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Form 424B7 Sendas Distributor S.A.

November 28, 2022 7:13 AM EST

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Filed Pursuant to Rule 424(b)(7)
Registration No. 333-268567

The information in this prospectus supplement and the accompanying prospectus to which it relates is not complete and may be changed. This prospectus supplement and the accompanying prospectus to which it relates are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

subject to completion, dated NOVEMBER 28, 2022.

PROSPECTUS SUPPLEMENT
(To Prospectus dated November 
28, 2022)

Sendas Distribuidora S.A.

Up to 190,300,000 Common Shares, including Common Shares represented
by American Depositary Shares

Wilkes Participações S.A., Géant International B.V. and Helicco Participações Ltda., or the Selling Shareholders, are offering a total of up to 190,300,000 common shares of Sendas Distribuidora S.A., or our common shares, which may be represented by American Depositary Shares, or ADSs, each of which represents five of our common shares, or the common ADSs, in a global offering that consists of an international offering outside Brazil and a concurrent public offering with restricted placement efforts in Brazil. The international offering includes a registered offering in the United States. In the international offering, the Selling Shareholders are offering our common shares, which may be represented by the common ADSs. Common ADSs sold in the international offering will be paid for in U.S. dollars. Common shares sold in the international offering will be delivered in Brazil and paid for in reais. The closings of the international and Brazilian offerings are conditioned upon each other.

The international underwriters named in this prospectus supplement are underwriting the sale of            common ADSs, which represent            common shares. The Brazilian placement agents are placing            common shares, including common shares sold in the international offering, to investors within and outside of Brazil. The international placement agents (as defined herein), are acting as international placement agents on behalf of the Brazilian placement agents with respect to the offering of common shares (not including common shares in the form of ADSs) sold outside Brazil.

Our common shares are listed on the São Paulo Stock Exchange (B3 S.A. — Brasil, Bolsa, Balcão), or the B3, under the ticker symbol “ASAI3.” The closing price of our common shares on the B3 on November 25, 2022 was R$19.21 per common share, equivalent to US$3.59 per common share, considering an exchange rate as of November 25, 2022, which is R$5.3508 to US$1.00. The common ADSs are listed on The New York Stock Exchange, or the NYSE, under the ticker symbol “ASAI.” The closing price of the common ADSs on the NYSE on November 25, 2022 was US$17.98 per common ADS.

————————————

See “Risk Factors” beginning on page S-26 and “Risk Factors” in our annual report on Form 20-F for the fiscal year ended December 31, 2021, filed with the SEC on May 2, 2022, or the 2021 Form 20-F, to read about factors you should consider before investing in the securities offered in this prospectus supplement and the accompanying prospectus.

Neither the U.S. Securities and Exchange Commission, or the SEC, nor any state or foreign securities commission, including the Brazilian Securities Commission (Commissão de Valores Mobiliarios), or CVM, has approved or disapproved of these securities or determined if this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus supplement is not an offer to sell or a solicitation of an offer to buy any of our common shares in the Brazilian offering.

 

Per
Common ADS

 

Per
Common Share

 

Total(1)

Public offering price

 

US$

 

R$

 

US$

Underwriting discounts, fees and commissions(2)

 

US$

 

R$

 

US$

Proceeds, before expenses, to the Selling Shareholders(2)

 

US$

 

R$

 

US$

____________

(1)         Total amounts reflect the sum of (i) the per-common ADS price multiplied by the number of common shares being sold represented by ADSs plus (ii) the per common share price multiplied by the number of common shares being sold directly converted to U.S. dollars based on the selling rate reported by the Central Bank of Brazil (Banco Central do Brasil), as of            , 2022, or R$            to US$1.00.

(2)         See “Underwriting” beginning on page S-54 of this prospectus supplement for additional information regarding underwriting compensation.

————————————

The Selling Shareholders expect to deliver the common ADSs through the facilities of The Depository Trust Company against payment in New York, New York on or about            , 2022. Delivery of our common shares, including common shares offered in the international offering, will be made in Brazil through the book-entry facilities of the B3 Central Depository (Central Depositária da B3) on or about            , 2022.

Global Coordinators and Joint Bookrunners

Itaú BBA

 

BTG Pactual

 

J.P. Morgan

Joint Bookrunners

Bradesco BBI

 

SAFRA

 

Santander

Financial Advisor to the Selling Shareholders

BR Partners

The date of this prospectus supplement is            , 2022.

 

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ABOUT THIS PROSPECTUS SUPPLEMENT

This document consists of two parts. The first part is this prospectus supplement, which describes the offering by the Selling Shareholders and certain other matters relating to us and our business, financial condition and results of operation. The second part, the accompanying prospectus, gives more general information about the common shares and common ADSs that the Selling Shareholders are offering. Generally, references to the prospectus mean this prospectus supplement and the accompanying prospectus combined. If the information in this prospectus supplement differs from the information in the accompanying prospectus, the information in this prospectus supplement supersedes the information in the accompanying prospectus.

We are responsible for the information contained and incorporated by reference in this prospectus supplement and in any related free-writing prospectus we prepare or authorize. Sendas (as defined below) has not authorized anyone to give you any other information, and we take no responsibility for any other information that others may give you. Neither the Selling Shareholders nor the international underwriters are making an offer to sell our common shares or the common ADSs in any jurisdiction where the offer is not permitted.

You should not assume that the information in this prospectus supplement, the accompanying prospectus or any document incorporated by reference is accurate as of any date other than the date of the relevant document. See “Incorporation of Certain Documents by Reference” herein for the documents we are incorporating by reference into this prospectus supplement.

The Selling Shareholders are using this prospectus supplement to offer our common shares and the common ADSs outside Brazil. The Selling Shareholders are also offering our common shares in Brazil by means of a separate Portuguese language offering memorandum (memorando de oferta) and accompanying reference form (formulário de referência) in Portuguese, or the Brazilian offering documents. You should not rely on the Brazilian offering documents in making an investment decision in relation to our common shares and the common ADSs offered hereby. No offer or sale of common shares, including common shares in the form of common ADSs, may be made to the public in Brazil except in circumstances that do not constitute a public offer or distribution under Brazilian laws and regulations. Any offer or sale of common shares, including common shares in the form of common ADSs, in Brazil to non-Brazilian residents may be made only under circumstances that do not constitute a public offer or distribution under Brazilian laws and regulations.

In this prospectus supplement, unless the context otherwise requires, references to “Sendas,” “we,” “us” and “our” are to Sendas Distribuidora S.A.

References to “Selling Shareholders” are to Wilkes Participações S.A., Géant International B.V. and Helicco Participações Ltda.

