Beruflich Dokumente
Kultur Dokumente
Management Proposal
Information provided to shareholders pursuant to Instruction CVM 481 of December 17, 2009,
regarding the Ordinary Shareholders Meeting Convening Notice, to be held on April 28, 2015, at
11:00 am, with the following agenda: (i) Appreciation of the Managements Report, the
Managements accounts, the Companys Financial Statements along with the independent auditors
report and the fiscal councils opinion for the fiscal year ended December 31, 2014; (ii) Approval of
the proposed capital budget for the 2015 fiscal year; (iii) Approval of the Managements Proposal for
the destination of net income for the fiscal year ended December 31, 2014; (iv) Election of the
members of the Board of Directors; (v) Election of the members of the Fiscal Council; and (vi)
Establishment of the remuneration of the Companys administrators for 2015 fiscal year.
1 Sources of funds
R$33,567,832.00
Retained earnings
R$33,567,832.00
2 Uses of funds
R$33,567,832.00
R$10,100,000.00
R$23,467,832.00
3 Duration
1 year
under the terms of article 193 of Law n. 6.404/76, as amended, and item a of
article 30 of the Companys Bylaws, the amount of R$3,213,392.43 (three million, two
hundred thirteen thousand, three hundred ninety three reais and fourty-two centavos),
be allocated to the Companys Legal Reserve;
(ii)
(iii)
under the terms of article 196 of Law no. 6.404/76 and item c of article 30 of the
Companys Bylaws, the amount of R$33,567,832.00 (thirty three million, five hundred
sixty-seven thousand, eight hundred thirty-three reais), will be retained by the
Company to finance investments in expansion (acquisition of equipment) and
investments in facilities and information technology to support the Companys
expansion, as provided for in the Companys Capital Budget to be submitted for
approval at the Shareholders Meeting.
(iv)
under the terms of article 194 of Law no. 6.404/76 and item "f" and paragraph 1 of
article 30 of the Company's Bylaws the amount of R$2,405,624.23 will be allocated to
the Expansion Reserve of the Company, to assure resources to finance additional
investments in fixed and working capital and in expanding corporate activities.
Description
Income for the Year
Legal Reserve
Retained earnings
Expansion Reserve
Mandatory Dividends
Interest on shareholders equity
Accordingly, the Board of Executive Officers proposes that the Board of Directors examine this
proposed allocation of results and submit the amounts presented for approval at the Companys
Shareholders Meeting.
In compliance with article 9, paragraph 1, item II of CVM Instruction 481/2009, as amended, the
information called for in Exhibit 9-1-II to such Instruction are presented in an annex hereto.
Sincerely,
The Board of Executive Officers
Mills Estruturas e Servios de Engenharia S.A.
2. Global amount and amount per share of dividends, including declared interim
dividends and interest on shareholders equity
Global Gross Amount: R$25,081 R$0.1959 per share
Interest on shareholders equity: R$25,081 R$0.1959 per share1
Global Amount Net of tax withholding in respect of Interest on Shareholders Equity: R$
21,810 R$0.1703 per share
4. Global amount and amount per share of dividends distributed based on income
from prior years
Not applicable
7. Furnish a comparative table indicating the following amounts per share for each
kind and class:
a. Net income for the year and for the 3 (three) prior years
Year
2014
2013
2012
2011
Net income
R$64,268
R$172,592
R$151,516
R$92,177
Dividends
IoSE
Dividends
per Share
-
2014
IoSE per
share
R$25,081 R$0.19
2013
R$3,484
R$0.02
R$43,014 R$0.33
2012
R$41,780 R$0.33
9. If the company has preferred shares with rights to fixed or minimum dividends,
Not applicable
11. If the mandatory dividend is retained due to the companys financial condition,
Not applicable
1 Sources of funds
R$33,567,832.00
Retained Earnings
R$33,567,832.00
2 Uses of funds
R$33,567,832.00
R$10,100,000.00
R$23,467,832.00
3 Term
1 year
a.
The Company presented ownership and financial favorable conditions, presenting operational profit
generation, operational cash generation and reasonable leverage level. The management of the
Company believes that current cash level together with cash generation capacity, even in a negative
scenario, are sufficient for the Company to honor its financial obligations.
Mills presented in 2014 R$ 794.2 million of net revenues and free cash flow of R$ 116.1 million. This
is the first time Mills achieved positive cash generation, after years of high investments, which
enabled its organic growth, geographic expansion, and manly, the consolidation of its leadership in its
markets. Net revenues amounted to R$ 832.3 million in 2013 and R$ 879.3 million in 2012.
Net earnings amounted to R$ 64.3 million in 2014, versus R$ 167.7 million of net earnings from
continuing operations in 2013. In 2013 there was a net positive effect of R$ 8.2 million due to the
sale of the Industrial Services business unit. Excluding extraordinary items for both periods, net
earnings in 2014 would total R$ 81.7 million, against net earnings from continuing operations of R$
159.5 million in 2013. In 2012, net earnings totaled 151.1 million.
Mills total debt was R$ 745.4 million as of December 31, 2014 versus R$ 632.6 million at the end of
2013 and R$ 622.5 million at the end of 2012. At the end of the year our net debt position was R$
551.7 million, versus R$ 606.5 million at the end of 2013 and R$ 400.7 million at the end of 2012.
The debt amortization schedule includes payment of R$ 206 million as principal and interest in 2015,
of which a payment of R$ 44 million was already made in January, without rolling over, reducing our
gross debt.
Our leverage, as measured by net debt/LTM EBITDA, was at 1.6 times as of December 31, 2014. The
total debt/enterprise value was 42%, while interest coverage, as measured by LTM EBITDA/LTM
interest payments, was 4.8 times. At the end of 2013, our leverage, was at 1.5 times, while interest
coverage (LTM EBITDA/LTM) was 8.3 times. In 2012, net debt/LTM EBITDA ratio was at 1.2%. The
total debt/enterprise value was 13.2%, while interest coverage was 7.6 times.
b.
According to the Company's balance sheet on December 31, 2014, the capital structure of Mills was
56.0% equity, measured by the stockholders equity, and 44.0% capital from third party, measured
by total liabilities.
10
According to the Company's balance sheet on December 31, 2013, the capital structure of Mills was
56.4% equity, measured by the stockholders equity, and 43.6% capital from third party, measured
by total liabilities.
According to the Company's balance sheet on December 31, 2012, the capital structure of Mills was
51.6% equity, measured by the stockholders equity, and 48.4% capital from third party, measured
by total liabilities.
On December 31, 2014, our debt was 21% short-term and 79% long-term, with an average maturity
of 2.4 years, at an average cost of CDI+0.68%. In terms of currency, 100% of Mills debt is in
Brazilian Reais. On December 31, 2013, our debt was 20% short-term and 80% long-term, with an
average maturity of 2.1 years, at an average cost of CDI+1.00%. On December 31, 2012, our debt
was 9% short-term and 91% long-term, with an average maturity of 3.0 years, at an average cost of
CDI+1.45%.
On November 10th, 2014 Mills Board of Directors approved a program to repurchase common shares
of Mills issuance, with the objective of acquiring up to 4,000,000 shares, with a deadline of 365 days
as of the date of approval, for treasury and subsequent cancellation or alienation, including in the
context of any exercise of options under its stock option program, in the case of exercise of options.
Up to December 31st, 2014, the Company acquired and kept in treasury 1,182,900 shares, with a
total value of R$ 11 million.
The management of the Company typically use both equity, from operating cash generation, and
capital from third-party, though the contraction of new loans and/or the issuance of debt securities,
to finance the needs for investments in non-current assets and working capital of the company. For
strategic operations, when necessary, the company may resort to the capital from their shareholders
or third parties, through the issuance of shares.
There are no hypotheses of redemption of shares issued by the Company in addition to the legally
provided for.
c.
The Companys EBITDA for the year ended December 31st 2014, was R$ 335.7 million and its
financial expenses, net of financial revenue in the same period were R$ 67.6 million. Thus, the
Companys EBITDA for year ended December 31st 2014 presented a coverage ratio of 5.0 times its
net financial expenses during the same period. Only considering its financial expenses, which
amounted to R$ 67.6 million as of December 31st, 2014, the coverage ratio would be 3.6 times.
The Companys total indebtedness for the year ended December 31st 2014, amounted to R$ 745.4
million, or 2.2 times the Companys EBITDA for the year ended December 31st 2014. The flow of
payment from this debt, considering the debt profile as of that date, will take place in a period of
seven years, of which R$ 153.8 million in less than one year, R$ 172.8 million from 1 to 3 years, R$
373.2 million in a period between 3 to 5 years and R$ 44.5 million in more than five years. The
Companys long-term debt profile has a policy for contracting loans and financing aimed at ensuring
that all financial commitments are honored, if necessary, through its cash generation.
In addition, on December 31st 2014, the Company had registered on its balance sheet the amount of
R$ 10.1 million, which refers to the Tax Recovery Program (REFIS) with a maturity of 180 months.
11
The Company is compliant to the remainder installments amounting R$ 10.1 million, of which the last
installment matures in December, 2024.
This way, the Company's management believes that its cash generation is sufficient to meet its
financial commitments. In 2014, cash generated was above investment needs for the first time since
its IPO, with a net balance of R$ 116.1 million.
The Companys EBITDA for the year ended December 31st 2013, was R$ 403.1 million and its
financial expenses, net of financial revenue in the same period were R$ 46.8 million. Thus, the
Companys EBITDA for year ended December 31st 2013 presented a coverage ratio of 8.6 times its
net financial expenses during the same period. Only considering its financial expenses, which
amounted to R$ 60.0 million in the year ended December 31st 2013, the coverage ratio would be 6.7
times.
The Companys total indebtedness for the year ended December 31st 2013, amounted to R$ 632.6
million, or, 1.6 times the Companys EBITDA for the year ended December 31st 2013. In addition, on
December 31st 2013, the Company had registered on its balance sheet liabilities in the amount of R$
10.4 million, which refers to the Tax Recovery Program (REFIS).
The Companys EBITDA for the year ended December 31st 2012, was R$ 358.4 million and its
financial expenses, net of financial revenue in the same period were R$ 39.2 million. Thus, the
Companys EBITDA for year ended December 31st 2012 presented a coverage ratio of 9.1 times its
net financial expenses during the same period. Only considering its financial expenses, which
amounted to R$ 51.2 million in the year ended December 31st 2012, the coverage ratio would be 7.0
times.
The Companys total indebtedness for the year ended December 31st 2012, amounted to R$ 622.5
million, or, 1.7 times the Companys EBITDA for the year ended December 31st 2012. In addition, on
December 31st 2012, the Company had registered on its balance sheet liabilities related to the Tax
Recovery Program (REFIS), which amounted to R$ 10.7 million.
With regard to contractual limitations for assumption of new debt, there are clauses in the Company's
bank credit contracts that require adherence to certain financial indicators, among which: the ratio
between EBITDA and net debt, the ratio of net short-term debt and total net debt, and the ratio
between net financial expenses and EBITDA.
On December 31st of 2012, 2013 and 2014, the Company was within the limits of contractual financial
indicators.
d.
The investments from the Company in non-current assets and working capital are financed by its own
cash generation and third party capital, through the contraction of new loans and/or the issuance of
debt securities. For strategic operations, when necessary, the Company can turn to capital from its
shareholders or third parties, through the issuance of shares.
On April 23rd, 2012 the Company issued a single series of thirty commercial promissory notes with
unit face value of R$ 1.0 million, for a total amount of R$ 30.0 million with maturity on December 3rd,
2012. Remuneration interest charges will fall due corresponding to 100% of the accumulated
12
variation in the average daily Domestic Demand (DI) rates, plus 4.9% per annum. Remuneration will
be fully paid upon the maturity date.
On August 15th, 2012, the Company held its second issuance, in two series of simple debentures, non
convertible into shares, unsecured, public offering object with limited placement efforts, pursuant to
CVM Instruction 476. 27,000 debentures were issued, each with a nominal value of R$ 10,000.00, of
which: i) 16,094 debentures of the first series, amounting to R$ 160.9 million, with maturity date on
August 15, 2017, not subject to monetary adjustment. The nominal value of the first series
debentures will be amortized in two annual installments starting on the fourth year of the issuance,
and the interest paid semi-annually and equal to surtax of 0.88% per annum of 100% of DI accrued
variation; ii) 10,906 debentures of the second series, amounting to R$ 109.1 million, with maturity
date on August 15, 2020, subject to monetary adjustment by the accrued variation of the IPCA. The
nominal value of the second series debentures will be amortized in three annual installments starting
on the sixth year of the issuance, and the interest paid annually and equal to 5.50% per annum of
the above mentioned monetarily adjusted amount.
On December 6, 2013 the Company entered into a loan agreement with the Nassau Branch of Banco
Ita BBA S.A. totaling US$ 16.9 million (equivalent to R$40.0 million). The settlement of the loan will
be made in a single installment, paid on January 30, 2015, without rolling over. Payment of interest
will occurred twice a year. In order to eliminate the foreign exchange risk on this borrowing, on the
same date a swap was contracted with Banco Ita BBA S.A. in the amount of R$ 40 million so that
the obligations (principal and interest) are fully converted into local currency and carried out on the
same maturity dates.
On April 11th, 2014 the Company issued commercial promissory notes with a total amount of R$
200.0 million. Remuneration interest charges will fall due corresponding to 106% of the accumulated
variation in the average daily Domestic Demand (DI) rates. The net proceeds of the offering were
used for: (a) refinancing of Companys debt, (b) rental equipment acquisition and (c) Companys
general uses and expenses.
