep its predominant share in core categories. Our margins are expected to improve gradually, returning to historical levels, and reflecting greater service penetration, an adequate mix, and the review of B2B, B2C and marketplace operations with a view to higher profitability. We must fully capture the cost reduction initiatives implemented in the previous year, seeking new efficiencies and maintaining a lean and synergistic structure.

The mindset of all areas and operations is mainly focused on the quality of the Company's cash management, with inventory efficiency and rationality in investments. And we should continue with our tax efficiency actions with a positive impact on cash, and keep labor lawsuits under control.

We are close, aligned and have the support of partner institutions, as evidenced by the aforementioned short-term debt schedule extension. And we continue improving the Company's capital structure, including the credit financing model.

2025 Outlook

The process of operational, financial and capital structure improvement for Grupo Casas Bahia to become a reference in value generation and return on invested capital in 2025 will be gradual. Our ambition is to be the largest specialist electronics and furniture retailer in Brazil. This position can only be achieved by, in addition to maintaining the leader status in core categories, increasing GMV and reaching a larger scale, winning market share and exploring locations currently ill-served by the physical channel.

We want to offer an omnichannel complete, uncomplicated and customized buying journey to our customers through a complete portfolio of core products, service offerings, excellence in assisted selling and using our entire database to assist in conversion.

Our objective is to generate value to our stakeholders with an efficient, lean operation that provides robust margins for the sector and sustainable cash generation through high-return assets. All this in a diverse environment, which values good ESG practices in day-to-day activities and promotes a culture of collaboration, high performance, recognition and growth based on meritocracy.

We are optimistic about the future, confident that we are on the right track and very clear about our goal. We take this opportunity to thank all our customers, employees, suppliers, financial institutions and other stakeholders. We will continue Fully Dedicated to You!

Financial and operation highlights

Gross revenue

In 2023, consolidated gross revenue decreased by 5.5% compared to 2022, this variation is explained by the

Goods

30.179 32.037

decrease in revenue from physical and online stores, despite the growth in marketplace revenue.

Payment books/Cards

2.534 2.359

Services

Gross revenue performance in brick-and-mortar stores reflects a more restrictive demand scenario, lower availability of consumer credit. In addition, it should be taken into account the high base of comparison for brick-and-mortar stores due to the World Cup in 2022.

Freight

1.341 1.707 378 315

12.31.2023

12.31.2022

The variation in online 1P is due to the decrease in investment in the B2B channel and other media (more profitable partnerships were prioritized focusing on results), the drop in the market and the more restrictive scenario for online purchases. Even in this context, in 2023 the Company strengthened its presence in the core categories.

In 2023, the Company sought greater profitability and a better experience for customers and sellers, through a greater number of services offered on its platforms (such as logistics and credit), the result of which was an 18% increase in 3P gross revenue.

12.31.2023	12.31.2022
Brick-and-mortar stores	21,796	22,139
Online	12,636	14,279
1P	11,924	13,675
3P	712	604
Gross sales revenue, net of returns and cancellations per channel	34,432	36,418
Gross profit
12.31.2023	12.31.2022
Operating revenue, net	28,847	30,898
Cost of sales and services	(20,792)	(21,684)
Gross profit	8,055	9,214
Gross margin	27.9%	29.8%

In the second half of 2023, the Company's Gross Profit was impacted by the clearance sale, a non-recurring effect, in line with the Transformation Plan (announced in the 2Q23). After the sale ended, the Company observed a recovery in gross margin in line with its historical information.

Selling, general and administrative expenses

12.31.2023	12.31.2022
Selling expenses	(5,883)	(6,160)
General and administrative expenses	(1,181)	(936)
Selling, general and administrative expenses	(7,064)	(7,096)

Selling, general and administrative expenses in 2023 decreased by 0.5% and remained stable in relation to ROL (24.5%).

Based on the Transformation Plan, the Company prioritized the reduction of personnel expenses, reduction of credit losses and cost containment, especially the rationalization of marketing expenses.

Net income (loss)

12.31.2023	12.31.2022
Loss before income and social contribution taxes	(4,202)	(1,083)
% Net revenue	-14.6%	-3.5%
Income and social contribution taxes (IRPJ and CSLL)	1,577	741
Net loss	(2,625)	(342)
Net margin - %	-9.1%	-1.1%

In 2023, loss before income and social contribution taxes amounted to R$4,202, reflecting the performance of the market and also of non-recurring impacts linked to the Transformation Plan (restructuring, optimization of staff and store closures).