References to “international underwriters” are to Itau BBA USA Securities, Inc., Banco BTG Pactual S.A. — Cayman Branch, J.P. Morgan Securities LLC, Banco Bradesco BBI S.A. and Santander Investment Securities Inc., who will collectively act as underwriters with respect to the offering of the common ADSs. BTG Pactual US Capital, LLC or one or more U.S. registered broker-dealers is acting as agent of Banco BTG Pactual S.A. — Cayman Branch for sales of the common ADSs in the United States. Bradesco Securities, Inc. or one or more U.S. registered broker-dealers is acting as agent of Banco Bradesco BBI S.A. for sales of the common ADSs in the United States.

References to “Brazilian placement agents” are to Banco Itaú BBA S.A., Banco BTG Pactual S.A., Banco J.P. Morgan S.A., Banco Bradesco BBI S.A., Banco Safra S.A. and Banco Santander (Brasil) S.A., who will act collectively as Brazilian placement agents with respect to the sale of common shares within and outside of Brazil.

References to “international placement agents” are to Itau BBA USA Securities, Inc., BTG Pactual US Capital, LLC, J.P. Morgan Securities LLC, Bradesco Securities, Inc., Safra Securities LLC and Santander Investment Securities Inc., who will act as international placement agents on behalf of the Brazilian placement agents with respect to the offering of common shares (not including common shares in the form of ADSs) sold outside Brazil.

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References herein to “reais” or “R$” are to the lawful currency of Brazil. References herein to “U.S. dollars” or “US$” are to the lawful currency of the United States.

References to the “Extra Transaction” are to the transaction involving the assignment and conversion of up to 70 commercial points/stores operated by Companhia Brasileira de Distribuição under the Extra Hiper banner in several Brazilian states into cash and carry stores under the Assaí banner, among other transactions. For more information about the Extra Transaction, see “Item 4. Information on the Company — A. History and Development of the Company — History — Extra Transaction” in the 2021 Form 20-F, which is incorporated by reference in this prospectus supplement.

PRIIPs Regulation/Prospectus Regulation/Prohibition of sales to EEA retail investors

Our common shares and the common ADSs are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); or (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the “Insurance Distribution Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor (a “Qualified Investor”) as defined in the Prospectus Regulation. Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling our common shares and the common ADSs or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling our common shares and the common ADSs or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

This prospectus supplement has been prepared on the basis that any offer of common shares or common ADSs in any Member State will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of common shares and common ADSs. Accordingly, any person making or intending to make any offer within the EEA of common shares or common ADSs which are the subject of the offering contemplated in this prospectus supplement may only do so in circumstances in which no obligation arises for Sendas, the Selling Shareholders or any of the international underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation, in each case, in relation to such offer. None of Sendas, the Selling Shareholders or the international underwriters have authorized, nor do they authorize, the making of any offer of common shares or common ADSs in circumstances in which an obligation arises for Sendas, the Selling Shareholders or the international underwriters to publish a prospectus for such offer. None of Sendas, the Selling Shareholders or the international underwriters have authorized, nor do they authorize, the making of any offer of common shares or common ADSs through any financial intermediary, other than offers made by the international underwriters, which constitute the final placement of the common shares and common ADSs contemplated in this prospectus supplement.

Each person in a Member State who receives any communication in respect of, or who acquires any common shares or common ADSs under, the offers to the public contemplated in this prospectus supplement, or to whom the common shares or common ADSs are otherwise made available, will be deemed to have represented, warranted, acknowledged and agreed to and with each international underwriter, Sendas and the Selling Shareholders that it and any person on whose behalf it acquires common shares or common ADSs is: (i) a qualified investor within the meaning of Article 2I of the Prospectus Regulation; (ii) in the case of the common ADSs only, not a retail investor (as defined above); and (iii) in the case of any common shares or common ADSs acquired by it as a financial intermediary, as that term is used in Article 5(1) of the Prospectus Regulation, (i) the common shares or common ADSs acquired by it in the offer have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Member State other than qualified investors, as that term is defined in the Prospectus Regulation, or in circumstances in which the prior consent of the international underwriters has been given to the offer or resale; or (ii) where the common shares or common ADSs have been acquired by it on behalf of persons in any Member State other than qualified investors, the offer of those common shares or common ADSs to it is not treated under the Prospectus Regulation as having been made to such persons.

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We, the Selling Shareholders and the international underwriters and their affiliates, and others will rely upon the truth and accuracy of the foregoing representation, acknowledgment and agreement. Notwithstanding the above, a person who is not a Qualified Investor may, with the consent of the international underwriters, be permitted to purchase our common shares or the common ADSs in the international offering.

In this section, the expression an “offer” in relation to any common shares or common ADSs in any Member State of the EEA means the communication in any form and by any means of sufficient information on the terms of the offer and our common shares or the common ADSs to be offered so as to enable an investor to decide to purchase or subscribe for our common shares or the common ADSs and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129 (as amended or superseded).

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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

Sendas is incorporating by reference into this prospectus supplement the following documents that it has filed with or furnished to the SEC:

(1)    our annual report on Form 20-F for the fiscal year ended December 31, 2021, filed with the SEC on May 2, 2022, or the 2021 Form 20-F;

(2)    our report on Form 6-K/A furnished to the SEC on May 16, 2022 (Film No.: 22925026), containing information on (i) the election of the current members of our executive board, and (ii) a capital increase and issuance of new common shares due to the exercise of stock options granted to certain employees under the terms of our share-based compensation plans, approved by our board of directors at a meeting held on May 9, 2022;

(3)    our report on Form 6-K furnished to the SEC on July 28, 2022 (Film No.: 221112359), containing information on a capital increase and issuance of new common shares due to the exercise of stock options granted to certain employees under the terms of our share-based compensation plans, approved by our board of directors at a meeting held on July 27, 2022;

(4)    our report on Form 6-K furnished to the SEC on October 21, 2022 (Film No.: 221321981), containing information on a capital increase and issuance of new common shares due to the exercise of stock options granted to certain employees under the terms of our share-based compensation plans, approved by our board of directors at a meeting held on October 20, 2022;

(5)    our report on Form 6-K furnished to the SEC on October 27, 2022 (Film No.: 221335319), containing information on Mr. Ronaldo Iabrudi dos Santos Pereira’s resignation as vice-chairman and member of our board of directors;

(6)    our report on Form 6-K furnished to the SEC on October 28, 2022 (Film No.: 221338455), containing information on the designation of Mr. Philippe Alarcon’s as vice-chairman of our board of directors, and of Mr. Belmiro Gomes, our chief executive officer, as member of our board of directors;

(7)    our current report on Form 6-K furnished to the SEC on November 28, 2022 (Film No.: 221421052), including the unaudited condensed interim financial statements of Sendas as of September 30, 2022 and for the nine-month periods ended September 30, 2022 and 2021, or the Interim Financials Form 6-K; and

(8)    any future reports of Sendas on Form 6-K furnished to the SEC prior to the completion of the offering of the securities offered by this prospectus supplement, that are identified in those forms as being incorporated by reference into this prospectus supplement or the accompanying prospectus.

