Pet Retail Market and Valuation Outlook

103 *** || 24. 4-Wall Analysis We did a 4-Wall analysis to understand how Petz stores perform, using the estimated maturation time in our model. From this, we saw that Petz stores manage to have a positive EBITDA throughout their opening time, reaching an average ROIC of 36% at the end of the four-year maturity period. Furthermore, we see a positive IRR for the investment per store, reaching 15% at the end of the period, with a payback of 3.1 years. We use COGS and SG&A data per mature store as assumptions and adjust this for an Opex maturity starting at 80% and reaching 100% at the end of the four years. In addition, we also assume that sales via omnichannel will have a lower penetration in the first few years of opening, going from 40% in the first year to 100% in the last year.About NOPAT, we used the average CAPEX per store (BRL 4,049 mn) and added pre-operating costs and net working capital, as shown in the model below. Using the same assumptions, we did for Petz, we could also simulate a 4-wall analysis using Cobasi's data in 2019. In the thick of it, we have as leading indicators: Main Assumptions Petz Store Model Gross Revenue per Store Omnichannel Revenue ex-Omnichannel Costs per Store Gross Margin Gross Profit Store Expenses % of Gross Revenue ex-Omnichannel Store Contribution Margin Additional SG&A % of Gross Revenue ex-Omnichannel D&A Income Tax NOPAT Capex Pre-Operational Year 1 Year 2 Year 3 Year 4 Maturation Curve - Sales ex- 65% 85% 95% 100% 14,818,690 Omnichannel 1,998,928 Gross Revenue per Store 12,819,763 Omnichannel 6,835,195 Revenue ex-Omnichannel 9,632,149 12,595,887 14,077,756 14,818,690 799,571 1,399,250 1,799,035 1,998,928 8,832,578 11,196,637 12,278,721 12,819,763 46.7% 5,984,568 3,369,785 26.3% Maturation Curve - Omnichannel Digital Penetration 40% 8.3% 70% 11.1% 90% 12.8% 100% 13.5% Costs per Store 5,468,156 6,151,675 6,835,195 6,835,195 2,614,783 133,447 1.0% 433,300 34% 1,637,682 Gross Margin Gross Profit Store Expenses % of Gross Revenue ex-Omnichannel 38.1% 45.1% 44.3% 46.7% 3,364,422 5,044,962 5,443,526 5,984,568 2,695,828 3,032,806 3,369,785 3,369,785 30.5% 27.1% 27.4% 26.3% Maturation Curve - Opex 4,049,000 Store Contribution Margin 620,253 Net Working Capital Invested Capital 277,778 % of Gross Revenue ex-Omnichannel Additional SG&A 4,947,031 D&A Income Tax ROIC Mature Store 36% Main Indicators Cobasi 4-Wall Appendix 24 Payback 3.9 ROIC ROIC + SG&A 4-Wall EBITDA -3.2% 14.0% 14.8% 22.0% 4.5% 21.6% 22.4% 29.7% Year 0 -4,947,031 Year 1 668,594 Year 2 2,012,156 Year 3 2,073,741 Year 4 2,614,783 -4,947,031 -4,278,437 -2,266,281 -192,540 2,422,243 NOPAT Capex Pre-Operational Net Working Capital Invested Capital 80% 90% 100% 100% 668,594 2,012,156 2,073,741 2,614,783 7.6% 18.0% 16.9% 20.4% 133,447 133,447 133,447 133,447 433,300 433,300 433,300 433,300 34% 34% 34% 34% 353,197 1,239,948 1,280,594 1,637,682 4,049,000 4,049,000 4,049,000 4,049,000 620,253 620,253 620,253 620,253 277,778 277,778 277,778 277,778 4,947,031 4,947,031 4,947,031 4,947,031 ROIC 7.1% 25.1% 25.9% 33.1% Margin 1.7% 13.4% 12.7% 16.5% IRR 15% ROIC + SG&A 9.8% 27.8% 28.6% 35.8% 4-Wall EBITDA Margin 7.6% 18.0% 16.9% 20.4% Payback 3.1 Source: Company's Data; Diário Oficial; Team 7

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