On May 30th, 2014 the Company issued a series of simple debentures for a total amount of R$ 200
million, non-convertible into shares, unsecured, with maturity date on May 30rd, 2019. The nominal
value of the this series debentures will be amortized in three annual installments starting on the third
year of the issuance, and the interest paid semi-annually and equal to surtax of 108.75% per annum
of 100% of DI accrued variation. The liquid resources obtained by the Company through the third
debenture issuance were fully used to settlement of Companys 4th edition promissory notes, issued
on 11th April, 2014.
Potential sources of financing used for working capital and for investments
in non-current assets.
e.
13
The management of the Company believes that the existing resources and the cash flow to be
generated from its operations, along with its borrowing capacity, with proper leverage, will be
sufficient to cover its investment plan and the need for working capital during the same period.
f.
2012
As of December 31st,
2013
2014
(in R$ million)
Financings provided by financial institutions
Financings provided by financial institutions
Leasing agreements entered into with
financial institutions
Non-convertible debentures
Non-convertible debentures
Non-convertible debentures
Total
CDI+0.29%
TJLP+0.2% to 0.9%
27.3
26.7
40.2
23.4
44.7
18.7
18.0
8.2
112.5% of CDI
1st series: CDI + 0.88%
2nd series: IPCA + 5.5%
108.75% of CDI
272.5
164.7
113.3
274.4
165.9
120.6
622.5
632.6
184.4
168.1
128.7
202.0
746.6
Short-Term Debt
As of December 31, 2014, short-term debt amounted to R$ 155.0 million, compared to R$ 125.3
million as of December 31, 2011, an increase of R$ 29.7 million or 23.7%. This increase was due to
the interest and monetary adjustment of Companys 3rd debentures issuances issued in May, 2014.
As of December 31, 2013, short-term debt amounted to R$ 125.3 million, compared to R$ 54.8
million as of December 31, 2012, an increase of R$ 70.5 million or 128.7%. This increase was
primarily due to the payment of the 1st installment amortization, in April 2014, of the 1st issuance of
the Debentures issued in April 2011 with maturity in April 2014. Remaining amortization will be in
April 2015 and April 2016.
Long-Term Debt
As of December 31st, 2014, the Companys long-term debt amounted to R$ 590.4 million, compared
to R$ 507.3 million as of December 31, 2013, an increase of R$ 83.2 million or 16.4%. This increase
was mainly due to following points: (i) the liquid effect of 3rd debentures issuances in May 2014; and
14
(ii) to the transfer of long-term debt to short-term debt of 2nd installment amortization in April 2014,
of debentures issued in April 2011.
As of December 31st, 2013, the Companys long-term debt amounted to R$ 507.3 million, compared
to R$ 567.7 million as of December 31, 2012, a decrease of R$ 60.4 million or 10.6%. This reduction
was due to the transfer of long-term debt to short-term debt of the 1st installment amortization, in
April 2014, of the 1st issuance of debentures, issued in April 2011.
Banco do Brasil
Ita BBA
Ita BBA S.A, Sucursal Nassau
On December 6, 2013 the Company entered into a borrowing agreement with Banco Ita BBA S.A.,
Nassau Branch, in the amount of US$16.9 million (equivalent to R$40.0 million). The settlement of
the loan will be made in a single installment, paid on January 30, 2015, without rolling over. Payment
of interest will occurred twice a year. In order to eliminate the foreign exchange risk on this
borrowing, on the same date of the borrowing the Company entered into a swap transaction with
Banco Ita BBA S.A. in the amount of R$40.0 million in order to convert the obligations (principal and
interest) into local currency and on the same maturity dates.
Debentures
On April 8, 2011 approval was granted for the issuance by the Company of a total of 27,000
debentures in a single tranche, of non-convertible unsecured debentures, of a total amount of R$
270.0 million, and unit face value of R$ 10,000, issued on April 18, 2011. The debentures have
maturity on April 18, 2016, with remuneration equivalent to 112.5% of the CDI rate and semi-annual
payments of interest and amortization in three consecutive installments, with the first maturity date
on April 18, 2014. The transaction costs associated with this issue, in the amount of R$ 2.4 million,
are being recognized as Company funding expenses, in accordance with the contractual terms of the
issue.
On August 3, 2012 approval was granted for the issuance by the Company, in two series of simple
debentures, non convertible into shares, unsecured, public offering object with limited placement
efforts, pursuant to CVM Instruction 476. On August 15, 2012, 27,000 debentures were issued, each
with a nominal value of R$ 10,000.00, of which: i) 16,094 debentures of the first series, amounting to
R$ 160.9 million, with maturity date on August 15, 2017, not subject to monetary adjustment. The
nominal value of the first series debentures will be amortized in two annual installments starting on
15
the fourth year of the issuance, and the interest paid semi-annually and equal to surtax of 0.88% per
annum of 100% of DI accrued variation. ii) 10,906 debentures of the second series, amounting to R$
109.1 million, with maturity date on August 15, 2020, subject to monetary adjustment by the accrued
variation of the IPCA. The nominal value of the second series debentures will be amortized in three
annual installments starting on the sixth year of the issuance, and the interest paid annually and
equal to 5.50% per annum of the above mentioned monetarily adjusted amount. Transaction costs
related to this issuance are recognized as capital funding expenses, according to contract terms.
On April 23, 2014 approval was granted for the issuance by the Company of a total of 20,000
debentures in a single tranche, of non-convertible unsecured debentures, of a total amount of R$
200.0 million, and unit face value of R$ 10,000, issued on June 18, 2014. The debentures have
maturity on May 30, 2019, with remuneration equivalent to 108.75% of the CDI rate and semi-annual
payments of interest and amortization in three consecutive installments, with the first maturity date
on May 30, 2017. The transaction costs associated with this issue, in the amount of R$ 0.7 million,
are being recognized as Company funding expenses, in accordance with the contractual terms of the
issue.
As of December 31, 2014 the balance of debentures including transaction costs is R$ 106.3 million in
current liabilities and R$ 577.1 million in non-current liabilities, and R$ 105.3 million and R$ 575.5
million, net of transaction costs, respectively.
Promissory Notes
On December 7, 2011 the Company issued a single series of three commercial promissory notes with
unit face value of R$ 9.0 million, for a total amount of R$ 27.0 million with maturity on December 1 st,
2012. Remuneration interest charges will fall due corresponding to 100% of the accumulated
variation in the average daily Domestic Demand (DI) rates, plus 1.10% per annum. Remuneration
was fully paid upon the maturity date.
On April 23, 2012 the Company issued a single series of thirty commercial promissory notes with unit
face value of R$ 1.0 million, for a total amount of R$ 30.0 million with maturity on December 3, 2012.
Remuneration interest charges will fall due corresponding to 100% of the accumulated variation in
the average daily Domestic Demand (DI) rates, plus 4.9% per annum. Remuneration was fully paid
upon the maturity date.
On April 11, 2014 the Company issued in a single series 20 commercial promissory notes with unit
face value of R$10,000, totaling R$200,000 and with maturity on August 8, 2014. The unit value of
the promissory notes bears interest equivalent to 106% of the accumulated fluctuation of the average
daily interbank deposit (DI) rates. On June 18, 2014 the Company fully paid these promissory notes
with the proceeds from its third issue of debentures.
Finance leases
Referred basically to agreements for purchase of rental equipment with periods between 36 and 60
months, maturities through 2015 and indexed to the CDI plus interest of 2.50% to 3.80% per year.
This obligation was collateralized by the its own leased assets. The Company settled in advance all
the existing finance lease agreements during the third quarter of 2014.
16
The Company adopts the policy of reducing the cash risk relating to foreign exchange variation on a
conservative basis since all its revenues are earned in Brazilian reais. Therefore, the Company enters
into NDF contracts with financial institutions for hedging purposes. All these contracts set the future
exchange rate from reais to dollars.
These derivative instruments contracted by the Company have the intention to protect it, on their
equipment import operations, in the interval between the placing of orders and nationalization against
the risk of fluctuation in the exchange rate, and are not used for speculative means.
The Company has also borrowing agreements in dollars and in order to cover substantially the foreign
exchange risk it entered into swap transactions.
On December 6, 2013 the Company entered into a borrowing agreement with Banco Ita BBA S.A.,
Nassau Branch, in the amount of US$16.9 million (equivalent to R$40.0 million). Principal was settled
in a bullet payment on January 30, 2015 without rolling over. In order to eliminate the foreign
exchange risk on this borrowing, on the same date of the borrowing the Company entered into a
swap transaction with Banco Ita BBA S.A. in the amount of R$40.0 million in order to convert the
obligations (principal and interest) into local currency and on the same maturity dates.
On December 31st, 2014, the Company did not possessed purchase orders with foreign suppliers of
equipment valued, being the value presented (US$ 0.3 million) in foreign suppliers account related
basically to installment purchase of equipment (in 2013 these orders totaled US$ 71.3 million, and in
2012 these orders totaled US$ 72.8 million).
(iv) any restrictions imposed on the issuer, in particular, for limits of indebtedness and contracting of
new debts, the distribution of dividends, disposal of assets, the issuance of new securities or disposal
of corporate control
Some of the Companys long-term financial instruments contain obligations relating to the
maintenance of certain levels for determined financial indicators. The main conditions imposed on
financial instruments entered into by the Company are: (i) the ratio between EBITDA and net debt
17
(total bank debt minus cash equivalents); and (ii) the ratio between EBITDA and net financial
expenses. Thus, the Company is required to maintain a relatively low indebtedness and a satisfactory
capacity to pay its financial obligations, and the hiring of new borrowings should meet these
prerequisites. On the fiscal years ended December 31st, 2012, 2013 and 2014, the Company was in
compliance with the required levels for the indicators.
Additionally, some of the Companys long term financial instruments have restrictions related to (i)
change of transfer of the controlling stake (direct or indirect) and (ii) asset disposals when the
amount represents more than 15% of the total assets of the Company, based on the consolidated
Financial Statements of the Company. In the case the Company is in default of any of its financial
obligations, it will not be able to distribute any profits to its shareholders above the minimum
mandatory dividend as determined by Law, as defined in the relevant documents.
The management of the Company believes that the current provisions will not significantly restrict the
ability to recruit new debt to meet its capital needs.
g.
On December 31, 2014, the Company had no limits to use in financing transactions already
contracted. At the same date the Company had unsecured overdraft account, not used, reviewed
annually of 570.2 million and Secured bank credit account used of R$ 64.5 million, with varying
maturities and that can be extended in a common agreement.
On December 31, 2013, the Company had no limits to use in financing transactions already
contracted. At the same date the Company had unsecured overdraft account, not used, reviewed
annually of 477.5 million and Secured bank credit account used of R$ 71.5 million, with varying
maturities and that can be extended in a common agreement.
On December 31, 2012, the Company had no limits to use in financing transactions already
contracted. At the same date the Company had unsecured overdraft account, not used, reviewed
annually of 492 million and Secured bank credit account used of R$ 72 million, with varying maturities
and that can be extended in a common agreement.
The Company maintains relationships with major financial institutions operating in Brazil and, the
evaluation of its board has conditions and the risk rating of credit that enable the Company to
contract new debt in the amount required to meet the current needs of cash for short and long term.
h.
In accordance with the existing accounting policies adopted in Brazil, the revenue reported in the
income statement should include only the gross inflows of economic benefits received and receivable
by the Company, when originating from their own activities. Amounts collected on behalf of third
parties - such as sales taxes, taxes on goods and services and from taxes on added value - do not
generate benefits for the Company and do not result in an increase in equity and therefore are
excluded from revenue. Thus, the comments below relating to variations between the results for the
years ended December 31st, 2012, 2013 and 2014 refer only to net revenue, not to the gross
revenue.
18
2012
879.3
174.1
238
213.8
253.5
AV(1) (%)
100.0%
19.8%
27.1%
24.3%
28.8%
AH(2) (%)
29.8%
32.3%
52.8%
-0.5%
44.5%
2013
832.3
217
258
357.3
AV(1) (%)
100.0%
26.1%
31.0%
42.9%
AH(2) (%)
-5.3%
24.6%
8.4%
-100.0%
41.0%
2014
794.2
211.0
212.4
370.8
AV(1) (%)
100.0%
26.6%
26.7%
46.7%
AH(2) (%)
-4.6%
-2.7%
-17.7%
3.8%
-410.9
46.7%
20.7%
-334.9
40.2%
-18.5%
-362.4
45.6%
8.2%
Gross Profit
468.3
53.3%
38.9%
497.3
59.8%
6.2%
431.8
54.4%
-13.2%
-218.5
24.8%
24.7%
8.3
-225.4
1.0%
27.1%
3.2%
-273.8
-34.5%
21.5%
Operating Profit
249.9
28.4%
54.3%
280.2
33.7%
12.1%
157.9
19.9%
-43.6%
Financial Expenses
Financial Income
-51.2
12.1
5.8%
1.4%
9.9%
-17.7%
-60
13.2
7.2%
1.6%
17.2%
9.1%
-92.8
25.2
11.7%
3.2%
54.6%
90.9%
210.7
24.0%
62.0%
233.4
28.0%
10.8%
90.3
11.4%
-61.3%
-59.2
6.7%
55.8%
-65.7
7.9%
11.0%
-26.1
3.3%
-60.3%
64.3
64.3
8.1%
8.1%
-61.7%
-62.8%
Year ended December 31st, 2014 compared with year ended December 31st, 2013
Revenue of Products Sold and Services Provided
In the year ended December 31st, 2014 the Companys net revenue from sales and services reached
R$ 794.2 million. For comparison purposes, there was an reduction of R$ 38.1 million, or 4.6% yoy.
This decrease comes mainly from the lower revenue from sales and technical assistance. The analysis
of the Company's management regarding the factors that led to these changes is listed below.
Heavy Construction
Net revenue from the Heavy Construction business unit totaled R$ 211.0 million in 2014, with a slight
drop of 2.7% compared to 2013. The management of the Company attributed this reduction as a
result of the 29.7% drop in sales revenues, technical assistance and others, due to projects not
favorable to equipment purchase, instead of renting.