We will provide without charge to any person to whom a copy of this prospectus supplement is delivered, upon the written or oral request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). Requests should be directed to Sendas’s Investor Relations Department located at Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A Jacarepaguá 22775-005 Rio de Janeiro, RJ, Brazil. Attn: Gabrielle Helú, Investor Relations Officer; telephone: +55 (11) 3411-5042; email: [email protected]).

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FORWARD-LOOKING STATEMENTS

This prospectus supplement and the documents incorporated by reference herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning Sendas, its subsidiaries and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial conditions, or other matters, based on current beliefs of our management as well as assumptions made by, and information currently available to, our management. Forward-looking statements can be identified by the fact that they do not relate only to historical or current facts and may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions, although the absence of any such words or expressions does not mean that a particular statement is not a forward-looking statement. These statements are subject to various risks and uncertainties, many of which are outside the parties’ control. Therefore, you should not place undue reliance on these statements. Factors that could cause actual plans and results to differ materially from those in these statements include, but are not limited to, risks and uncertainties detailed in the section of this prospectus supplement entitled “Risk Factors,” and in the Form 20-F and other periodic filings with the SEC, and the following factors:

        the economic, financial, political and social effects of the ongoing COVID-19 pandemic (or other pandemics, epidemics and similar crises), particularly in Brazil, and to the extent that they continue to cause serious negative macroeconomic effects, thus prompting and exacerbating the risks described in the 2021 Form 20-F;

        global economic, political and social conditions, including the military conflict between Russia and Ukraine and its impacts on the global economy, and their impact on consumer spending patterns, particularly in Brazil (including, but not limited to, unemployment rates, interest rates, monetary policies and inflation rates);

        the ongoing impacts of the COVID-19 pandemic on customer demand, as well as on our expected results of operations, financial condition and cash flows our ability to sustain or improve our performance;

        competition in the sectors in which we operate;

        Brazilian government regulation and tax matters;

        adverse legal or regulatory disputes or proceedings;

        our ability to implement our strategy, including our digital transformation initiatives;

        credit and other risks of lending and investment activities;

        the political instability related to the recent election of Luis Inácio Lula da Silva as President of Brazil with a mandate starting in 2023, including uncertainties in relation to the implementation by the new government of monetary, fiscal and social security policies and the political climate after the result of the election, which has resulted in massive demonstrations and/or strikes;

        our ability to expand our operations outside of our existing markets; and

        other risk factors as set forth in the 2021 Form 20-F.

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the parties’ businesses, including those described in this prospectus supplement, and information contained in this prospectus supplement.

Nothing in this prospectus supplement is intended, or is to be construed, as a profit projection or to be interpreted to mean that earnings per share for the current or any future financial years will necessarily match or exceed our historical published earnings per common share.

We are under no obligation, and each expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statements, whether written or oral, which may be made from time to time, whether as a result of new information, future events or otherwise. Persons reading this document are cautioned not to place undue reliance on these forward-looking statements, which only speak as of the date hereof.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

All references herein to “real,” “reais” or “R$” are to the Brazilian real, the official currency of Brazil. All references to “U.S. dollars,” “dollars” or “US$” are to U.S. dollars.

Financial Statements

The financial information presented in this prospectus supplement has been derived from the following:

        the unaudited condensed interim financial statements of Sendas as of September 30, 2022 and for the nine-month periods ended September 30, 2022 and 2021 and the related notes thereto, included in the Interim Financials Form 6-K incorporated by reference in this prospectus supplement; and

        the audited financial statements of Sendas as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019, and the related notes thereto, included in the 2021 Form 20-F incorporated by reference in this prospectus supplement.

The audited financial statements of Sendas were prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, and are presented in reais. The unaudited condensed interim financial statements of Sendas were prepared in accordance with IAS 34 — Interim Financial Reporting as issued by the IASB and are presented in reais.

Internal Controls over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by IASB.

Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that our receipts and expenditures are being made only in accordance with appropriate authorization of management and the board of directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in our annual financial statements will not be prevented or detected on a timely basis.

Management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment management concluded that our internal control over financial reporting was not effective as of December 31, 2021, considering the material weakness described below.

Inadequate control over Extra Transaction

Management did not appropriately design and maintain effective controls related to the interpretation and application of complex accounting matters, specifically in relation to the Extra Transaction, a significant unusual transaction with a related party. The control deficiencies did not allow management to identify immaterial misstatements

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in the classification of assets in the statement of financial position and non-cash payments in the cash flows statement. Such deficiency did not result in a misstatement of our financial statements as of and for the year ended December 31, 2021 or any other financial indicators for the year.

Remedial actions

We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures in order to ensure our compliance with the requirements of the Sarbanes-Oxley Act and the related rules promulgated by the SEC. In order to mitigate the risk of future errors in our financial statements related to unusual transactions, we will evaluate the involvement of technical specialists, if applicable.

Attestation Report of the Registered Public Accounting Firm

The effectiveness of Sendas’s internal control over financial reporting as of December 31, 2021, have been audited by Ernst & Young Auditores Independentes S.S., which conclude, among other things, that Sendas did not maintain effective internal control over financial reporting as of December 31, 2021. Such report is included in the Sendas 2021 Form 20-F.

Translation of Reais into U.S. Dollars

We have translated certain amounts included in this prospectus supplement from reais into U.S. dollars. The exchange rate used to translate such amounts was R$5.4066 to US$1.00, which was the commercial selling rate at closing for the purchase of U.S. dollars on September 30, 2022, as reported by the Central Bank of Brazil. The U.S. dollar equivalent information included in this prospectus supplement is provided solely for convenience of investors and should not be construed as representation that the real amounts represent, or have been or could be converted into, U.S. dollars at such rates or at any other rate.

Rounding

We have made rounding adjustments to reach some of the figures included in this prospectus supplement. As a result, numerical figures shown as totals in some tables may not be arithmetic aggregations of the figures that precede them.

Special Note Regarding Non-IFRS Financial Measures

In this prospectus supplement, we present the following non-IFRS financial measures: EBITDA, EBITDA Margin and Net Debt.

EBITDA is defined as net income for the year/period plus income tax and social contribution, net financial result and depreciation and amortization, as defined by our Brazilian regulator, the CVM, pursuant to CVM Resolution No. 156/2022. We consider EBITDA to be a measure of our operating performance. We define EBITDA Margin as EBITDA divided by net operating revenue, expressed as a percentage.