Financial cycle

12.31.2023	12.31.2022
(+/-) Inventories	4,353	5,574
Inventory days1	76	94
(+/-) Trade accounts payable - goods and portal	6,379	7,119
Trade accounts payable - agreement	1,765	2,463
Service providers	823	789
Total days of trade accounts payable	112	119
Financial cycle variation	(36)	(25)
(¹) Days in COGS

In 2023, the Company reduced its inventory by R$1,221 (-18 days in inventory). The main impact on such variation refers to the reduction of older inventories, in line with the Transformation Plan.

Capital structure

12.31.2023	12.31.2022
(+) Casas Bahia credit facility	5,355	5,523
(-) Transfers to financial institutions - CDCI	(5,383)	(5,665)
(=) Financing installments, net balance - CDCI	(28)	(142)
(-) Loans and financing - current (*)	(2,332)	(1,752)
(-) Loans and financing - noncurrent (*)	(1,651)	(2,385)
(=) Gross debt	(3,983)	(4,137)
(+) Trade accounts payable - agreement	(1,765)	(2,463)
(=) Net balance CDCI + Gross debt + trade accounts payable (agreement)	(5,776)	(6,742)
(+) Cash and short-term investments	2,573	2,019
(+) Credit cards companies	273	3,426
(+) Other accounts receivable and B2B accounts receivable	733	708
(=) Cash and cash equivalents (managerial)	3,579	6,153
Equity	3,454	5,284
(*) The balances of Transfers to Financial Institutions - CDCI are not considered

The Company's gross debt, for the purposes of covenants and understanding of capital structure, does not consider the Trade accounts payable - agreement (Note 13) and Transfers to Financial Institutions - CDCI (Note 14).

On February 29, 2024, the Company announced a debt schedule extension (see Note No. 29) in the amount of R$1,519 with a term of 3 years at the cost of CDI + 4% p.a. and grace period of 18 months, reinforcing the confidence in the Company and in the Transformation Plan.

Capex

12.31.2023	12.31.2022
Logistics	14	52
New stores	9	180
Store renovation	31	56
Technology	329	654
Other	3	64
Total	386	1.006
Human resources

In the year ended December 31, 2023, the Company's headcount was 37,958 employees, with a turnover rate of 30.3% (25.8% at December 31, 2022).

12.31.2023	12.31.2022
Balance at beginning of year	46,052	51,242
Loans raised	9,659	11,995
Terminations	(17,753)	(17,185)
Balance at end of year	37,958	46,052

In the year ended December 31, 2023, 545,322 hours of training were conducted, which represents an average of approximately seven hours of training per employee.

ESG Highlights

In 2023, Grupo Casas Bahia was once again included in B3's portfolios of important indexes: ISE (Corporate

Sustainability Index) and ICO2 (Carbon Efficient Index), reinforcing its environmental, social and governance commitments. Our main highlights in the year are as follows:

SLB (Sustainability Linked Bonds): Progress in the renewable energy target established in the SLB (Sustainability Linked Bonds), with acquisition of 67% of energy from clean and renewable sources. We are committed to reach 90% by 2025.

REVIVA Recycling Program: More than 3,000 tons of waste were allocated for recycling, benefiting 12 partner cooperatives. With 593 electronics collectors distributed in the group's stores and operations, we collected more than 10 tons of electronics for disposal and recycling, an increase of more than 200% compared to the same period or the previous year.

Social - Diversity

Awareness and Training: More than 26,000 employees trained in the Distance Learning Diversity Course. Training provided to 900 store operation leaders on inclusive leadership.

People with Disabilities: The Journey Without Barriers Program, specifically for employees with disabilities (5% of the headcount), engaged 1,300 active employees, 80% of the audience.

Race - Racial Equity: Growth in the participation of black people in the workforce: in the general staff, we went from 42% in 2022 to 45% in 2023; in leadership (managers or above), from 30% to 34%. Our goal is 45% of black people in the positions of managers and above by 2025. We highlight the Dedicação Total na Luta Antirracista (Anti-Racist Struggle) campaign, with more than 200,000 people impacted (internal and external audience).