Real Estate
Net revenue from the Real Estate business unit, totaled R$ 212.4 million in 2014, with a drop of
17.7% compared to 2013, negatively impacted by a decrease of 17.9% in rental revenues and of
25.3%, in sales revenues. The management of the Company attributed this reduction as a result of a
deterioration of Real Estate market in Brazil, influenced by political and economic uncertainties,
higher interest rates and weakness of economic activity.
Rental
19
Net revenue from the Rental business unit totaled R$ 370.8 million in 2014, new annual record, being
3.8% greater than that 2013. On the evaluation of the management of the company, this increase is
mainly associated with increasing fleet of equipment and, therefore, in rented volume due to
investments in organic growth since 2010.
Cost of products sold and services rendered and general and administrative expenses
The table below shows the Companys cost of goods sold and services rendered by nature in fiscal
years ended December 31, 2013 and 2014.
Year ended on December 31st, 2013
Direct cost
of
construction
and renting
General and
Administrati
ve Expenses
Total
General and
Administrati
ve Expenses
Total
Direct cost
of
construction
and renting
General and
Administrati
ve Expenses
Total
(in R$ million)
Labor
-58.8
-107.4
-166.2
-63.0
-113.3
-176.4
-4.3
-5.9
-10.2
Third-party Services
-5.0
-20.4
-25.5
-6.5
-28.2
-34.7
-1.5
-7.8
-9.2
Freight
Construction Material /
Maintanance and Repair
Rent Equipment
-15.5
-0.8
-16.2
-16.3
-0.6
-16.9
-0.8
0.1
-0.7
-43.5
-6.1
-49.6
-44.5
-7.0
-51.5
-1.0
-0.9
-1.9
-5.9
-15.0
-20.8
-5.3
-18.2
-23.6
0.5
-3.3
-2.8
Travel
-5.0
-11.6
-16.5
-3.8
-10.5
-14.3
1.2
1.0
2.2
Cost of Sales
Depreciation ad
Amortization
Asset impairment
Allowance for Doubtful
Debts
Stcok Option
-68.0
0.0
-68.0
-53.2
0.0
-53.2
14.9
0.0
14.9
-122.6
-8.4
-131.0
-152.9
-15.4
-168.3
-30.3
-7.0
-37.3
-8.9
0.0
-8.9
-13.7
0.0
-13.7
-4.9
0.0
-4.9
0.0
-16.2
-16.2
0.0
-42.3
-42.3
0.0
-26.1
-26.1
0.0
-9.0
-9.0
0.0
-9.5
-9.5
0.0
-0.6
-0.6
0.0
0.0
-1.9
0.2
-18.8
-12.0
0.2
-18.8
-13.8
0.0
0.0
-3.2
-2.5
0.0
-26.2
-2.5
0.0
-29.4
0.0
0.0
-1.3
-2.7
18.8
-14.2
-2.7
18.8
-15.6
-334.9
-225.4
-560.4
-362.4
-273.8
-636.2
-27.4
-48.4
-75.8
Update provisions
Profit sharing
Others
Total
(1)
The table below shows the Companys cost of goods sold and services rendered and general and
administrative expenses by business unit in fiscal years ended December 31st, 2013 and 2014. The
information provided in this table does not reflect the effects of depreciation on such costs.
Year ended December 31st
2013
(%)
(1)
2014
2014 x 2013
(%)
(1)
Var. (%)
12.1%
(2)
(in R$ million)
Heavy Construction....................................
Real Estate................................................
Industrial Services .....................................
Rental .......................................................
Total .....................................................
(108.9)
25.9%
(122.1)
26.1%
(164.2)
39.0%
(162.3)
34.7%
-1.2%
(156.1)
37.1%
(174.1)
37.2%
11.6%
8.2
-1.9%
(9.5)
2.0%
(421.0)
100.0%
(468.0)
100.0%
(1)
Percentage share of the business unit of goods sold and services provided and general and administrative expenses
(2)
Percentage increase (decrease) of the total registered from one period to another.
N.A. Not applicable
20
N.A.
11.2%
Cost of goods sold and services provided, excluding the effects of depreciation, went from R$ 421.0
million in the year ended December 31, 2013 to R$ 468.0 million year ended December 31, 2014, a
increase of R$ 47.0 million, or 11.2%, mainly due to a greater allowance for doubtful debts (ADD).
The depreciation of assets used in services rendered, which is part of the costs of goods sold and
services rendered increased 28.4% due to higher investments in the past years, from R$ 131.0
million for the year ended on December 31, 2013 to R$ 168.3 million in the fiscal year ended
December 31, 2014, maintaining the average depreciation period of 10 years.
The ratio between the Companys operating, general, and administrative expenses in relation to the
net operating income went from 27.1% in the fiscal year ended December 31, 2013 to 34.5% in the
fiscal year ended December, 2014.
Operating Profit
Operating profit before financial result increased from R$ 280.2 million in the fiscal year ended
December 31, 2013 to R$ 157.9 million in the fiscal year ended December 31, 2014, a reduction of
R$ 122.3 million, or 43.6%. Such reduction was a consequence of higher depreciation, and General,
administrative and operating expenses, both mainly impacted by increase in ADD of the fiscal year.
Operating profit represented 19.9% of net revenues in December 31, 2014, compared to 33.7% of
net revenues in December 31, 2013.
Financial Results
Net financial expenses decreased from R$ 46.8 million in the fiscal year ended December 31, 2013 to
R$ 26.1 million in the fiscal year ended December 31, 2014, representing decrease of R$ 20.8 million
due to higher gross debt level and interest rates in the period. The Company's bank debt, which was
R$ 632.6 million in December 31, 2013 increased to R$ 745.4 million in December 31, 2014.
Net Income
The net profit increased from R$ 172.6 million in the fiscal year ended December 31, 2013 to R$ 64.3
million in the fiscal year ended December 31, 2014, a R$ 108.3 million decrease. In 2013 there was a
net positive effect of R$ 8.2 million in the net earnings from continuing operations due to the sale of
the Industrial Services business unit. In 2014 there were non-recurring items with a negative effect of
R$ 21.7 million, of which (i) R$ 7.1 million from the Industrial Services business unit due to the
payment of indemnity, related to events that happened before the completion of the sale, although
21
the request for indemnity occurred this year; (ii) R$ 12.3 million from Easy Set formwork cost
adjustment, due to higher raw material use than technical specifications and to customized
equipment sale as scrap ate the end of the rental contract ; and (iii) R$ 2.3 million in cost provision
and adjustments from the raw material and goods for resale inventories. The increase of depreciation
(R$ 37.3 million) and negative financial result (R$ 20.8 million) figures also contributed to the Net
Income decrease.
Year ended December 31st, 2013 compared with year ended December 31st, 2012
Revenue of Products Sold and Services Provided
The following table shows the Companys net revenue by business unit for the years ended December
31st, 2012 and 2013:
Year ended December 31st
2012
VA (%)(1)
174.1
238.0
213.8
253.5
879.3
19.8%
27.1%
24.3%
28.8%
100.0%
2013
VA (%)(1)
HA (%) (2)
217.0
258.0
357.3
832.3
26.1%
31.0%
0.0%
42.9%
100.0%
24.6%
8.4%
(100.0%)
41.0%
(5.3%)
In the year ended December 31st, 2013 the Companys net revenue from sales and services totaled
R$ 832.3 million. For comparison purposes, excluding the result of the Industrial Services business
unit, which was sold in 2012, there was an increase of R$ 166.8 million, or 25.1%. This increase
comes mainly from the incremental revenue from the Rental and Heavy Construction business units.
The analysis of the Company's management regarding the factors that led to these changes is listed
below.
Heavy Construction
Net revenue from the Heavy Construction business unit, totaled R$ 217.0 million in 2013, with an
increase of 24.6% or R$ 42.9 million compared to the previous year. The management of the
Company attributed this expansion as a result of the investments in organic growth made in this
business unit, since 2010.
Real Estate
Net revenue from the Real Estate business unit, totaled R$ 258.0 million in 2013, with an increase of
8.4% or R$ 20.0 million compared to 2012, including expansion of 15.9% of the revenue from
equipment rental. The branches opened since November 2009 contributed with 55% of this business
units revenue in the year 2013. The management of the Company attributed this expansion as a
result of the investments in organic growth made in this business unit, since 2010.
Industrial Services
The sale of the Industrial Services business unit was concluded in November 30, 2013, and the
Company recorded gain of R$ 8.3 million with the sale. Of the agreed sales price of R$ 102 million, (i)
R$ 25 million was received on the date of the sale agreement, in July; (ii) R$ 17 million were paid in
22
April 2014, net of R$ 6.8 million related to adjusts settled between the Buyer and the Company; and
(iii) the outstanding amount of R$ 60 million will be paid in annual installments adjusted by the
Interbank Deposit Certificate CDI rate. This disposal is in line with Mills strategy to focus on
businesses in which its competences are able to add higher value for its shareholders and clients.
Rental
Net revenue from the Rental business unit totaled R$ 357.3 million in 2013, which was 41.0% or R$
103.8 million greater than that 2012. The branches opened since 2010 contributed with 69% of 2013
revenue. On the evaluation of the management of the company, this increase is mainly associated
with increasing fleet of equipment, with investments in organic growth since 2010.
Cost of products sold and services rendered and general and administrative expenses
Since 2010, the Company began to detail its costs of goods sold and general and administrative
expenses by business segment and by nature, and the information by business segment has been
presented only on a consolidated basis, excluding the effects of depreciation.
The table below shows the Companys cost of goods sold and services rendered by nature in fiscal
years ended December 31, 2012 and 2013.
Year ended on December 31st, 2012
Direct cost
of
construction
and renting
General and
Administrati
ve Expenses
Total
General and
Administrati
ve Expenses
Total
Direct cost
of
construction
and renting
General and
Administrati
ve Expenses
Total
(in R$ million)
Labor
Third-party Services
Freight
Construction Material /
Maintanance and Repair
Rent Equipment
Travel
Cost of Sales
Depreciation ad
Amortization
Asset impairment
Allowance for Doubtful
Debts
Stcok Option
Update provisions
Profit sharing
Others
(179.2)
(6.3)
(15.0)
(109.3)
(22.1)
(0.8)
(288.6)
(28.4)
(15.8)
(58.8)
(5.0)
(15.5)
(107.4)
(20.4)
(0.8)
(166.2)
(25.5)
(16.2)
120.4
1.3
(0.5)
1.9
1.7
0.0
122.4
2.9
(0.4)
(41.7)
(4.8)
(46.5)
(43.5)
(6.1)
(49.6)
(1.8)
(1.3)
(3.1)
(8.3)
(8.6)
(41.0)
(11.3)
(11.5)
-
(19.5)
(20.1)
(41.0)
(5.9)
(5.0)
(68.0)
(15.0)
(11.6)
-
(20.8)
(16.5)
(68.0)
2.4
3.6
(27.0)
(3.7)
(0.1)
-
(1.3)
3.6
(27.0)
(104.2)
(4.4)
(108.6)
(122.6)
(8.4)
(131.0)
(18.4)
(4.0)
(22.4)
(4.9)
(4.9)
(8.9)
(8.9)
(4.0)
(4.0)
(16.1)
(16.1)
(16.2)
(16.2)
(0.1)
(0.1)
(1.6)
(5.8)
4.0
(20.1)
(16.3)
(5.8)
4.0
(20.1)
(17.9)
(1.9)
(9.0)
0.2
(18.8)
(12.0)
(9.0)
0.2
(18.8)
(13.8)
(0.2)
(3.2)
(3.8)
1.3
4.3
(3.2)
(3.8)
1.3
4.1
23
(410.9)
Total
(218.5)
(629.4)
(334.9)
(225.4)
(1)
(560.4)
76.0
(6.9)
69.0
The table below shows the Companys cost of goods sold and services rendered and general and
administrative expenses by business unit in fiscal years ended December 31st, 2012 and 2013. The
information provided in this table does not reflect the effects of depreciation on such costs.
Year ended December 31st
2012
(%)
(1)
2013
2012 x 2013
(%)
(1)
Var. (%)
(2)
(in R$ million)
Heavy Construction....................................
Real Estate................................................
Industrial Services .....................................
Rental .......................................................
Total .....................................................
(1)
(2)
(89.7)
(124.5)
(194.4)
(112.2)
(520.8)
17.2%
23.9%
37.3%
21.5%
100.0%
(108.9)
(164.2)
(156.1)
(429.2)
25.4%
38.3%
0.0%
36.4%
100.0%
21.4%
31.9%
(100.0%)
39.2%
(17.6%)
Percentage share of the business unit of goods sold and services provided and general and administrative expenses
Percentage increase (decrease) of the total registered from one period to another.
Cost of goods sold and services provided, excluding the effects of depreciation, went from R$ 520.8
million in the year ended December 31, 2012 to R$ 492.2 million year ended December 31, 2013, a
decrease of R$ 91.6 million, or 17.6%, mainly due to the sale of the Industrial Services business unit.
The depreciation of assets used in services rendered, which is part of the costs of goods sold and
services rendered increased 17.7% due to higher investments in the past years, from R$ 104.2
million for the year ended on December 31, 2012 to R$ 122.6 million in the fiscal year ended
December 31, 2013, maintaining the average depreciation period of 10 years.
Considering the depreciation costs, the Companys cost of goods sold and services rendered totaled
R$ 334.9 million in the fiscal year ended December 31, 2013, compared with R$ 410.9 million in the
fiscal year ended December 31, 2012, representing a decrease of 18.5%, mainly due to the sale of
the Industrial Services business unit.
As a result of the sale of the Industrial Services business unit, compared to net revenues, the total
cost of goods sold and services provided, excluding the effects of depreciation, decreased from
34.9% in the year ended December 31, 2012 to 25.5% in the year ended December 31, 2013.