Net Debt is calculated as total debt (the sum of current and non-current borrowings and financing and current and non-current debentures and promissory notes) less cash and cash equivalents and current and non-current derivative financial instruments. Derivative financial instruments are used to protect us from possible fluctuations in the interest rates and foreign currency exchange rates to which our debt instruments are exposed. We consider Net Debt to be a financial position measure.

Our management believes that EBITDA, EBITDA Margin and Net Debt, along with comparable IFRS measures, provide useful information to potential investors, financial analysts and the public in their review of our operating performance. Our management uses these Non-IFRS financial measures, along with the most directly comparable IFRS financial measures, in evaluating our operating performance. However, EBITDA, EBITDA Margin and Net Debt are not measures under IFRS and should not be considered as substitutes for net income or loss, cash flow from operations or other measures of operating performance or liquidity determined in accordance with IFRS. Other companies may calculate these measures differently than we do, and therefore, our presentation may not be comparable to similarly titled measures of other companies. EBITDA, EBITDA Margin and Net Debt are not intended to represent

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funds available for dividends or other discretionary uses by us because those funds are required for debt service, capital expenditures, working capital needs and other commitments and contingencies. The Non-IFRS financial measures described in this prospectus supplement are not a substitute for the IFRS measures of earnings, for which our management has responsibility.

For more information on the Non-IFRS measures presented in this prospectus supplement, including reconciliations to applicable IFRS measures, see “Summary Financial Information — Non-IFRS Financial Measures.

This financial information should be read in conjunction with the information set forth under “Item 5. Operating and Financial Review and Prospects,” “Item 11. Quantitative and Qualitative Disclosures about Market Risk,” and our audited financial statements and the related notes thereto, included in our 2021 Form 20-F and our unaudited condensed interim financial statements and the related notes thereto, included in our Interim Financials Form 6-K.

Special Note Regarding Certain Operational Metrics

This prospectus supplement presents information regarding our:

        total selling area;

        average selling area per store;

        same store gross sales; and

        average monthly gross revenue per square meter.

We define total selling area as the sum of the selling area of each store at a period end. We define average selling area per store as the total selling area at a period end divided by total number of stores at a period end. Total selling area information and average selling area per store information are prepared and presented as important indicators of the size of our business. Moreover, we believe tracking average selling area per store enables our management to evaluate performance metrics per store and can provide useful information to investors, securities analysts and the public in their review of our operating performance.

We define same store gross sales as sales made in stores opened for at least 12 months and which have not been closed or remained closed for a period of seven or more consecutive days. Same store gross sales information is prepared and presented as an important indicator of the maturation of our stores. Tracking same store gross sales enable our management to evaluate the performance of our organic expansion and we believe can provide useful information to investors, securities analysts and the public in their review of our operating performance.

We define average monthly gross revenue per square meter as gross revenue for the period allocated by store divided by the average selling area (in square meters) for the period taking into account our store opening schedule. Average monthly gross revenue per square meter is an important indicator of our operating performance on a unit basis and the efficiency of our operations and we believe can provide useful information to investors, securities analysts and the public in their review of our operating performance.

Information regarding total selling area, average selling area per store, same store gross sales and average monthly gross revenue per square meter should be analyzed in conjunction with other operating and financial metrics, and should not be considered as a measure of performance in isolation. Additionally, our calculation of these measures may be different from the calculation used by other companies, including our competitors. Because other companies may not calculate these measures in the same manner as we do, our measures may not be comparable to those of other companies.

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WHERE YOU CAN FIND MORE INFORMATION

Information that Sendas files with or furnishes to the SEC after the date of this prospectus supplement, and that is incorporated by reference herein, will automatically update and supersede the information in this prospectus supplement. You should review the SEC filings and reports that Sendas incorporates by reference to determine if any of the statements in this prospectus supplement, the accompanying prospectus or in any documents previously incorporated by reference have been modified or superseded.

Documents incorporated by reference in this prospectus supplement are available without charge. Each person to whom this prospectus supplement and the accompanying prospectus are delivered may obtain documents incorporated by reference herein by requesting them either in writing or orally, by telephone or by e-mail from us at the following address:

Investor Relations Department
Sendas Distribuidora S.A.
Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A
Jacarepaguá
22775-005 Rio de Janeiro, RJ, Brazil
Attn: Gabrielle Helú, Investor Relations Officer
Telephone: + 55 (11) 3411 5042
E-mail: [email protected]

Sendas is subject to the information requirements of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, applicable to a foreign private issuer, and accordingly files or furnishes reports, including annual reports on Form 20-F, reports on Form 6-K, and other information with the SEC. Any filings Sendas makes electronically will be available to the public over the Internet at the SEC’s web site at http://www.sec.gov. The information on this website, which might be accessible through a hyperlink resulting from this URL, is not and shall not be deemed to be incorporated into this prospectus supplement.

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Table of Contents

SUMMARY

This summary highlights key information described in greater detail elsewhere, or incorporated by reference, in this prospectus supplement and the accompanying prospectus. This summary is not complete and does not contain all of the information you should consider before investing in our common shares and our common ADSs. You should read carefully the entire prospectus supplement, the accompanying prospectus, including “Risk Factors” and the documents incorporated by reference herein, which are described under “Incorporation of Certain Documents by Reference” and “Where You Can Find More Information.”

Overview

According to the Brazilian Association of Self-Service Wholesale (Associação Brasileira dos Atacadistas de Autosserviço), or ABAAS, we were the largest pure cash and carry player in Brazil in terms of consolidated gross revenue in 2021. We were also named the second largest retailer and the 16th largest company in Brazil in 2020 according to the Exame magazine. We were also recognized as one of the most valuable brands in Brazil, reaching the 15th place in the Brazil 100 ranking published by Brand Finance on August 8, 2022.

We serve as an economic center for the regions in which we operate. Our cash and carry operations involve sales of more than 8,000 items of grocery, food, perishable, beverage, wrapping and hygiene products, among others. In addition, our stores offer ample parking, air-conditioning, well-lit environments and over 100 stores have butcher services.

Our customers include prepared food retailers (including restaurants, pizzerias and snack bars), end users (including schools, small businesses, religious institutions, hospitals and hotels), conventional retailers (such as grocery stores and neighborhood supermarkets) and individuals.

The chart below sets forth our growth in the past decade. In the nine-month period ended September 30, 2022, our gross operating revenue (defined as net operating revenue before returns and sales cancellations and taxes (note 20 to the unaudited condensed interim financial statements of Sendas as of September 30, 2022 and for the nine-month periods ended September 30, 2022 and 2021)) totaled R$42.2 billion, a 28.2% increase compared to the corresponding period in 2021.

