Saraiva Livreiros S A em Recuperação Judicial : Dados Econômico-Financeiros

Saraiva Livreiros S.A - In Judicial Reorganization - Management Report - 1T23

São Paulo, March 31, 202 3 - Saraiva Livreiros S.A - In Judicial Reorganization - ("Saraiva" or "Company") (B3: SLED3 and SLED4), the parent company of Saraiva e Siciliano S.A - In Judicial Reorganization ("Retail") in order to provide its Shareholders and the Market in General with relevant information about the Company, the following is the Financial Results for the first quarter of 202 3 , compared to the same periods of the previous year unless otherwise indicated.

The accounting information contained in this document refers to the Individual and Consolidated Interim Accounting Information, prepared in accordance with the International Financial Reporting Standards ("IFRS") and accounting practices adopted in Brazil, including pronouncements, guidelines and interpretations issued by the Accounting Pronouncements Committee - CPC, approved by the Brazilian Securities and Exchange Commission (CVM) and by the provisions contained in the Law of Corporations.

MESSAGE FROM THE ADMINISTRATION

Amid a combination of factors in the macroeconomic scenario of rising prices, as a reflection of inflationary pressure and high interest rates; dand Brazilian families in debt and with reduced purchasing power;and credit shortages, Saraiva faces a challenging scenario of maintaining its operations and the payment of its debt, ending the first quarter of 2023 with 31 physical stores.

There was great progress in the reduction of the Company's debtafter the approval of the request for judicial reorganization in November 2018. The approval of the 2nd Addendum to the Judicial Reorganization Plan in 2022 allowed Saraiva to effect the conversion of a large part of the debt into shares of the capital stock and to complete the sale of two UPI's in a negotiation that reduced its financial liabilities, in addition to ensuring the renegotiation of its post-tender debts, giving breath to face the year 2022.

Despite the serious financial difficulties faced, Saraiva analyzes all possible alternatives and business opportunities, which include, but are not limited to, the structuring of a franchise operation; raising new funds through the capital market, onerous assignment of tax credits; and the restructuring of the store network, which prioritizes the continuity only of the units with the highest profitability; to identify short- and medium-term solutions that preserve the payment of its suppliers and the implementation of all agreements made in 2022, mitigating the risk of shortages of your store network.

Saraiva continues to seek effective measures to stabilize its operations that can ensure cash protection and ensure the continuity of its operations, making use of solid governance, efficient management and qualified professionals.

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The review of the financial statements carried out by the external audit did not identify significant deficiencies in internal controls. The verification of the existence of internal controls without relevant deficiencies and the certification of their level of security are fundamental for the structured recovery of the Company.

The Management, aware of the relevance and complexity of the challenges that the Company faces, and especially of the peculiar scenario of the publishing market in the country, believes in the recovery and in the Nova Saraiva that is under construction and is committed to identifying ways to ensure the maintenance of the operational activity, compliance with the Judicial Reorganization Plan and the consequent operational continuity and sustainability of the business.

Finally, we thank the commitment of everyone who has been working hard for Nova Saraiva and building a viable path to a sustainable recovery.

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Non-recurring impacts

1Q23: The quarter was positively impacted by R$3.4 million (R$1.4 million attributable to the Company's discontinued operating results) due to the following events:

• Impairment: negative impact on the result of R$0.3 million due to the adjustment of the provision for impairment, net of the remeasurement of the lease liability, to determine the recoverable value of the assets related to the chain's stores.
• Others: positive impact on the result of R$3.7 million as a result of adhering to the Program for Early Settlement of Transactions and Registrations of the Active Debt of PGFN (QuitaPGFN), through which tax losses and negative bases of CSLL were used for the payment of part of tax debts registered in the active debt of the Union.

As a way to make the analysis of the Company's operation more reliable, all the results reported in this Management Report consider the recurring numbers of 1 Q2 3, 1Q22, purging the effects of the adoption of CPC 06 (R2) - IFRS 16 for commercial leases, as well as the aforementioned non-recurring impacts cited above.

The following table presents the reconciliation of the results, purging the non-recurring impacts:

(In R$ thousand)

MAIN INDICATORS

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Table 1. (R$ thousand, except when indicated)

Note: 1. Adjusted EBITDA by purging the effect of non-recurring items as previously cited in the report.

						1T23 | 1T22
Same Store Sales	1T23	1T22	Var (%)	4T22	Var (%)	Acum.	Acum.	Var (%)
1T23 | 1T22	1T23	2023	2022	T | T
Crescimento Lojas (Same Store Sales )	12%	4%	7,6 p.p.	37%	-25,7 p.p.	12%	4%	7,6 p.p.
Crescimento Saraiva.Com (E-commerce )	-73%	-85%	11,9 p.p.	-81%	7,8 p.p.	-73%	-85%	11,9 p.p.
Quantidade de Lojas do Período	31	36	-5	33	-2	31	36	-5
Área Total de Vendas (m²)	17.581	20.044	-2.463	18.345	-764	17.581	20.044	-2.463

REVENUE

1Q23: net revenue reached R$ 16.9 million, a reduction of 4.8% when compared to 1Q22, due to the reduction in the number of stores in the network from 36 to 31 stores.

REVENUE PHYSICAL STORES

1Q23: Net revenue from physical stores in 1 Q23 reached R$ 16.6 million, which represents an increase of 0.1% when compared to the same period of the previous year. The Same Store Sales, that is, the sales of the same stores compared between 1 Q2 3 and 1Q22 had an increase of 12%, which demonstrates its ability to recover from the challenges faced in recent years.

E-COMMERCERECIPE

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1Q23: Net sales of the Saraiva.com site were R$0.3 million, registering a decline of 76.7% compared to 1Q22.

The site's poor sales performance is due to structural problems in the solution, which is why it was completely redesigned in October 2022 and is in the process of recovery. E-commerce effectively acts as a marketplace, offering products from partner stores, distributed in sections of games, stationery, gifts and, in the future, electronics.

GROSS RESULT

1Q23: Gross margin in 1Q23 was 52.5%, an increase of 7.7 p.p. over 1Q22, which was 44.8%. The variation refers to the reversal of the provision of obsolescence.

OPERATING EXPENSES

1Q23: the accounting operating expense line totaled R$ 19.8 million in 1 Q2 3, remaining in line with the accounting operating expense of 1Q22, which was R$ 19.7 million.

EBITDA RECONCILIATION - EBITDA is an indicator calculated as the net income for the period plus taxes on profit, net financial result, depreciation and amortization. The Company discloses EBITDA, as provided for in CVM Resolution No. 156 of October 2022.

In order to reflect in a manner consistent with the formation of the result of the Company's recurring activities, EBITDA is also presented adjusted ("adjusted EBITDA") excluding the effects of: impairment result; non-recurring expenses and revenues; results arising from provisions for passive contingencies; and effects of CPC 06 (R2) - IFRS-16.

Adjusted EBITDA for 1Q23 was negative R$10.2 million and was betterthan 44.5% compared to the same period of the previous year.

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