Including the effects of depreciation, the same ratio decreased from 46.7% in the year ended
December 31, 2012 to 40.2% in the fiscal year ended December 31, 2013.
The general and administrative expenses increased from R$ 218.5 million in the fiscal year ended
December 31, 2012 to R$ 225.4 million in the fiscal year ended December 31, 2013, an increase of
R$ 6.9 million, or 3.2%. In 2013, we continued the technical and commercial team expansion and
improvement and some branches were transferred to larger spaces, consistent with the growth of the
companys businesses. Despite the Company, at a first glance, incurred in greater general and
administrative expenses and consequent compression of margin, the management of the Company
believes that these are fundamental measures to enable its growth with productivity improvements in
the operation of its warehouses and maintaining the high technical quality of its services.
The ratio between the Companys operating, general, and administrative expenses in relation to the
net operating income went from 24.8% in the fiscal year ended December 31, 2012 to 27.1% in the
fiscal year ended December, 2013.
24
Operating Profit
Operating profit before financial result increased from R$ 249.9 million in the fiscal year ended
December 31, 2012 to R$ 280.2 million in the fiscal year ended December 31, 2013, an increase of
R$ 30.3 million, or 12.1%. Companys management believes that such increase was a consequence of
the maturity of the investments made, as mentioned above. Operating profit represented 33.7% of
net revenues in December 31, 2013, compared to 28.4% of net revenues in December 31, 2012.
Financial Results
Net financial expenses increased from R$ 39.2 million in the fiscal year ended December 31, 2012 to
R$ 46.8 million in the fiscal year ended December 31, 2013, representing an increase of R$ 7.6
million. The Company's bank debt, which was R$ 622.5 million in December 31, 2012 increased to R$
632.6 million in December 31, 2013.
Net Income
The net profit increased from R$ 151.5 million in the fiscal year ended December 31, 2012 to R$
172.6 million in the fiscal year ended December 31, 2013, an increase of R$ 21.1 million, or 13.9%.
This expansion is due to the decrease of cost of goods sold and services provided and general and
administrative expenses (R$ 69.0 million), partially offset by the decrease of net revenue (R$ 47.0
million) and negative net financial result (R$ 7.6 million).
Year ended December 31st, 2014 compared to year ended December 31st, 2013
Current Assets
The Companys current assets increased from R$ 319.5 million as of December 31, 2013 to R$ 425.3
million as of December 31, 2014, an increase of R$ 105.8 million or 33.1%. The main reasons for
such increase, in the assessment of the management of the Company, were:
increase of R$ 167.9 million in cash and cash equivalents, due to higher liquidity mainly derived
from the slower pace of investments in rental equipment.
decrease of R$ 29.9 million in accounts receivable, including revenue from the sale of the
investee;
reduction of R$ 14.5 million in inventories;
reduction of R$ 10 million in recoverable taxes;
25
Non-current Assets
The Companys non-current assets of R$ 101.5 million as of December 31, 2013 was increased to R$
103.7 million as of December 31, 2014, a growth of R$ 2.2 million or 2.2%.
Investment
In 2014 the Company maintained the same registered investment value as 2013 of R$ 87.4 million. In
January, 2011 it acquired 25.0% of the total voting capital of Rohr for R$ 90.0 million.
Intangible assets
The Companys intangible assets increased from R$ 68.4 million as of December 31, 2013 to R$ 76.1
million as of December 31, 2014, mainly due to R$ 7.7 million in software acquisition.
In the beginning of 2014, the Company concluded SAP implementation, unifying and standardizing its
information systems aiming at achieving a higher efficiency level for its internal controls, mainly on
the financial and operational sides.
Current liabilities
The Companys current liabilities increased from R$ 255.0 million as of December 31, 2013, to R$
221.2 million as of December 31, 2014, a reduction of R$ 33.8 million. The main factors that led to
this change, according to the managements opinion, were:
increase of R$ 36.9 million in the short-term loans and financing balance, due to a
reclassification from long to short-term referring to installment to be settled in 2015.
reduction of R$ 21.4 million in suppliers account, due to installment purchase of rental
equipment of our PPE.
reduction of R$ 19.2 million in dividends and payable interest on capital, due to the lower
level of profit distribution of 2014;
decrease of R$ 18.7 million in the profit sharing payable account, since there will not be profit
sharing in 2014;
reduction of R$ 7.2 million, in the short-term debentures balance, due to the amortization of
part of the debentures in 2014.
Non-current liabilities
The non-current liabilities increased from R$ 529.7 million as of December 31, 2013 to R$ 612.1
million as of December 31, 2014, an increase of R$ 82.4 million, or 15.6%. On the Companys
management evaluation, the main factor that led to this variation were:
26
increase of R$ 201.2 million referring to the third issuance of Debentures held by the
Company;
reduction of R$ 90 million referring to amortization of principal of first Debentures issuance;
reduction of R$ 43.9 million in long-term borrowings and financing due to its transfer to shortterm.
Stockholders Equity
Shareholders equity increased from R$ 1,016.51 million as of December 31, 2013 to R$ 1,059.4
million as of December 31, 2014, an increase of R$ 42.9 million, or 4.2%. On the Companys
management evaluation, the main factor that led to this variation were:
increase of R$ 39.1 million in earnings reserve account referring to the net earning registered
in 2014 of R$ 64.3 million deducted R$ 25.1 million of dividends and payable interest on
capital registered in 2014;
increase of R$ 10.1 million in stockholders equity due to the exercise of options by the
beneficiaries;
reduction of R$ 1.4 million in capital reserve account, due to R$ 11.0 million in buyback of
shares and to R$ 9.5 in stock option premium reserve amounting; and
reduction of R$ 5.0 million in valuation adjustment to equity, due to cash flow hedges in 2014.
Year ended December 31st, 2013 compared to year ended December 31st, 2012
Current Assets
The Companys current assets increased from R$ 473.7 million as of December 31, 2012 to R$ 319.5
million as of December 31, 2013, a decrease of R$ 154.2 million or 32.6%. The main reasons for such
decrease, in the assessment of the Management of the Company, were:
a reduction of R$ 159.6 million in securities and marketable securities, due to the use of the
proceeds from the Companys second offering of non convertible debentures held in
September 2012;
a reduction of R$ 17.4 million in accounts receivable, due to the sale of the Industrial Services
business unit;
an increase of R$ 26.8 million in other accounts receivable sale o investee due to the
outstanding receivable amount related to the sale of the Industrial Services business unit;
Non-current assets
The Companys non-current assets increased from R$ 45.1 million as of December 31, 2012 was
increased to R$ 101.5 million as of December 31, 2013, an increase of R$ 56.4 million or 125.0%.
The main variations in the non-current assets was in other accounts receivable sale o investee due
to the outstanding receivable amount related to the sale of the Industrial Services business unit.
Investment
27
In December 31, 2013, the Company maintained the same registered investment value as of
December 31, 2012, R$ 87.4 million.
Intangible assets
The Companys intangible assets increased from R$ 54.5 million as of December 31, 2012 to R$ 68.4
million as of December 31, 2013, mainly due to R$16.5 million in software acquisition.
Current liabilities
The Companys current liabilities increased from R$ 214.5 million as of December 31, 2012, to R$
255.0 million as of December 31, 2013, an increase of R$ 40.5 million. The main factors that led to
this change, according to the Managements opinion, were:
increase of R$ 18.6 million in the short-term loans and financing balance, due to the issuance of
promissory notes in December 2011, to enable the Companys investments in 2011;
a reduction of R$ 11.5 million in taxes payable, due to lower taxes on revenues, such as PIS,
COFINS and ICMS;
increase of R$ 99.5 million, in the short-term debentures balance, due to the reclassification from
long-term debentures to short-term liability related to a debt amount to be paid in 2014;
decrease of R$ 29.0 million in the short-term borrowing and financing account, due to the
settlement of debt due in 2013;
Non-current liabilities
The non-current liabilities increased from R$ 590.2 million as of December 31, 2012 to R$ 529.7
million as of December 31, 2013, a reduction of R$ 60.5 million, or 10.3%. The main factor that led
to this variation, according to the managements opinion, was the R$ 89.2 million decrease in the
long-term debenture account, due to the the reclassification from long-term debentures to short-term
liability related to a debt amount to be paid in 2014, and the R$ 28.5 million increase in the long-term
borrowing and financing account, due to a new borrowing contract of R$ 40.0 million signed in
December 2013.
Stockholders Equity
Shareholder's equity increased from R$ 859.3 million as of December 31, 2012 to R$ 1,016.5 million
as of December 31, 2013, an increase of R$ 157.2 million, or 18.3%, substantially due to the increase
of the Companys income reserve that aims retain financial resource to support its budget investment.
CASH FLOW
2013
(in R$ millions)
28
2014
202.3
(393.1)
199.8
9.0
263.4
(258.1)
(23.7)
(18.4)
241.4
(125.3)
51.7
167.9
The table below shows the investments in PP&E made in 2012, 2013 and 2014:
Year ended December 31st,
2012
2013
2014
(in R$ millions)
Gross investments, before PIS and COFINS credits ...........................................................
Acquisition of GP Sul
Total Gross investments .................................................................................................
PIS and COFINS credits ..................................................................................................
Net Investments ............................................................................................................
(287.4)
(287.4)
25.6
(261.8)
(489.4)
(489.4)
43.4
(446.0)
(186.7)
(186.7)
18.2
(168.5)
The gross investments in intangible assets in the years ended December 31st 2012, 2013 and 2014
totaled, R$ 10.1 million, R$ 16.5 million and R$ 12.4 million, respectively.
2012
2013
2014
10.0
(21.9)
(95.2)
306.9
15.6
(41.8)
(38.5)
41.0
10.1
(11.0)
(46.7)
(300.6)
400.0
The cash flow from financing activities includes new loan agreements, the amortization of the
principal and payment of interest on existing loans, as well as increases in the capital stock, and
dividend payment.
29
In 2012, the Company captured R$ 270.0 million through its second non-convertible debentures
issuance, made in two series. The first series, at the value of R$ 160.9 million, has a 5-year term,
with amortization starting from the fourth year, and interest rates equivalent to CDI + 0.88%. The
second series, at the value of R$ 109.1 million, has an 8-year term, with amortization starting from
the sixth year, and interest rates equivalent to IPCA + 5.50%. The net proceeds of the offering will
be used for the financing of investments in 2013, general uses and expenses and for the payment of
debts, allowing the reduction of cost and expansion of its average term. The Company also issued, in
April 2012, promissory notes at the amount of R$ 30.0 million, with maturity date in December 3rd,
2012.
In 2014, the Company issued promissory notes totaling R$ 200 million, and its third debentures
issuance, in May, amounting to R$ 200 million, which were used, in June, to fully pay the promissory
notes issued in April.
On April 11, 2014 the Company issued in a single series 20 commercial promissory notes with unit
face value of R$10,000, totaling R$200,000 and with maturity on August 8, 2014. The unit value of
the promissory notes bears interest equivalent to 106% of the accumulated fluctuation of the average
daily interbank deposit (DI) rates. On June 18, 2014 the Company fully paid these promissory notes
with the proceeds from its third issue of debentures.
In 2014, the Company captured R$ 200.0 million through its third issue of Company debentures
simple, nonconvertible, registered, unsecured, in a single series with unit face value of R$10.00.
These debentures mature on May 30, 2019 and pay interest equivalent to 108.75% of the CDI,
payable semiannually, and amortized in three annual, consecutive installments, commencing on May
30, 2017. The proceeds obtained by the Company with the third issue of debentures were fully used
to settle the commercial promissory notes amounting R$ 200 million of the Companys fourth issue,
issued on April 11, 2014.
10.2 The directors must comment on
a.
(i)
30
unemployment, exchange rates and commodities prices, the last two affect costs of equipment used
in companys activities. Consequently, these factors affect, indirectly, its operation and results.
The net revenues from sales and services are denominated in reais, and are derived from the rental
and sale of equipment, the provision of technical support services, and penalty payments for
unreturned or damaged equipment. The table below sets forth the participation of the net revenue
for the periods indicated:
Year ended December 31st,
(ii)
2012
2013
2014
81.0%
12.2%
2.6%
4.2%
83.5%
10.1%
1.0%
5.3%
Its main cost of products sold and services rendered relates to costs for executing the projects in
which the Company are involved, including (i) personnel for assembly and disassembly of equipment
rented to its clients when such tasks are carried out by the Company; (ii) cost of the equipment subleased from third parties when the Companys inventories are insufficient to meet demand; (iii)
expenses with materials used in the provision of its services, which include individual safety
equipment, wood, paint and insulation material; and (iv) freight costs relating to the transportation of
equipment between its branches and eventually to its clients. Costs related to the execution of its
projects represented 73.4%, 43.7% and 44.0% of its principal costs of sales and services rendered,
excluding depreciation, in the years ended December 31, 2012, 2013 and 2014, respectively. On the
evaluation of the company's management, this reduction from 2012 to 2014 was due to the
expansion of equipment sales costs, mainly in the Real estate and Rental business units and, and to
the sale of the Industrial Services business unit.
In addition, the Company incurred in (i) costs deriving from the sale of equipment; (ii) depreciation of
equipment rented; (iii) expenses with equipment storage; and (iv) cost of assets sales and write-offs
of assets.
The Companys main general and administrative expenses refer to contract coordination,
encompassing the project teams and engineers in the commercial area, responsible for the
management and supervision of each of its projects, which correspond basically to salaries, payroll
charges and benefits, with the rest relating to travel, representation and communications expenses,
as well as the overhead of the administrative areas. Other material general and administrative
expenses include: (i) administrative expenses incurred with respect to its financial, investor relations,
and human resources departments, as well as its executive management, including salaries and
benefits, (ii) expenses in connection with the Companys employee profit-sharing plans and expenses
related to its stock option plans, and (iii) other administrative expenses, which include, in particular,
expenses resulting from adjustments to its provisions for contingencies.