____________

Note: Gross operating revenue for each fiscal year refers to the years ended December 31.

Our operations strongly expanded throughout Brazil. As of September 30, 2022, we operated a total of 233 stores throughout 23 Brazilian states and the Federal District (average sales per store of approximately R$215 million), having a total selling area of approximately 1.1 million square meters of total sales area, representing approximately a 30% increase in the last 12 months. In addition, we have 12 distribution centers and more than 58 thousand employees. In comparison, in 2012 we operated 61 stores in six Brazilian states and had approximately 182 thousand square meters in total sales area.

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The opening of new stores and our organic growth since 2019 corresponded to a significant increase in the number of transactions (tickets), from approximately 169 million tickets in 2019 to approximately 190 million in 2021, representing a compound annual growth rate of 12.8%. We receive approximately 30 million distinct customers monthly in our stores in 2021.

____________

(1)      A ticket is equivalent to a purchase made at an Assaí store.

(2)      Considers distinct customers in transit at the stores in 2021.

The following tables set forth the number of stores, the total selling area, the average selling area per store and the total number of employees for our Assaí stores as of the dates indicated:

 

As of September 30, 2022

   

Number of
Stores

 

Total Selling
Area
(1)

 

Average
Selling Area
per Store
(2)

 

Total Number
of Employees
(3)

       

(in thousand
square meters
)

 

(in square
meters
)

   

Assaí stores

 

233

 

1,091

 

4,682

 

57,663

____________

(1)      Sum of the selling area of each store at period end.

(2)      Total selling area at period end divided by total number of stores at period end.

(3)      Based on the full-time equivalent number of employees at stores, which is the product of the number of food retail employees (full- and part-time) and the ratio of the average monthly hours of food retail employees to the average monthly hours of full-time employees.

 

As of December 31, 2021

   

Number of
Stores

 

Total Selling
Area
(1)

 

Average
Selling Area
per Store
(2)

 

Total Number
of Employees
(3)

       

(in thousand
square meters
)

 

(in square
meters
)

   

Assaí stores

 

212

 

964

 

4,546

 

50,154

____________

(1)      Sum of the selling area of each store at period end.

(2)      Total selling area at period end divided by total number of stores at period end.

(3)      Based on the full-time equivalent number of employees at stores, which is the product of the number of food retail employees (full- and part-time) and the ratio of the average monthly hours of food retail employees to the average monthly hours of full-time employees.

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As of December 31, 2020

   

Number of
Stores

 

Total Selling
Area
(1)

 

Average
Selling Area
per Store
(2)

 

Total Number
of Employees
(3)

       

(in thousand
square meters
)

 

(in square
meters
)

   

Assaí stores

 

184

 

809

 

4,397

 

39,197

____________

(1)      Sum of the selling area of each store at period end.

(2)      Total selling area at period end divided by total number of stores at period end.

(3)      Based on the full-time equivalent number of employees at stores, which is the product of the number of food retail employees (full- and part-time) and the ratio of the average monthly hours of food retail employees to the average monthly hours of full-time employees.

 

As of December 31, 2019

   

Number of
Stores

 

Total Selling
Area
(1)

 

Average
Selling Area
per Store
(2)

 

Total Number
of Employees
(3)

       

(in thousand
square meters
)

 

(in square
meters
)

   

Assaí stores

 

166

 

713

 

4,293

 

36,045

____________

(1)      Sum of the selling area of each store at period end.

(2)      Total selling area at period end divided by total number of stores at period end.

(3)      Based on the full-time equivalent number of employees at stores, which is the product of the number of food retail employees (full- and part-time) and the ratio of the average monthly hours of food retail employees to the average monthly hours of full-time employees.

The following table sets forth the number of our Assaí stores by region as of the dates indicated:

 

As of
September 30,
2022

 


As of December 31,

   

2021

 

2020

North

 

17

 

14

 

11

Midwest

 

22

 

21

 

18

Southeast

 

122

 

113

 

101

Northeast

 

65

 

57

 

49

South

 

7

 

7

 

5

Total

 

233

 

212

 

184

The table below sets forth same store gross sales growth for the periods indicated. Same store gross sales are sales made in stores opened for at least 12 consecutive months and which have not been closed or remained closed for a period of seven or more consecutive days:

 




For the year ended December 31,

 

For the
nine-month
period ended
September 30,
2022

   

2019

 

2020

 

2021

 

Same store gross sales

 

6.3

%

 

14.1

%

 

4.8

%

 

10.2

%

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The table below sets forth our average monthly gross revenue per square meter for the period indicated, which is defined as gross revenue for the period allocated by store divided by the average selling area (in square meters) for the period taking into account our store opening schedule:

 




For the year ended December 31,

 

For the
nine-month
period ended
September 30,
2022

   

2019

 

2020

 

2021

 
   

(in R$ thousands)

Average monthly gross revenue per square meter

 

4.1

 

4.4

 

4.5

 

4.6

We reported the highest average sales per square meter in 2021 (which is defined as gross revenue for the period divided by the total selling area at period end (in square meters) divided by the number of months in the period) among the publicly listed cash and carry players in Brazil, as set forth below:

Average Sales per Square Meter in 2021
(thousands of R$ / square meter)

____________

Sources:    Companies’ public information.

In addition, we also reported the highest profitability in 2021 (as measured by EBITDA Margin) among the publicly listed cash and carry players in Brazil, as set forth below:

EBITDA Margin(1) in the year ended December 31, 2021
(% of net operating revenue)

____________

Sources:    Companies’ public information.

(1)     EBITDA Margin is defined as EBITDA divided by net operating revenue, expressed as a percentage. EBITDA Margin is a Non-IFRS financial measure, and our calculation of EBITDA Margin may be different than our competitors, including the publicly listed cash and carry players in Brazil indicated in the graphic above. For further information on why our management uses Non-IFRS financial measures, and on the limits of using these Non-IFRS financial measures, please see “Presentation of Financial and Other Information — Special Note Regarding Non-IFRS Financial Measures.” For a reconciliation to applicable IFRS measures, see “Summary Financial Information — Non-IFRS Financial Measures.”

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Our Business Model

As set forth in the chart below, our business model is flexible and it can adapted to our different target customers and regions through different formats. We stand out for our decentralized logistics system, where most of our inventory is delivered in the store, and low cost structure, which we believe generates efficiency and productivity. We also have a financial services segment, with more than 2.1 million Passaí credit cards issued as of September 2022, representing approximately 6% of our gross sales in stores during the nine-month period ended September 30, 2022.