Women - Gender Equity: Supporting the participation of women in the workforce: 46% of women in the general staff and 33% in leadership (managers or above). Women Power Program with highlight to training on harassment.

LGBTQIAP+: #TenhoOrgulhoEMostro (#I'mProudToShow) campaign, with reinforcement in the fight against any discrimination against LGBTQIAP+ people. Reach of 9 million views (internal and external audience).

Partnership - G10 Favelas and Favela Express: In order to expand deliveries to vulnerable communities, in 2023 we had more than 63,000 orders delivered by startup Favela Express, representing a 17% increase compared to the previous year.

Social - Casas Bahia Foundation

In 2023, the Casas Bahia Foundation invested R$ 3.7 million in social projects, impacting more than 40,000 people. Youth Prominence: More than 10,000 young people impacted; 5,869 young people trained in partnership with Instituto PROA, 44 of whom were hired by the Company. With AFESU, we supported the training of 55 girls, through the Employability and Digital Inclusion Program. In addition, we inaugurated the institution's Computer Lab, which benefited 250 students between the ages of 8 and 24.

We supported the Vini Jr. Institute com the construction of 02 TC Base (Training Center), impacting 389 students and 45 teachers. We contributed to the training of 5,345 young people and 44 teachers, in partnership with Viven. Fostering Entrepreneurship: Training of women entrepreneurs in partnership with the Dona de Si Institute. In all, there were 268 women in Rio de Janeiro and Rio Grande do Sul, 67% of whom self-declared as black. The AfroLab Program, a partnership with the Feira Preta Institute, included the training of 204 black and indigenous entrepreneurs; Social Engagement: On the volunteering front, we highlight: South Solidarity Campaign, with the collection of more than 7,000 pieces of clothing; Career Fair, which had 50 volunteer employees, training 488 young people nominated by institutions AFESU, PROA, Viven and Aldeias Infantis; +Joy at Christmas Campaign, which benefited 523 people supported by AFESU, Casa São Vicente de Paulo and Lar Mãos Pequenas, with the participation of 44 volunteer employees on the day of delivery.

In the humanitarian aid front, we responded to situations of calamity, with the donation of 1,500 products (mattresses, blankets and cleaning and personal hygiene items) to the victims of the rains on the North Coast of São Paulo; 300 mattresses for people affected by the calamity situation in Rio Grande do Sul resulting from heavy rains; and 900 baskets of food staples for families in Manaus (AM), Porto Alegre (RS) and Itajaí (SC).

Governance

In 2023, the Company continued to maintain a special focus on Ethics and Integrity. It revisited and updated the training courses available on topics such as Moral and Sexual Harassment, Discrimination, Anti-Corruption and other topics related to the Code of Ethical Conduct, maintaining a high level of adherence. In addition, face-to-face and distance meetings and discussions were held on the same topics with the leadership of all stores and with the corporate areas.

Investments in associates and subsidiaries

The Company is part of an economic group in which 17 (seventeen) subsidiaries (direct and indirect interest) and 3 (three) associates participate.

In the year ended December 31, 2023, the Company did not invest in the acquisition of equity interest.

Dividend payment policy

The Company's Articles of Incorporation provide for dividends of not less than 25% of the annual net income, adjusted at 5% for the recognition of a legal reserve, capped at 20% of the paid-in capital.

In the year ended December 31, 2023, no dividends will be distributed, as the Company did not meet the dividend distribution requirement.

Shareholding structure

Number of shares

(in thousands)

12.31.2023	12.31.2022 (*)
Goldentree Fundo de Investimentos em Ações	7,462	4,965
Twinsf Fundo de Investimento Multimercado CP	6,604	4,804
EK-VV Limited	3,279	3,279
Michael Klein	1,603	1,603
BlackRock	246	3,198
Other	75,669	45,365
Treasury shares	220	724
95,083	63,938

(*) Due to the reverse stock split that occurred in the year ended December 31, 2023, for better comparability, the previous balances of the number of shares were grouped in the ratio of 25:1. For more details, see Note 21.1.

Reverse stock split

On November 27, 2023, the reverse stock split of the Company's common shares was approved without any change in capital. For more details, see Note 21.1.