In 2014 there were an increase in Allowances for Doubt Debt (ADD) account due to deterioration of
economic environment and the downgrading of corporate credit rating of several clients, that lead the
Company to adopt a more conservative approach. In addition, there are the investigations ongoing in
31
Heavy Construction Brazilian market. ADD represented 5.3% of net revenues in 2014, versus 2.0% in
2013 and 2.1% in 2012.
With equipment and maintenance operational synergy from Heavy Construction and Real Estate, we
will see improvement in operational efficiency and, consequently, a reduction in unit costs for
maintenance. In 2014, we had intense maintenance activities, in spite of weaker demand, to equalize
deferred maintenance of our equipment. From the second half of 2015, we should normalize the
maintenance activity, with a respective cost reduction.
Furthermore, we have some initiatives underway in order to reduce Company expenses, such as (i) a
leaner corporate structure and, thus, the disposal of some administrative and management positions;
(ii) procurement centralization; and (iii) insourcing of some third-party services, such as IT; among
others.
Financial Results
The Companys financial results consist of its financial expenses, net of financial revenues. The
Companys main financial expenses include interest payments on loans, leasing operations, and costs
associated with discounting to present value certain long-term receivables derived from the sale of
equipment owned by its former Events division. Its main financial revenues consist of income from its
financial investments and interest in connection with late payments by its clients.
The net financial result was a negative R$ 34.3 million, R$ 46.8 million and 67.6 million in 2012,
2013 and 2014, respectively. YOY variation is explained by an increase in gross debt and higher
interest rates in the period.
b.
The Companys revenues have a direct correlation with changes in price and volume of equipment
rented to clients. Introduction of new products and services also directly impact revenue. As for
inflation, the correlation of its revenue is indirect, in the extent that the adjustments take place only
in the renewal or closing of new contracts, reflecting the past inflation. As regards to the exchange
rate fluctuation, currently there is no correlation to its revenue, except that the Rental segments
equipment are imported and hence have their acquisition cost in foreign currency. Consequently, in
the future, the rental revenue from this division may be influenced by possible in exchange rates
variations. The increase in revenues in 2012 and 2013 was due to an increased in rented and sales
32
volume, given the favorable market conditions and its geographic expansion. In 2014, rental
revenues were stable compared to 2013, being the consolidated revenues affected by lower sales
volume in the year.
c.
Impact of inflation, price variations of main inputs and products, exchange rate
and interest rate on operating profit and the issuer's financial result.
Companys operations and results are directly impacted by variations of: (i) Inflation rates, which
index are used to adjustment of Companys long-term contracts; (ii) Interest rates, that affect
interest-bearing debt of the Company; and (iii) cost of material used in construction works or
equipment maintenance of the Company.
The Companys expenses are subject to impact of inflation via wage increases for employees, a raise
in the cost of the hired services, such as freight, and inputs used in the provision of services and
through financial expenditure due to the remuneration of the debentures which are subject to
monetary restatement by the accumulated variation of IPCA. Moreover, the equipment the Company
invests in to use at its services are also subject to increases due to inflation and changes in
commodity prices, mainly steel and aluminum. In the case of Rental business unit, the prices of the
equipment the Company uses can increase according to the fluctuation of the exchange rate, because
they are imported.
10.3 The directors must comment on the relevant effects that the events listed below
may have caused or are expected to cause on the Companys financial statements or its
results
a.
b.
In 2013, the Company sold, through the sale of the company Albuquerque Participaes Ltda., the
Industrial Services business unit, as described in item (b) below. The Company did not introduce or
dispose of any segment in fiscal years 2012, 2013 and 2014.
for the nine months ended September 2013 (end of the last quarter before the actual sale),
net profit of R$ 6.1 million 30 representing in the same period, 4.8% of total net profit of Mills, and
net income of R$ 168.4 million, over the same period, 21.3% of consolidated net revenue of Mills;
in fiscal year 2012, net income of R$ 2.3 million, in the same period, 1.2% of total net profit
of the Mills, and net income of R$ 213.8 million, over the same period, 24.3% of consolidated net
revenue of Mills.
The sale is aligned with the Companhys strategy to focus on businesses in which its competencies
are able to add higher value to its shareholders and clients. Therefore, the Company ceased to
33
operate in the Industrial Services sector, in which were offered access services, industrial painting,
surface treatment and thermal insulation, during both construction and maintenance phase of large
industrial plants.
The sale of the Industrial Services business unit was concluded in November 30, 2013, and the
Company recorded gain of R$ 8.3 million with the sale. Of the agreed sales price of R$ 102 million, (i)
R$ 25 million was received on the date of the sale agreement, in July; (ii) R$ 17 million were paid in
April 2014, net of R$ 6.8 million related to adjusts settled between the Buyer and the Company; and
(iii) the outstanding amount of R$ 60 million will be paid in installments adjusted by the Interbank
Deposit Certificate CDI rate. This disposal is in line with Mills strategy to focus on businesses in
which its competences are able to add higher value for its shareholders and clients.
c.
There were no unusual transactions or events in fiscal years 2012, 2013 and 2014, except as
described above.
10.4 The directors must comment on:
a.
a) New standards and interpretations and amendments to existing standards that are effective
since January 1, 2014:
IFRIC 21 - Levies New interpretation that addresses the issue as to when to recognize a
liability to pay a levy imposed by a government both for levies that are recognized in
accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those in
which the amounts and taxation period are clear. Management has not identified any impact
of this new standards.
IAS 36 Impairment of Assets (CPC 01) The amendments to IAS 36 provide guidance on
recoverable amount disclosures for nonfinancial assets. Management has not identified any
impact of these amendments to existing standards.
IFRS 10, IFRS 12 and IAS 27 - the amendments to IFRS 10 define an investment entity and
require a reporting entity that meets the definition of an investment entity not to
consolidate its subsidiaries but instead to measure its subsidiaries at fair value through
34
profit or loss in its consolidated and separate financial statements. Management has not
identified any impact of these amendments to existing standards.
To qualify as an investment entity, a reporting entity is required to:
obtain funds from one or more investors for the purpose of providing them with investment
management services;
commit to its investor(s) that its business purpose is to invest funds solely for returns from
capital appreciation, investment income, or both; and
measure and evaluate performance of substantially all of its investments on a fair value basis.
Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure
requirements for investment entities.
Management has not identified any impact of these amendments to existing standards.
b) New standards, interpretations of and amendments to existing standards that are not yet
effective at December 31, 2014:
Effective for annual periods beginning on or after July 1, 2014:
IAS 19/CPC 33 Employee Benefits The amendments clarify how an entity should account
for contributions made by employees or third parties based on whether those contributions
are dependent on the number of years of service provided by the employee.
Annual Improvements to IFRSs 2010-2012 and 2011-2013 Cycles Minor amendments to
existing pronouncements.
IAS 16 and IAS 38 Amendments to these standards to clarify the acceptable methods of
depreciation and amortization.
35
IFRS 10 and IAS 28 Amendments to standards to clarify how to account for the sale or
contribution of assets between an investor and its associate or joint venture whose
requirements are applicable independent of the legal type of the operation.
IFRS 10, IFRS 12 and IAS 28 Amendments to address specific issues arisen in the context of
the application of the consolidation exception for investment entities.
IFRS 15 Revenue from Contracts with Customers establish 5 simple steps to be applied to
contracts with customers for revenue recognition and disclosure. It will supersede the
standards (IAS 18 and IAS 11) and interpretations (IFRIC 13, IFRIC 15 and IFRIC 18)
currently effective on the matter.
36
b.
c.
Preparation of the Companys financial statements requires Management to make judgments and
estimates and adopt premises that affect the amounts of revenues, expenses, assets and liabilities, as
well as disclosures of contingent liabilities as of the reporting date. Nevertheless, the uncertainty
relating to such assumptions and estimates may lead to results that require significant adjustment to
the carrying value of the asset or liability affected in future periods.
The main assumptions relating to sources of uncertainties in the future estimates and other
importance sources of uncertainty in estimates as of the reporting date, involving significant risk of
causing a major change in the carrying value of assets and liabilities in the next financial year, are as
set out below:
Following, the Companys Management presents a discussion about what they consider relevant as
accounting practices for the presentation of Companys financial information.
(i)
Financial Instruments
Financial assets and liabilities are recognized when the Company becomes a party to the contractual
provisions of the respective instrument.
37
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognized immediately in profit or loss.
(ii)
Income tax expense comprises current and deferred taxes. Taxes on income are recognized in the
income statement, except when they relate to items that are recognized directly in equity or in other
comprehensive income, in which case, the tax is also recognized in equity or in other comprehensive
income.
The current income tax and social contribution expense is calculated based on tax rates prevailing in
Brazil at the end of the reporting period, which are 15% for income tax, plus a 10% surtax on taxable
profit exceeding R$240, and 9% on taxable profit for social contribution. Management periodically
reviews positions taken in respect of tax matters that are subject to interpretation and recognizes a
provision when the payment of income tax and social contribution according to the tax bases is
expected.
Deferred income tax and social contribution are calculated on temporary differences between the
carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases
used in the computation of taxable profit. The tax rates currently defined are 25% for income tax and
9% for social contribution.
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be
sufficient against which the deductible temporary differences can be utilized, based on projections of
future results prepared on the basis of internal assumptions and future economic scenarios that are,
therefore, subject to changes.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Current and deferred taxes are recognized in profit or loss, except when they relate to items that are
recognized in Other comprehensive income or directly in equity, in which case, current and deferred
taxes are also recognized in Other comprehensive income or directly in equity, respectively Where
current and deferred taxes arise from the initial accounting for a business combination, the tax effect
is included in the accounting for the business combination.
(iii)
A majority of the Company revenues come from property, plant and equipment for operational rental
and use, either solely through rental, or rental combined with assembly and disassembly.
Property, plant and equipment for own use consists mainly of facilities to store equipment, office,
improvements, furniture and equipment necessary for the operation of these facilities.
38
Property, plant and equipment are carried at historical cost, less accumulated depreciation and
accumulated impairment losses. Historical cost includes expenditure directly attributable to the
acquisition of the property, plant and equipment items.
The items of PP&E are valued at historic cost, less accumulated depreciation. The historic cost
includes expenditures as well as any exchange rate hedge gain or loss cash flow directly attributed to
the acquisition of such fixed assets.
Subsequent costs are added to the residual value of property, plant and equipment or recognized as
a specific item, as appropriate, only if the future economic benefits associated to these items are
probable and the amounts can be reliably measured.
Depreciation is calculated under the straight-line method, taking into consideration the estimated
economic useful lives of assets. Land is not depreciated.
Assets held under finance leases are depreciated over their expected useful lives on the same basis
as owned assets or, where shorter, the term of the relevant lease.
Any gain or loss arising on the disposal of an item of property, plant and equipment is determined as
the difference between the sales proceeds and the carrying amount of the asset and is included in
operating income or expense.
The residual values and estimated useful lives of assets are reviewed at the end of each reporting
period, with the effect of any changes in estimate accounted for on a prospective basis.
(iv)
Goodwill
Impairment of assets
Property, plant and equipment and other non-current assets, including goodwill and intangible assets,
are tested to identify evidences of impairment on an annual basis or whenever events or changes in
circumstances indicate that their carrying amount may not be recoverable. When applicable, the
recoverable amount is calculated to determine if there is an impairment loss.
When an impairment loss is identified, it is recognized in the amount by which the carrying amount of
the asset exceeds its recoverable amount, which is the higher of the net selling price and the value in
use of an asset. For impairment testing purposes, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units - CGUs). Non-financial assets other
than goodwill that suffered impairment are reviewed for the analysis of a possible reversal of the
impairment at the reporting date.
(vi)
Provisions
39
Provisions are recognized when the Company has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Company will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
The provisions for tax, civil and labor claims are recognized at the amount of probable losses,
according to the nature of each provision. Based on the opinion of its legal counsel, management
believes that the recognized provisions are sufficient to cover any losses on ongoing lawsuits.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation.
The increase in the provision due to passage of time is recognized as expense.
A provision for onerous contracts is recognized where the Company has a contract under which the
unavoidable costs of meeting the obligations under the contract exceed the economic benefits
expected to be received from the contract. The provision is measured at present value at the lower of
the expected cost of terminating the contract and the expected net cost of continuing with the
contract.
(vii)
The Company offers stock option plans to certain employees and executives. The fair value of the
options granted is recognized as an expense during the period over which the right is vested, that is,
period during which specific vesting conditions should be met.
At the end of the reporting period, the Company reviews its estimates of the number of options
whose rights must be vested based on the conditions. It recognizes the impact of the review of the
initial estimates, if any, in the income statement, as a balancing item to the capital reserve in equity.
The amounts received, net of any directly attributable transaction costs, are credited to capital when
options are exercised.
(viii)
Revenue recognition
Revenue from a contract to provide services is recognized by reference to the stage of completion of
the contract at the end of the reporting period.
Revenue from the sale of goods is recognized when the Company has transferred to the buyer the
significant risks and rewards of ownership of the goods. Therefore, the Company adopts as revenue
recognition policy the date in which goods are delivered to the buyer.
Rental income is recognized on a straight-line basis over the term of the equipment lease
agreements.
The Company separates the identifiable components of a single contract or a group of contracts to
reflect the essence of the contract or group of contracts, recognizing the revenue of each of the
elements proportionally to its fair value. Thus, the Company's revenue is split into lease, technical
assistance, sales and indemnities/recoveries of expenses.
40
Interest income is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate through maturity, when it is determined whether such income will accrue to the
Company.