Different Assaí Formats (Sales Area)

Our regional model is operated through 11 local offices managed by leaders with autonomy in decision making. This model aims to tailor our product mix and communications according to each region.

Of the 233 stores we operated as of September 30, 2022, 33 stores ranged from 1,000 to 3,000 square meters of selling area, a format we believe is best suited to enable our food service provider customers to quickly replace their supplies; 89 stores ranged from 3,000 to 5,000 square meters of selling area, a format we believe is best suited to big families in urban centers; and 111 stores ranged from 5,000 to 8,000 square meters of selling area, a format we believe is best suited for bulk purchases.

Over the years, we have seen an increase in productivity in stores as a result of investments in better locations and purchasing experience, including lighting, air conditioning, equipment, process automation, expansion of sortiments, inclusion of services (such as butcher’s, cold dish emporium, roasted chicken), among others. However, as set forth in the chart below, the improvement in customer’s purchasing experience did not significantly change our level of expenses, which contributed to the generation of an increase in EBITDA Margin, as set forth below.

SG&A and EBITDA Margin(1) (% of Net Operating Revenue)

____________

(1)      EBITDA Margin is defined as EBITDA divided by net operating revenue, expressed as a percentage. EBITDA Margin is a Non-IFRS financial measure. For further information on why our management uses Non-IFRS financial measures, and on the limits of using these Non-IFRS financial measures, please see “Presentation of Financial and Other Information — Special Note Regarding Non-IFRS Financial Measures.” For a reconciliation of EBITDA Margin for the year ended December 31, 2021 to the applicable IFRS measures, see “Summary Financial Information — Non-IFRS Financial Measures.”

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We are evolving in our digital transformation through the development of a seamless buying experience. We are currently investing in: (1) Wi-Fi infrastructure in all of our stores; (2) self-check-out; (3) digital sales through partnerships with last-mile operators; and (4) shipping through our telesales channel.

We also hold an indirect minority equity interest in FIC, a Brazilian company that provides financial services in our stores and stores of Companhia Brasileira de Distribuição (Grupo Pão de Açúcar) with exclusive rights to offer credit cards, financial services and insurance policies (except for extended warranties).

We generate all of our operating revenues in Brazil. Prior to the corporate reorganization completed on December 31, 2020, we also generated a share of our operating revenues from our retail operations in Colombia, Argentina and Uruguay, as a result of the acquisition of Éxito on November 27, 2019. For more information about this corporate reorganization, see “Item 4. Information on the Company — A. History and Development of the Company — History — The Spin-Off — Corporate Reorganization” in the 2021 Form 20-F, which is incorporated by reference in this prospectus supplement.

Growth Strategy

We have shown consistent growth in recent years. In the twelve months ended September 30, 2022, we recorded an expansion of more than 44 stores and in the nine-month period ended September 30, 2022, we recorded an expansion of more than 23 new stores. In addition, in the nine-month period ended September 30, 2022, we recorded a 28.2% growth, comprising a 10.2% same store growth and a 17.9% store expansion growth. For 2022, we expect to open a total of 58 new stores by the end of the year, with 45 conversions.

In addition, the acquisition of 70 Extra Hiper commercial points/stores converted, or to be converted, into Assaí banner stores accelerated our growth plan, since it added more than 400 thousand square meters to our total sales area with low cannibalization of our existing stores. The map below sets fort the privileged locations of the stores acquired which are mainly located in capitals, metropolitan regions or large cities in Brazil.

Extra Hiper Stores to be Converted

Based on our results for the 12-months ended September 30, 2022, our converted stores present an uplift of sales of three times against sales in hypermarkets format (pre-conversion). In addition, our converted stores have accelerated maturation of approximately six months for sales ramp-up, first year breakeven and second year maturation. In 2022, we spent approximately R$45 million in capital expenditures for converted stores compared to approximately R$65 million for organic stores.

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Robust Unit Economics in Organic Openings and Conversions

____________

(1)      Gross operating revenue per stores based on our past performance in mature stores for the last twelve months ended September 30, 2022.

Stores converted in the third quarter of 2022 are among our main stores in terms of flow, a performance that exceeds the already high expectations for the Extra Transaction. The combination of the successful business model, Assaí banner strength and the attractiveness of trading points resulted in rapid customer engagement. In the period between October 1, 2022 and October 18, 2022, six of the 10 stores with the highest customer flows were converted stores.

As set forth in the table below, we expect that short-term conversions will play a relevant role in our future based on planned organic expansion and conversion timeline.

Schedule of Organic Expansion and Extra Hiper Store Conversions

____________

Source:    Company information.

(1)      Through September 30, 2022.

(2)      Company estimates.

Our principal executive office is located at Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A Jacarepaguá 22775-005 Rio de Janeiro, RJ, Brazil; our telephone number is +55 (11) 3411-5042; and our website is www.assai.com.br. The information on our website, which might be accessible through a hyperlink resulting from this URL, is not and shall not be deemed to be incorporated into this prospectus supplement.

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Table of Contents

The Offering

Issuer

 

Sendas Distribuidora S.A.

Selling Shareholders

 

Wilkes Participações S.A., Géant International B.V. and Helicco Participações Ltda.

Global coordinators and joint bookrunners

 

Itau BBA USA Securities, Inc., Banco BTG Pactual S.A. — Cayman Branch and J.P. Morgan Securities LLC.

International underwriters

 

Itau BBA USA Securities, Inc., Banco BTG Pactual S.A. — Cayman Branch, J.P. Morgan Securities LLC, Banco Bradesco BBI S.A. and Santander Investment Securities Inc.

Brazilian placement agents

 

Banco Itaú BBA S.A., Banco BTG Pactual S.A., Banco J.P. Morgan S.A., Banco Bradesco BBI S.A., Banco Safra S.A. and Banco Santander (Brasil) S.A.

International placement agents

 

Itau BBA USA Securities, Inc., BTG Pactual US Capital, LLC, J.P. Morgan Securities LLC, Bradesco Securities, Inc., Safra Securities LLC and Santander Investment Securities Inc.

Financial advisor to the Selling
Shareholders

 


BR Partners Assessoria Financeira Ltda. is acting as a financial advisor to the Selling Shareholders in connection with this offering. For more information, see “Underwriting.”

Securities offered by the Selling
Shareholders

 


Up to 190,300,000 common shares, which may be in the form of common ADSs.

Global offering

 

The global offering consists of the international offering and the Brazilian offering. The international offering and the Brazilian offering are being conducted concurrently, and the closing of each is conditioned upon the closing of the other.

International offering

 

The international offering is being conducted outside Brazil and includes an offering registered with the SEC. The international underwriters are underwriting the sale of            common ADSs. The international placement agents are acting as placement agents on behalf of the Brazilian placement agents for sales of common shares to investors outside Brazil.