Dividend income from investments is recognized when the shareholders right to receive such
dividends has been established (provided that it is probable that future economic benefits will flow to
the Company and the amount of income can be measured reliably).
Income, expenses and assets are recognized net of taxes on sales.
10.6 Regarding the internal controls adopted to ensure the preparation of reliable
financial statements, the management shall comment on:
a.
Efficiency of such controls, indicating any flaws and the steps taken to correct
them
The management of the Company believes that its internal controls are adequate to ensure the
elaboration of reliable financial statements.
b.
Weaknesses and recommendations on internal controls present in the report of the
independent auditor
No deficiencies or recommendations were submitted by the independent auditors in their report about
the effectiveness of internal controls adopted by the Company.
10.7 Management comments on the use of resources from public offerings for
distribution of securities
In April 23rd, 2012, the Company issued a single series of 30 promissory notes with par value of R$
1.0 million, totaling R$ 30.0 million. The net proceeds of the issue were fully used to: (i)
reinforcement of working capital of the company; and (ii) debt refinancing of the company.
In August 15th, 2012, the Company held its second issue of simple, non-convertible, unsecured
debentures subject to public offering with restricted placement efforts. A total of 27,000 debentures
were issued, each with par value of R$ 10,000.00. The net proceeds of the offering were fully utilized
for: (a) the financing of investments to be made by the Company, (b) the payment of Companys
debts, and (c) general uses and expenses of the Company. The realized investments in renting goods
amounted to R$463.6 million in 2013.
On April 11, 2014, the Company issued promissory notes, totaling R$ 200 million and bearing interest
at 106% of the DI rate, to be settled with the debentures offering proceeds. The proceeds of these
offerings were used to (a) refinance indebtedness of the Company; (b) purchase rental equipment
and (c) general corporate purposes and expenses of the Company.
On May 18th, 2014, the Company held its third issue of simple, non-convertible, unsecured
debentures subject to public offering with restricted placement efforts. A total 20,000
debentures were issued, each with par value of R$ 10,000.00. The net proceeds of the
41
offering will be fully utilized for fully settlement of commercial promissory notes of
Companys fourth issuance, issued in April 11th, 2014.
10.8 Managements comments on significant items not included in the balance sheet
and their effects on the consolidated financial statements
In the evaluation of the management, there are no significant items not included in the balance sheet
of the Company.
10.9 Managements comments about the obligations not accounted in financial
statements.
In the evaluation of the management, there are no significant obligations not included on the
financial statements of the Company.
10.10 Management shall indicate and comment on key elements of the Company's
business, specifically exploring the following topics:
a.
Investments, including: (i) quantitative and qualitative description of investments
in progress and forecasted investments; (ii) financing sources of investments and (iii)
relevant alienations in progress and forecasted alienations
The Company plans its investment policy in accordance with its demand prospects, cash flow and
credit availability in the market. The Companys internal policy is to maintain its leverage around 1.0x
net debt to EBITDA. To ensure the necessary amount of capital for the implementation of its
investment plan, the Company constituted a statutory reserve, of which the shareholders may
allocate up to 75% of net income, provided that such reservation does not exceed the limit of 80% of
the capital. The cash generation of the Companys normal operations, from the retention of profits
was used to partially finance the investments made in 2012, 2013 and 2014. In 2014, the amount of
R$ 2.4 million were designated to this reservation, whereas there was not any amount for this
reservation in 2012 and 2013. The management presents below the major investments made in the
course of the years ended December 31, 2012, 2013 and 2014, and highlight the investment budget
for fiscal year 2015.
Heavy Construction
In the fiscal years ended by December, 31st, 2012, 2013 and 2014, the Heavy Construction business
unit invested, mainly, in shoring structures and industrialized steel and aluminum formwork
acquisition, amounting to R$ 50.5 million in 2012, R$ 106.3 million in 2013 and R$ 47.5 million in
2013.
Real Estate
42
Over the past three fiscal years ended by December, 31st, 2012, 2013 and 2014, the Real Estate
business unit invested mainly in acquisition of shoring equipment, suspended scaffolding and
industrialized formworks, having disbursed R$ 59.8 million in 2012, R$ 90.1 million in 2013 and R$
19.3 million in 2014.
Rental
In 2012, 2013 and 2014, the Company continued to implement its strategy of expanding its portfolio
of aerial work platforms and telescopic handlers, investing R$ 160.9 million, R$ 267.2 million and R$
105.3 million in the acquisition of such equipment, respectively.
The Company intends to finance its investments with (i) cash generated in its own activities, and (ii)
indebtedness.
b.
Since it has already disclosed, indicate the purchase of plants, equipment, patents
or other assets that should materially affect the productive capacity of the Company
In 2015 we will reduce significantly our investment levels to a maximum amount of R$ 40 million,
being the majority of it for maintenance processes and facilities of our branches. In the Heavy
Construction and Real Estate business units we will invest to maintain the actual fleet, with the
acquisition of necessary spare parts to keep the equipment mix. In the Rental business unit we will
continue the geographic expansion, using the existing fleet.
c.
New products and services, by indicating: (i) description of researches in progress
already disclosed; (ii) total amounts paid by the issuer in researches for development of
new products or services; (iii) projects under development already disclosed and (iv)
total amounts paid by the issuer for the development of new products or services
The Companys management believes that providing innovative solutions is a constant mark of its
activities and a key aspect to retain its customers. In this sense, although the Company does not
carry out in-house research and development activities, it annually visits the main national and
international fairs of equipment from the industrial and construction sectors to meet the main
technological innovations available to the industry in which the company operates. Furthermore, the
Companys representatives visit the factories of leading national and international manufacturers of
equipment and construction sites around the world to assess the functioning and operation of
advanced equipment available for purchase.
The Company does not develop new products and services, so it does not incur expenses related to
the research and development department. All the technology and innovation present in its
equipment and offered to its clients come from its suppliers. For this, the Company seeks to acquire
or license new technologies from third parties on acceptable terms in the domestic and international
market, preferably with usual suppliers with whom the Company seeks to establish long term
partnerships. As an example of such partnerships, the Company entered into a licensing contract in
43
1996 with the German company NOE Schaltechnik, to produce and supply modular steel and
aluminum panel formwork (replacing the wood) for the Brazilian construction market, an innovation in
the Brazilian market.
10.11 Management is expected to discuss and analyze other material factors that
influenced operating performance, which were not discussed under previous items in this
section.
There are no other factors to comment on about operational performance of 2012, 2013 and 2014
results.
44
Documentation required by article 10 of CVM Instruction 481 (Instruo CVM 481), issued by
CVM on December 17, 2009
Information contained in items 12.5, 12.6, 12.8, 12.9 and 12.10 of the Reference Form,
concerning the nominee or supported by management or controlling shareholders
Date of
office
Term of
office
Other
titles
Ellected by the
controlling
shareholder
Age
Profession
CPF
Position
Date of last
election
36
Lawyer
082.613.217-03
President
4.25.2014
4.25.2014
1 year
No
Yes
38
Lawyer
886.793.577-15
Alternate
4.25.2014
4.25.2014
1 year
No
Yes
57
Controller/Engi
neer
Accountant/La
wyer
Member
N/A
N/A
N/A
No
Yes
Alternate
N/A
N/A
N/A
No
Yes
56
632.856.067/20
492.846.497-49
12.8 Summary of the business experience, activities and areas of expertise of members
of the Fiscal Council
Eduardo Botelho Kiralyhegy graduated in Law from the Candido Mendes University, a member of the
Brazilian Lawyers Association, and founding partner of the Negreiro Office, Medeiros & Kiralyhegy
45
Lawyers, in Rio de Janeiro, specializing in Tax Law, Administrative and Regulatory. Currently a
member of the Special Committee of Tax Issues of the Brazilian Lawyers Association, the Special
Committee of the Federal Justice of the Brazilian Lawyers Association, the Brazilian Academy of Tax
Law, and the Brazilian Association of Financial Law and the International Fiscal Association.
Maria Cristina Pantoja da Costa Faria graduated in law from the Pontifical Catholic University of Rio de
Janeiro (Pontifcia Universidade Catlica do Rio de Janeiro - PUC), specializing in corporate finance for
lawyers by the Foundation Institute of Management from the University of So Paulo (Fundao
Instituto de Administrao da Universidade de So Paulo), and earned her masters degree in
executive management of insurances at IBMEC. Member of the Brazilian Lawyers Association. At the
date of this Reference Form, is a member of the Negreiro Office and Medeiros & Kiralyhegy Lawyers.
Marcus Vincius Dias Severini graduated in Accounting and Eletric Engineering, postgraduated in
Economic Engineering. He acted as Controller Director of Vale S.A. until March 26, 2015, having
entered the Company in 1994, coming from Arthur Andersen S/C, where he worked in auditing.
Member of IBGC with fiscal advisor certification and acted as effective or alternate member of fiscal
councils of the following companies: Fertilizantes Fosfatados S/A- Fosfrtil, Associal Brasileira de
Alumnio ABAL, Uninas Minas Gerais S/A USIMINAS, Companhia Siderrgica de Tubaro - CST e
Caemi Minerao S.A. He was president of the deliberative council of Fundao Vale do Rio Doce de
Seguridade Social VALIA from May 2007 to March 2015.
Vera Lucia de Almeida Pereira Elias gratuated in Accounting and Law, postgraduted in finances. Mrs.
Vera Lucia de Almeida Pereira Elias acted as accountant of Vale S.A. until September 2013. Since
December 2013 she holds the position of International Standards Officer and CPC in the Associao
Nacional dos Executivos de Finanas, Administrao e Contabilidade ANEFAC. Mrs. Vera Lucia de
Almeida Pereira acted and/or act as effective or alternate member of the fiscal council of the
following companies: Norte Energia S.A., Vale do Rio Doce de Seguridade VALIA, Fundao Vale do
Rio Doce, Ferrovia Centro-Atlntica, Caemi Minerao e Metalurgia AS and Associao Mulheres
Geniais.
12.9 Relationship (as a spouse or significant other) or relationship to the second degree
between:
b. (i) members of the Board of Directors, Executive Board and Fiscal Council and (ii)
members of management of entities controlled by the Company, either directly or
indirectly
There is no such relationship among the indicated members.
46
d. (i) members of the Board of Directors, Executive Board and Fiscal Council and (ii)
Millss direct or indirect controlling shareholders
There is no such relationship among the indicated members.
12.10 Subordination, rendering of services or control relationships for the previous three
fiscal years between administrators and:
c. In case its relevant, supplier, client, debtor or creditor of the Company or its controlled
or controlling shareholders
Mr. Eduardo Kiralyhegy is an associate of Negreiro, Medeiros & Kiralyhegy Advogados, which
provided services of legal advisory to the Company over the past three fiscal years.
A Sra. Maria Cristina Faria is an associate of Negreiro, Medeiros & Kiralyhegy Advogados, which
provided services of legal advisory to the Company over the past three fiscal years.
47
Documentation required by article 12 of CVM Instruction 481 (Instruo CVM 481), issued by
CVM on December 17, 2009
Information contained in items 13 of the Reference Form
a.
Board of Directors
For the Board of Directors of the Company, the total remuneration is fixed in a discretionary amount
determined by the general meeting, with no relationship with the remuneration policy applicable to
officers and other employees of the Company and, therefore there is no goal of the policy or specific
remuneration practice of this body defined by the human resources department of the Company.
As part of total discretionary remuneration approved by the general meeting, there is a fixed
component and a variable component, according to the results of the Company. The Company
believes that the variable remuneration of the members of the Board of Directors is a way to
encourage them to successfully lead the Company's business by aligning the interests of members of
the Board of Directors with those of shareholders.
Statutory Directors and Non-Statutory Directors
For statutory directors and non-statutory directors of the Company, the remuneration policy aims to
attract and guarantee that the qualified professionals required remain in the Company and have a
proper remuneration. The fixed amount of the remuneration of the Directors includes the salary and
direct and indirect benefits tailored for statutory directors and non-statutory directors. In addition to
the fixed compensation, there is a variable component, which includes profit-sharing in the
Companys results and the granting of stock options or subscribing to shares issued. The Company
believes that the profit-sharing and stock option programs benefiting statutory directors and nonstatutory directors is a way to motivate them to carry out the Companys business in its best interest,
48
thus stimulating an entrepreneurial and results orientated culture in line with the interests of both
shareholders and management.
Fiscal Council
Members of the Fiscal Council are entitled to remuneration equivalent to 10% of the average
remuneration of the statutory directors, corresponding to the minimum set by law. In this way, their
remuneration is not correlated to the remuneration policy applicable to officers and other employees
of the Company and therefore there is no objective of the policy or practice of remuneration for that
body.
Advisory Committee
The members of the Human Resources Committee and Strategic Committee will be entitled to
remuneration equivalent to 50% of the monthly remuneration of the members the Board of Directors.
The Committee members who are officers, managers or employees of the Company shall not be
entitled to remuneration. The remuneration of members of the Committee may be amended at any
time by the Board. The purpose of this remuneration policy is to adequately compensate Committee
members for time spent in office, except by those who are already paid by the Company as its
directors or employees.
b.
Composition of compensation packages: (i) description of the different elements of
the compensation packages and the objectives of each of them; (ii) proportion of each
element to make up the total compensation package; (iii) the method for calculating and
adjusting each of the elements in the compensation packages; and (iv) reasons for the
composition of remuneration
(i) Description of the different elements of the compensation packages:
49
Board of Directors
Executive Officers
Human Resources Committee
Fiscal Council
Including taxes.
Salary and
Pro-labore
100.00%
62.73%
100.00%
100.00%
Bonus
0.00%
0.00%
Profit sharing
0.00%
0.00%
Grant of
options
0.00%
33.11%
Total
100.00%
100.00%
100.00%
100.00%
(iii) Method for calculating and adjusting each of the elements in the compensation packages:
50
The fixed portion of compensation paid to statutory directors and non-statutory directors is
determined based on market standards, and readjusted annually at regular levels to account for the
loss in currency value or for merit by performance.
In terms of the profit-sharing program granted to statutory directors and non-statutory directors, and
to bonus, payed to the members of Board of Directors, this plan is based on the aggregate economic
value, which consists of the adjusted net profit deducted from shareholder remuneration. If positive,
a percentage between 20% and 30%, which will be annually decided by the Board of Directors
starting from 2012, of the Economic Value Added (EVA) will be distributed to management and
employees, and whose portion will be defined in an increasing manner in accordance with their
hierarchical level in the Company and results obtained by their respective business segments. i.e. in a
proportion of 75% in 2012 and 60% from 2013 based on the segments results that the manager or
employee in question is linked to, and 25% in 2012 and 40% from 2013 based on the result of our
Company as a whole. For the employees of corporate areas, the program considers the total result of
the company. In 2013 the Company distributed R$ 20.1 million for the results of 2012 and in 2014
will be distributed R$ 18.7 million for the results of 2013. In 2015, the Company will not distribute
any amount related to the results of 2014.
Regarding the to the stock option plan to purchase or subscribe shares, granted to the statutory
directors and non-statutory directors, the number of options granted is proportional to the investment
made in the Company's shares with resources obtained from the profit sharing program described
above. Additionally, the Board of Directors may distribute discretionary stock options or subscription
shares to statutory directors and non-statutory directors, that is, independent of the investment made
in the Company's shares with resources obtained from the profit sharing program described above,
based on merit, performance and/or outcome.
For the Board of Directors of the Company (and the Advisory Committees), the remuneration is
discretionary determined by the general meeting with no relation with the remuneration policy
applicable to officers and other employees of the Company and therefore there is no goal at the
policy or remuneration practice of this body. Members of the Fiscal Council are entitled to
remuneration equivalent to 10% of the average remuneration of the statutory board, corresponding
to the minimum set by law. In this way, their remuneration is not correlated to the remuneration
policy applicable to officers and other employees of the Company and therefore there is no aim of
policy or practice of remuneration for that body. So, there is no method of calculation and adjustment
of each element of remuneration.
(iv) Reasons for the composition of remuneration:
For the statutory directors and non-statutory directors, the policy aims in the remuneration of
professionals based on the responsibilities inherent in their job positions, market practices and the
Companys level of competiveness.
For the Board of Directors, the Advisory Committee and the Fiscal Council, the remuneration paid by
the Company is fixed, in a discretionary amount determined by the general meeting, in case of Board
of Directors (and consequently the Advisory Committees), and according to the law, in case of Fiscal
Council. The remuneration of the members of these bodies has no relation with the remuneration
policy applicable to officers and other employees of the Company and therefore there is no goal at
the policy or remuneration practice of this body.
51
For the statutory directors and non-statutory directors and the members of the Board of Directors,
the variable portion is justified by the Companys focus on results and the target of aligning
management interests with those of the shareholders of Company.
For the members of the Board of Directors who participate on Advisory Committees are entitled to
individual monthly remuneration equivalent to 50% of the individual monthly remuneration of the
Board of Directors members. Statutory officers who participate on Advisory Committees are not
entitled to any compensation.
c.
Main performance indicators that are taken into consideration when determining
each element of the compensation package
The main performance indicator used to determine the variable component of management
remuneration is the Companys Economic Value Added (EVA), which is calculated from the net profit
of the Company, deducting from this remuneration the capital invested in the Company by the
shareholders, which is the invested capital in the Company at book value multiplied by the weighted
average cost of capital of the Company. The variable portion of remuneration is determined from the
economic value generated in the Company and in the business segment, under its responsibility.
d.
How the compensation package is structured to reflect the development of the
performance indicators
The remuneration consists of a significant variable portion, represented by profit-sharing of the
Companys results, and the values to be distributed are directly proportionate to the Companys
Economic Value Added (EVA), calculated annually in accordance with the formula described in item
(c) above.
e.
How the compensation policy is aligned with the Companys short-, medium- and
long-term interests
The remuneration monthly paid to statutory directors and non-statutory directors is in line with the
short-term interests of the Company to attract and retain qualified professionals. The profit-sharing
and stock options plan are aligned with the medium-to-long-term interests of the Company to
motivate management to carry out the Companys business, stimulating an entrepreneurial and
results-orientated culture, to the extent that both shareholders and directors benefit from
improvements in the results and increases in the price of the shares.
For the Board of Directors of the Company (and consequently the Advisory Committees), the
remuneration is fixed in discretionary amount determined by the general meeting with no relation
with the remuneration policy applicable to officers and other employees of the Company, and
therefore there is no goal at the policy or remuneration practice of this body. The members of the
Fiscal Council are entitled to remuneration equivalent to 10% of the average remuneration of the
statutory board, corresponding to the minimum set by law. In this way, their remuneration is not
correlated to the remuneration policy applicable to officers and other employees of the Company and
therefore there is no aim of policy or practice of remuneration for that body.
For the Board of Directors, the bonus, which is based on profit-sharing, being also directly
proportional to the Economic Value Added (EVA), is in line with the Companys mid and long term
best interest of stimulating an entrepreneurial and results orientated culture.
52
f.
Existence of compensation supported by subsidiaries, and direct or indirect
affiliates or holding companies
Not applicable. There is not any remuneration supported by subsidiaries, and direct or indirect
affiliates or holding companies.
g.
Existence of any compensation or benefits connected to the occurrence of a given
corporate event, such as the sale of the Companys controlling interest
Not applicable. There is no remuneration or benefits connected to the occurrence of a given
corporate event, such as the sale of the Companys controlling interest.
13.2 With respect to compensation acknowledged in the results of the last 3 accounting
reference periods and the estimated compensation for the current accounting reference
period for the Executive Board, the Statutory Board and the Fiscal Council:
Estimated for Current Fiscal Year (2015)
Board of Directors
Board of Executive
Officers
Fiscal Council
Total
4.08
14.08
1,292,330
5,247,727
260,000
6,800,057
Number of members
Annual fixed compensation
Salaries or pro-labore fees
Direct and indirect benefits
457,291
80,771
Others
274,620
457,291
80,771
1,994,136
52,000
2,320,757
Variable Compensation
Bonus
830,322
830,322
Profit sharing
2,492,436
2,492,436
166,064
166,064
Post-employment benefits
Employment cessation benefits
Stock-based compensation
3,236,926
Total Compensation
2,644,107
3,236,926
13,428,516
312,000
16,384,623
(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option. The number of options granted on the discretionary plan 2014 is
estimated.
Number of members
Annual fixed compensation
Board of Directors
6.67
Board of Executive
Officers
6
53
Fiscal Council
3
Total
15.67
1,031,559
4,715,612
232,961
448,315
448,315
112,707
207,513
5,980,132
112,707
2,046,833
46,592
2,300,938
Variable Compensation
Bonus
Profit sharing
Compensation for participation
in meetings
Comissions
Others
Post-employment benefits
Employment cessation
benefits
Stock-based compensation
Total Compensation
3,570,000
1,351,778
10,780,760
3,570,000
279,553
12,412,091
(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option. The number of options granted on the discretionary plan 2014 is
estimated.
Number of members
Board of Directors
6.08
Board of Executive
Officers
5.17
Fiscal Council
3.00
Total
14.25
893,619
4,360,016
207,288
5,460,923
323,743
323,743
164,423
164,423
211,608
1,658,550
41,458
1,911,616
383,066
383,066
1,224,640
1,224,640
76,613
76,613
2,694,144
2,694,144
1,729,329
10,261,094
248,746
12,239,169
(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option. The number of options granted on the discretionary plan 2013 is
estimated.
Number of members
Board of Directors
7
Board of Executive
Officers
5
Fiscal Council
3
Total
15
933,005
3,278,531
187,200
4,398,736
304,444
304,444
111,926
111,926
208,986
1,185,772
37,440
1,432,198
54
Variable Compensation
Bonus
168,737
168,737
637,433
637,433
33,747
33,747
1,690,083
1,690,083
1,456,401
7,096,263
224,640
8,777,304
Profit sharing
Compensation for participation
in meetings
Comissions
Others
Post-employment benefits
Employment cessation
benefits
Stock-based compensation
Total Compensation
(1) Amount based on the annual amortization rate of all curent plans, by the cost of call option.
13.3 With respect to variable compensation in the last 3 accounting reference periods
and compensation estimated for the current accounting reference period for the Board of
Directors, the Board of Executive Officers and the Fiscal Council:
Estimated for Current Fiscal Year (2015)
Board of Directors
Board of Executive
Officers
Fiscal Council
Total
Number of Members
Bonus
Minimum amount estimated by
compensation plan
Maximum amount estimated
by compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
4.08
14.08
Profit sharing
Minimum amount estimated by
compensation plan
Maximum amount estimated
by compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Board of Executive
Officers
Fiscal Council
Total
Number of Members
Bonus
Minimum amount estimated by
compensation plan
Maximum amount estimated
by compensation plan
Amount estimated by the
compensation plan if pre-
6.67
55
0 (negative EVA)
0 (negative EVA)
0 (negative EVA)
0 (negative EVA)
Board of Executive
Officers
Fiscal Council
Total
Number of Members
Bonus
Minimum amount estimated by
compensation plan
Maximum amount estimated
by compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Value effectively recognized in
results of the fiscal year
Profit sharing
Minimum amount estimated by
compensation plan
Maximum amount estimated
by compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Value effectively recognized in
results of the fiscal year
6.08
5.17
14.25
25% of Eva
25% of Eva
383.0
383.0
25% of Eva
25% of Eva
1,224.6
1,224.6
Board of Executive
Officers
Fiscal Council
Total
Number of Members
Bonus
Minimum amount estimated by
compensation plan
Maximum amount estimated
by compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Value effectively recognized in
results of the fiscal year
Profit sharing
Minimum amount estimated by
compensation plan
Maximum amount estimated
15
30.0% of EVA
30.0% of EVA
168.7
168.7
56
by compensation plan
Amount estimated by the
compensation plan if preestablished goals are met
Value effectively recognized in
results of the fiscal year
Number of Members
30.0% do EVA
30.0% of EVA
637.4
637.4
13.4 With respect to the stock-based compensation plan for the Executive Board and
the Board of Executive Officers, which was in force in the last accounting reference
period and which is estimated for the current accounting reference period:
STOCK-BASED COMPENSATION PLANS
On December 31st, 2014, the Company had a single stock option plan for the benefit of its managers,
that being the Plano de Opes de Compra de Aes , as described below. This plan will remain for
the fiscal year 2015, with no expectation for the creation of new plan this year. Until December 31st
of 2014, a total of 764,756 options had been exercised associated with this plan, with 659,500
previously granted but not yet redeemed purchase options remaining.
All the stock-based compensation plans created before the Companys IPO, held in April 15th, 2010
had its granted options redeemed.
57
As most of the options are available over the long term, the beneficiaries tend to stay with the
Company until at least the time they can contribute to its long-term results.
d. How the plan is included in the Companys compensation policy
As mentioned in Item 13.1b, this plan is part of the variable compensation package paid to the
Companys officers.
e. How the plans promote the alignment between management and the Company
interests at short, mid and long term
The stock option plan, in general, aligns the medium and long term interests to encourage the
Administration to conduct the company's business success, stimulating entrepreneurial and resultsoriented culture, to the extent that both the shareholders and the directors benefit from
improvements in income and increases in stock market quotation. The establishment of a waiting
period before which the options cannot be exercised (vesting period), ensures that this alignment is
found in the short, medium and long term.
f. The maximum number of shares options to be granted:
The stock options granted within the scope of this plan confer the rights to acquire up to 5% of
shares of the Companys capital stock, throughout the period of validity of the plan, considering all
the options already granted under the Plan, exercised or not, except those which have been extinct
and not exercised as long as the total number of shares issued or can be issued under the Plan is
always within the boundary the authorized capital of the company. In addition, the aim of the Plan is
to grant share purchase options in an amount that does not exceed 1% of shares of the Companys
total capital each year, as verified on the date the plan was approved.
As part of the 1/2010 Program, 538,714 options have been granted that will be converted into
ordinary shares in the Company. Up to December 31st, 2013, 528,077 options have been exercised.
As part of the 1/2011 Program, 392,046 options have been granted that will be converted into
ordinary shares in the Company. Up to December 31st, 2014, 161,771 options have been exercised.
As part of the 1/2012 Program, 232,462 options have been granted that will be converted into
ordinary shares in the Company. Up to December 31st, 2014, 53,181 options have been exercised.
58
As part of the 1/2013 Program, 210,770 options have been granted that will be converted into
ordinary shares in the Company. Up to December 31st, 2014, 21,727options have been exercised.
As part of the 1/2014 Program, 101,852 options have been granted, which will be converted into
ordinary shares in the Company once they are exercised. Up to December 31st, 2014, no options
have been exercised.
g. The maximum number of stock options to be granted
As a result of the number of shares that can be acquired within the scope of the stock option plan.
The maximum total number of shares to be issued is up to 5% of total stock.
h. Conditions for acquiring the shares
To receive the stock options in the 1/2010 Program, each beneficiary had to use at least 33% of the
variable component of their compensation associated with the Companys Profit-Sharing Program, net
of taxes, which were received related to the 2009 financial year, to acquire shares issued by the
Company.
To receive the stock options in the 1/2011 Program, each beneficiary had to use at least 33% of the
variable component of their compensation associated with the Companys Profit-Sharing Program, net
of taxes, which were received related to the 2010 financial year, to acquire shares issued by the
Company.
To receive the stock options in the 1/2012 Program, each beneficiary will have to use at least 33% of
the variable component of their compensation associated with the Companys Profit-Sharing Program,
net of taxes, which were received related to the 2011 financial year, to acquire shares issued by the
Company.