SEC registered offering

 

The securities sold as part of the international offering to investors outside Brazil are being sold by means of this prospectus supplement in an offering registered with the SEC.

Brazilian offering

 

The Brazilian placement agents are placing            common shares, including common shares placed in the international offering through the international placement agents, to investors within and outside of Brazil in a public offering with restricted placement efforts by means of a separate Portuguese language offering memorandum (memorando de oferta) and accompanying reference form (formulário de referência) in Portuguese. The Brazilian offering has not been and will not be registered with the CVM. The offering to investors in Brazil is exempt from registration with the SEC under Regulation S.

Common ADSs

 

Each common ADS represents five of our common shares.

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Purchases of common shares

 

Any investor outside Brazil purchasing our common shares must be authorized to invest in Brazilian securities pursuant to the applicable rules and regulations of the Brazilian National Monetary Council (Conselho Monetário Nacional), or CMN, the CVM and the Central Bank of Brazil.

Offering price

 

The public offering prices in the international offering are set forth on the cover page of this prospectus supplement, in U.S. dollars per common ADS and reais per common share.

The public offering prices were approximately equivalent to each other at the exchange rates prevailing on            , 2022.

Use of proceeds and dilution

 

All of the securities offered as part of the global offering will be sold by the Selling Shareholders for their own accounts. Sendas will not receive any of the proceeds from these sales and, accordingly, the offering will not have any dilutive effect to the existing shareholders of Sendas.

Settlement

 

Payment for our common ADSs must be made in U.S. dollars through the facilities of The Depository Trust Company. The Selling Shareholders expect that the common ADSs will be delivered and settled through the facilities of The Depository Trust Company on or about            , 2022.

Payment for our common shares (other than common shares represented by ADSs) must be made in reais through the facilities of the B3 Central Depository. The Selling Shareholders expect that the common shares will be delivered and settled through the facilities of the B3 Central Depository on or about            , 2022.

Distributions

 

Under Brazilian law and our bylaws, we are required to distribute to our shareholders an annual amount equal to not less than 25% of our adjusted net income for the fiscal year, unless our board of directors advises our shareholders at our shareholders’ meeting that payment of the mandatory dividend for the preceding year is inadvisable in light of our financial condition and our shareholders approve that recommendation.

The holders of common ADSs will be entitled to receive dividend distributions to the same extent as the holders of our common shares, subject to deduction of any applicable fees and charges, including the ADS issuance fee in case ADSs are issued as a result of such distributions. For further information, see “Item 10. Additional Information — B. Memorandum and Articles of Association” in the 2021 Form 20-F, which is incorporated herein by reference and Description of Common Shares and American Depositary Shares” in the accompanying prospectus.

Voting rights

 

Holders of our common shares are entitled to one vote per share at meetings of our shareholders.

Holders of the common ADSs do not have voting rights, but may instruct the ADS Depositary how to vote the common shares underlying their common ADSs under the circumstances described in the deposit agreement dated February 19, 2021, as amended on August 16, 2021, entered into between Sendas and the ADS Depositary and the owners and holders from time to time of common ADSs issued thereunder, or the Sendas Deposit Agreement.

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Table of Contents

Listings

 

Our common shares are publicly traded in Brazil on the B3 under the symbol “ASAI3”.

The common ADSs representing our common shares trade on the NYSE under the symbol “ASAI”.

Company lock-up agreement

 

Subject to certain exceptions, Sendas has agreed that for 90 days following the public offering date set forth on the final prospectus supplement for this offering, it will not, without first obtaining the written consent of Itau BBA USA Securities, Inc., issue, sell or transfer any common shares, common ADSs or securities convertible into, exchangeable for, exercisable for, or repayable with common shares or common ADSs.

For more information, see “Underwriting — Lock-up Agreements.”

None of our directors or officers will be subject to lock-up agreements.

See also “Risk Factors — Risks Relating to Our Common Shares and the Common ADSs — Future sales, or the perception of future sales, of substantial amounts of our common shares on the B3 or the common ADSs on the NYSE, or the anticipation of these sales, could adversely affect the market price of our common shares and the common ADSs prevailing from time to time or their liquidity and could impair our ability to raise capital through the sale of equity securities, and our directors and officers are not subject to any lock-up agreements in connection with the global offering.”

Selling Shareholder lock-up agreements

 

Subject to certain exceptions, the Selling Shareholders have agreed that for 90 days following the public offering date set forth on the final prospectus supplement for this offering, they will not, without first obtaining the written consent of Itau BBA USA Securities, Inc., sell or transfer any common shares, common ADSs or securities convertible into, exchangeable for, exercisable for, or repayable with common shares or common ADSs. For more information, see “Underwriting — Lock-up Agreements.”

None of our other shareholders will be subject to lock-up agreements.

See also “Risk Factors — Risks Relating to Our Common Shares and the Common ADSs — Future sales, or the perception of future sales, of substantial amounts of our common shares on the B3 or the common ADSs on the NYSE, or the anticipation of these sales, could adversely affect the market price of our common shares and the common ADSs prevailing from time to time or their liquidity and could impair our ability to raise capital through the sale of equity securities, and our directors and officers are not subject to any lock-up agreements in connection with the global offering.”

ADS Depositary

 

JPMorgan Chase Bank N.A.

Risk factors

 

You should carefully consider the risk factors discussed beginning on page S-26, the section entitled “Risk Factors” in the 2021 Form 20-F, which is incorporated by reference in this prospectus supplement, and the other information included or incorporated by reference in this prospectus supplement, before purchasing any common shares or common ADSs.

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Table of Contents

Summary Financial Information

The following tables set forth summary historical financial information of Sendas and have been derived from:

        the unaudited condensed interim financial statements as of September 30, 2022 and for the nine-month periods ended September 30, 2022 and 2021 and the related notes thereto of Sendas, included in the Interim Financials Form 6-K incorporated by reference in this prospectus supplement; and

        the audited financial statements as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019, and the related notes thereto of Sendas, included in the 2021 Form 20-F incorporated by reference in this prospectus supplement.

The audited financial statements of Sendas were prepared in accordance with IFRS as issued by the IASB, and are presented in reais. The unaudited condensed interim financial statements of Sendas were prepared in accordance with IAS 34 — Interim Financial Reporting as issued by the IASB and are presented in reais.

The results of operation for the nine-month period ended September 30, 2022 are not necessarily indicative of the operating results to be expected for the entire year. The summary financial information below should be read in conjunction with, and are qualified in their entirety by reference to, Sendas’s financial statements and the accompanying notes incorporated by reference in this prospectus supplement.

Statement of Operations and Comprehensive Income Data

 

For the nine-month period ended
September 30,

 

For the year ended
December 31,

   

2022

 

2022

 

2021

 

2021

 

2021

 

2020

 

2019

   

(in
millions
of US$)
(1)

 

(in millions of R$)

 

(in
millions
of US$)
(1)

 

(in millions of R$)

Net operating revenue

 

7,133

 

 

38,566

 

 

30,342

 

 

7,749

 

 

41,898

 

 

36,043

 

 

28,082

 

Cost of sales

 

(5,982

)

 

(32,341

)

 

(25,186

)

 

(6,428

)

 

(34,753

)

 

(30,129

)

 

(23,349

)

Gross profit

 

1,151

 

 

6,225

 

 

5,156

 

 

1,322

 

 

7,145

 

 

5,914

 

 

4,733

 

Selling expenses

 

(554

)

 

(2,997

)

 

(2,371

)

 

(617

)

 

(3,334

)

 

(2,811

)

 

(2,273

)

General and administrative expenses

 

(106

)

 

(572

)

 

(456

)

 

(109

)

 

(588

)

 

(435

)

 

(352

)

Depreciation and amortization

 

(120

)

 

(649

)

 

(461

)

 

(118

)

 

(638

)

 

(503

)

 

(395

)

Share of profit of associates

 

6

 

 

34

 

 

41

 

 

9

 

 

47

 

 

 

 

 

Other operating expenses, net

 

(11

)

 

(59

)

 

(30

)

 

(10

)

 

(53

)

 

(97

)

 

(11

)

Operating profit

 

367

 

 

1,982

 

 

1,879

 

 

477

 

 

2,579

 

 

2,068

 

 

1,702

 

Financial revenues

 

40

 

 

217

 

 

140

 

 

35

 

 

188

 

 

343

 

 

236

 

Financial expenses

 

(238

)

 

(1,287

)

 

(583

)

 

(170

)

 

(918

)

 

(786

)

 

(436

)

Net financial result

 

(198

)

 

(1,070

)

 

(443

)

 

(135

)

 

(730

)

 

(443

)

 

(200

)

Income before income taxes from continuing operations

 

169

 

 

912

 

 

1,436

 

 

342

 

 

1,849

 

 

1,625

 

 

1,502

 

Income tax and social contribution

 

(18

)

 

(98

)

 

(353

)

 

(44

)

 

(239

)

 

(436

)

 

(426

)

Net income from continuing operations

 

151

 

 

814

 

 

1,083

 

 

298

 

 

1,610

 

 

1,189

 

 

1,076

 

Discontinued operations(2)

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Net income (loss) from discontinued operations, net of taxes

 

 

 

 

 

 

 

 

 

 

 

367

 

 

(16

)

Net income for the
year
/period

 

151

 

 

814

 

 

1,083

 

 

298

 

 

1,610

 

 

1,556

 

 

1,060

 

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For the nine-month period ended
September 30,

 

For the year ended
December 31,

   

2022

 

2022

 

2021

 

2021

 

2021

 

2020

 

2019

   

(in
millions
of US$)
(1)

 

(in millions of R$)

 

(in
millions
of US$)
(1)

 

(in millions of R$)

Other comprehensive income

   

 

   

 

           

 

       

Items that may be subsequently reclassified to the statement of operations

   

 

   

 

           

 

       

Fair value of expected
credit loss

 

(1

)

 

(3

)

 

 

 

(1

)

 

 

Exchange rate differences on translation of foreign investments

 

 

 

 

 

 

 

 

 

358

 

220

Cash flow hedge

 

 

 

 

 

 

 

 

 

 

5

Tax over other comprehensive income

 

 

 

1

 

 

 

 

 

 

 

Other comprehensive income for the year/period

 

 

 

(2

)

 

 

 

(1

)

 

358

 

225

Total comprehensive income for the year/period

 

150

 

 

810

 

 

1,083

 

298

 

1,609

 

 

1,914

 

1,285

Net income for the year/period attributable to:

   

 

   

 

           

 

       

Controlling shareholders

 

151

 

 

814

 

 

1,083

     

1,610

 

 

1,398

 

1,047

Non-controlling interest

 

 

 

 

 

 

 

 

 

158

 

13

____________

(1)      Solely for the convenience of the reader, Brazilian real amounts have been translated into U.S. dollars at an exchange rate of R$5.4066 per US$1.00, which was the commercial selling rate for U.S. dollars in effect on September 30, 2022, as reported by the Central Bank of Brazil. The real/U.S. dollar exchange rate should not be construed as implying that the real amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate as of that or any other date.

(2)      Prior to the corporate reorganization completed on December 31, 2020, we also generated a share of our operating revenues from our retail operations in Colombia, Argentina and Uruguay, as a result of the acquisition of Éxito on November 27, 2019. For more information about this corporate reorganization, see “Item 4. Information on the Company — A. History and Development of the Company — History — The Spin-Off — Corporate Reorganization” in the 2021 Form 20-F, which is incorporated herein by reference.

S-21

Table of Contents

Balance Sheet Data

 

As of September 30,

 

As of December 31,

   

2022

 

2022

 

2021

 

2021

 

2020

 

2019

   

(in millions of US$)(1)

 

(in millions of R$)

 

(in millions of US$)(1)

 

(in millions of R$)

Current assets

                       

Cash and cash equivalents

 

779

 

4,210

 

472

 

2,550

 

3,532

 

5,026

Trade receivables

 

84

 

454

 

49

 

265

 

182

 

491

Inventories

 

1,118

 

6,047

 

810

 

4,380

 

3,739

 

5,190

Recoverable taxes

 

211

 

1,141

 

162

 

876

 

768

 

1,119

Derivative financial instruments

 

3

 

17

 

1

 

4

 

57

 

29

Dividends receivable

 

 

 

3

 

16

 

 

Other accounts receivable

 

9

 

51

 

11

 

59

 

34

 

206

Other current assets

 

19

 

102

 

13

 

72

 

37

 

169

   

2,223

 

12,022

 

1,521

 

8,222

 

8,349

 

12,230

Assets held for sale

 

45

 

242

 

102

 

550

 

 

52

Total current assets

 

2,268

 

12,264

 

1,622

 

8,772

 

8,349

 

12,282

Non-current assets

                       

Recoverable taxes

 

168

 

911

 

142

 

770

 

866

 

962

Deferred income tax and social contribution

 

4

 

23

 

8

 

45

 

 

37

Derivative financial instruments

 

19

 

105

 

5

 

28

 

11

 

11

Related parties

 

49

 

264

 

21

 

114

 

178

 

97

Restricted deposits for legal proceedings

 

13