To receive the stock options in the 1/2013 Program, each beneficiary will have to use at least 33% of
the variable component of their compensation associated with the Companys Profit-Sharing Program,
net of taxes, which were received related to the 2012 financial year, to acquire shares issued by the
Company.
To receive the stock options in the 1/2014 Program, each beneficiary will have to use at least 33% of
the variable component of their compensation associated with the Companys Profit-Sharing Program,
net of taxes, which were received related to the 2013 financial year, to acquire shares issued by the
Company.
Additionally, the Board of Directors approved grants within the 1/2011, 1/2012, 1/2013 and 1/2014
Programs, independent of the investment in the Company's shares to certain employees of the
Company, due to its performance in the exercise of their jobs.
i.
Until April 20, 2012, the price of the ordinary shares to be acquired by the beneficiaries, by exercising
their option rights were determined by the Companys Board of Directors or committee created for
this purpose based exclusively on the average share price on the BM&FBOVESPA, weighted by the
trading volume in the month or the two months prior to the granting of the stock option, monetarily
59
adjusted by the inflation index IPCA (ndice de Preos ao Consumidor Amplo), and deducting the
value of dividends and interest on equity per share paid by the Company as from the stock option
date. On April 20, 2012, according to the resolution of the General Meeting held on that date, the
criterion for fixing the exercise price of the options that have as a counterpart the acquisition of
shares by its beneficiary was changed and was defined as the equity value of the shares on the last
day of the subsequent fiscal year. This change does not affect the options granted prior to that
General Meeting and the new criterion does not apply to options granted that have no counterpart of
the acquisition of shares by the beneficiary, which continues to be applied the criterion of market
price, described above.
For the 1/2010 Program, the exercise price of the options will be based on the value of the shares
issued at the Companys Initial Public Offering (R$11.50), monetarily adjusted by the inflation
according to the IPCA, which is disclosed by the Brazilian Institute of Geography and Statistics
(IBGE), deducting the value of dividends and interest on equity per share paid by the Company as
from the stock option date.
Regarding the 1/2011 Program, the exercise price of the options will be the average share price
acquired according to brokerage invoice sent by the beneficiary to the Board of Directors or Human
Resources Committee of the Company (R$ 19.28), monetarily adjusted by the inflation according to
the IPCA or by another index determined by the Board of Directors or committee, according to the
case, from the date of conclusion of the stock option agreement until the date the option is exercised,
deducting the value of dividends and interest on equity per share paid by the Company as from the
stock option date.
Regarding the 1/2012 Basic Program, the exercise price of the options will be the average share price
acquired according to brokerage invoice sent by the beneficiary to the Board of Directors or Human
Resources Committee of the Company (R$ 5.86), monetarily adjusted by the inflation according to
the IPCA or by another index determined by the Board of Directors or committee, according to the
case, from the date of conclusion of the stock option agreement until the date the option is exercised,
deducting the value of dividends and interest on equity per share paid by the Company as from the
stock option date.
Regarding the 1/2012 Discricionary Program, the exercise price of the options will be the average
share price on the BM&FBOVESPA in the year of 2011 (R$19.22), weighted by the trading volume,
monetarily adjusted by the inflation according to the IPCA or by another index determined by the
Board of Directors or committee, according to the case, from the date of conclusion of the stock
option agreement until the date the option is exercised, deducting the value of dividends and interest
on equity per share paid by the Company as from the stock option date.
Regarding the 1/2013 Basic Program, the exercise price of the options will be equal to the book value
of shares on December 31st of the fiscal year of the Company immediately preceding the stock option
date (R$ 6.80), monetarily adjusted by the inflation according to the IPCA or by another index
determined by the Board of Directors or committee created for this purpose, according to the case,
from the date of conclusion of the stock option agreement until the date the option is exercised,
deducting the value of dividends and interest on equity per share paid by the Company as from the
stock option date.
Regarding the 1/2013 Discricionary Program, the exercise price of the options will be the average
share price on the BM&FBOVESPA in the year of 2012 (R$26.16), weighted by the trading volume,
60
monetarily adjusted by the inflation according to the IPCA or by another index determined by the
Board of Directors or committee created for this purpose, according to the case, from the date of
conclusion of the stock option agreement until the date the option is exercised, deducting the value
of dividends and interest on equity per share paid by the Company as from the stock option date.
Regarding the 1/2014 Basic Program, the exercise price of the options will be equal to the book value
of shares on December 31st of the fiscal year of the Company immediately preceding the stock option
date (R$ 7.98), monetarily adjusted by the inflation according to the IPCA or by another index
determined by the Board of Directors or committee created for this purpose, according to the case,
from the date of conclusion of the stock option agreement until the date the option is exercised,
deducting the value of dividends and interest on equity per share paid by the Company as from the
stock option date.
Regarding the 1/2014 Discricionary Program, the exercise price of the options will be the average
share price on the BM&FBOVESPA in the year of 2013 (R$30.94), weighted by the trading volume,
monetarily adjusted by the inflation according to the IPCA or by another index determined by the
Board of Directors or committee created for this purpose, according to the case, from the date of
conclusion of the stock option agreement until the date the option is exercised, deducting the value
of dividends and interest on equity per share paid by the Company as from the stock option date.
j. Criteria used to determine the exercise term
The options granted under the terms of this plan will be subject to grace periods of up to 72 (seventy
two) months for the conversion of options into shares.
k.
Form of liquidation/settlement
The shares resulting from the exercising of purchase options will be integrated and/or acquired by
their respective beneficiaries in cash, in current national currency.
l.
Until the exercise price is fully paid, the shares acquired through exercising the option rights under
the terms of the Plan cannot be sold to third parties, except with the prior authorization of the Board,
based on the hypothesis that the product of the sale will preferably be used to settle any debt the
beneficiary has with the Company.
Based on the terms of the respective Option Contract, no beneficiary will be allowed to trade the
shares acquired for a period of 5 (five) years, observing the following rules:
(i) after a period of one year after signing the respective Option Contract, beneficiaries will be free to
trade up to 25% of the shares acquired;
(ii) after a period of one year after the term defined in item i, beneficiaries will be free to trade an
additional 25% of the shares acquired;
(iii) after a period of one year after the term defined in item ii, beneficiaries will be free to trade an
additional 25% of the shares acquired; and
61
(iv) after a period of one year after the term defined in item iii, beneficiaries will be free to trade
the outstanding balance of the shares acquired.
m. criteria and events that, when verified, will lead to the suspension, alteration or extinction of
the plan
The stock option rights granted under the terms of the Plan will automatically all be cancelled in the
following cases: (i) on the complete and full exercising of the same; (ii) after the option term has
expired; (iii) through the mutual rescission of the stock option; (iv) if the Company is dissolved,
liquidated or files for bankruptcy; or (v) if the beneficiary fails to observe the trading restriction rules
described in item n below.
In addition, in the event the beneficiary is laid off, with or without just cause, resigns or steps down
from their job, retires, or suffers from permanent disability, or dies, the option rights granted can
either be cancelled or modified, as described in item n below.
n. Effects generated by the Company`s Board and Committee Manager`s departure
upon his/her rights as provided by the stock-based compensation plan
If at any time during the validity of the Stock Options Plan, the beneficiary:
(i)
resigns voluntarily from the Company or leave their management role: (a) the rights not
exercised in accordance with the respective Option Contract on the date they leave the Company will
automatically all be cancelled, with no need for any prior warning or notification, and with no right to
any indemnity; and (b) the rights already exercised in accordance with the respective Option Contract
on the date they leave the Company may be exercised within a period of 30 days from the same
date, after which all rights will automatically all be cancelled, with no need for any prior warning or
notification, and with no right to any indemnity;
(ii)
leaves the Company as a result of being fired with due cause, or failure to fulfill their duties
adequately as a manager, all the right (exercised and not exercised) in accordance with the
respective Option Contract on the date they leave the Company will automatically all be cancelled,
with no need for any prior warning or notification, and with no right to any indemnity;
(iii)
leaves the Company as a result of being fired without due cause, or failure to fulfill their
duties adequately as a manager: (a) the rights not exercised in accordance with the respective Option
Contract on the date they leave the Company will automatically all be cancelled, with no need for any
prior warning or notification, and with no right to any indemnity; except if the Board decides to
anticipate the grace period term for some or all of these rights, and the beneficiary leaves the
Company within a period of up to 12 (twelve) months after the change in share control in the
Company all the unexercised rights in accordance with the respective Option Contract on the date
they leave the Company may be exercised within a period of 30 days from the same date, after which
all rights will automatically all be cancelled, with no need for any prior warning or notification, and
with no right to any indemnity, will have their grace period anticipated; and (b) the rights already
exercised in accordance with the respective Option Contract on the date they leave the Company may
be exercised within a period of 30 days from the same date, after which all rights will automatically
all be cancelled, with no need for any prior warning or notification, and with no right to any
indemnity;
62
(iv)
on retiring from the Company: (a) the rights not exercised in accordance with the respective
Option Contract on the date they leave the Company will automatically all be cancelled, with no need
for any prior warning or notification, and with no right to any indemnity, except if the Board decides
to anticipate the grace period term for some or all of these rights; and (b) the rights already
exercised in accordance with the Options Contract on the date of leaving the Company will have their
grace period anticipated, allowing the Beneficiary to exercise the respective stock option, as long as
this is within a period of 12 (twelve) months from the date of retirement, after which all the
remaining rights will automatically all be cancelled, with no need for any prior warning or notification,
and with no right to any indemnity;
(v)
leaving the Company due to death or permanent disability: (a) the rights not exercised in
accordance with the respective Option Contract on the date they leave the Company will
automatically all be cancelled, with no need for any prior warning or notification, and with no right to
any indemnity, except if the Board decides to anticipate the grace period term for some or all of these
rights; and (b) the rights already exercised in accordance with the Options Contract, on the date of
passing away, can be exercised by the Beneficiarys legal successors, as long as this is done within a
period of 12 (twelve) months from the aforementioned date, after which all the remaining rights will
automatically all be cancelled, with no need for any prior warning or notification, and with no right to
any indemnity.
Over and above mentioned item, the Board or Committee (whichever is the case) can, at their
exclusive criteria, whenever they deem social interests are better met by this approach, chose not to
abide by the rules stipulated above, and treat a determined beneficiary in a differentiated and
individual manner.
13.5 Number of stocks or direct or indirect stock holdings, either in Brazil or overseas,
and other securities that might be converted into stock or quotas, issued by the
Company, direct or indirect affiliates, subsidiaries or companies under common control,
by members of the Executive Board, of the Board of Executive Officers or the Fiscal
Board, grouped per board or committee, on the closing date of the last accounting
reference period:
The table below indicates the number of our shares held directly by our administrators and the
percentage that their direct individual contributions represent of the total number of shares issued by
our Company, in the last fiscal year, December 31st, 2014.
On December 31st, 2013
Board of Directors
Board of Executive Officers
Fiscal Council
Number of shares
(%)
18,945,742
14.8%
383,560
0.30%
1 Andres Cristian Nacht and Francisca Kjellerup Nacht, the Companys controlling shareholders and members of the Board of Directors, were not considered.
Their position as of December 31st, 2014, was 15,685,349 shares and 1,000 shares, respectively
63
The tables below show the impact of those stock option plans on the compensation of our statutory
directors in the years 2012, 2013 and 2014 and the estimated impact for 2015. The Companys Board
of Directors does not have stock based compensation.
Stock Option Plan
Program 1/2010
Number of Members of the Board of Executive
Officers
Grant Date
Number of granted options
Number of non-redeemable options
Number of redeemable options
Deadline for options to become redeemable
Deadline for redeeming options
Grace period for stock transfer
Quantity of options exercised
Pondered average price within accounting
reference period for each of the following
option groups
Outstanding at the beginning of the
accounting reference period
Not redeemed throughout accounting
reference period
Redeemed within accounting reference
period
Expired within accounting reference period
Fair option price on grant date
Potential dilution in the event of exercise of all
options granted3
2012
2013
2014
2015
5.17
6.00
4.08
05/31/2010
269,357
18,639
25% by year, from
the year after the
date of the Grant
05/31/2016
05/31/2010
134,678
3,769
25% by year, from the
year after the date of
the Grant
05/31/2016
05/31/2010
144,575
25% by year, from the
year after the date of
the Grant
05/31/2016
05/31/2010
10,628
25% by year, from the
year after the date of
the Grant
05/31/2016
250,718
400,267
534,574
534,574
R$ 12.22
R$ 12.63
R$ 13.01
R$ 13.89
R$ 12.42
R$ 12.86
R$ 13.44
0.23%
0.11%
0.11%
0.01%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of
redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms
available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of
the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of fiscal year 2013, the total number of shares
was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to 128,057,925.
4. Fair value of R$ 3.84 per option. Assumptions available in item 13.9 (b).
1/2011 Program
Number of Members of the Board of
Executive Officers
Grant Date
Number of granted options
Number of non-redeemable options
Number of redeemable options
Deadline for options to become redeemable
Deadline for redeeming options
Grace period for stock transfer
Quantity of options exercised
Pondered average price within accounting
reference period for each of the following
option groups
Outstanding at the beginning of the
accounting reference period
Not redeemed throughout accounting
2012
5
04/16/2011
294,034
56,546
25% by year, from the
date of the Grant
04/16/2016
2013
2014
2015
5.17
6.00
4.08
04/16/2011
196,023
65,742
25% by year, from the
date of the Grant
04/16/2011
143,442
170,385
25% by year, from the
date of the Grant
04/16/2011
164,465
25% by year, from the
date of the Grant
41,466
130,281
169,080
169,080
R$ 19.77
R$ 20.60
R$ 21.50
R$ 23.02
64
reference period
Redeemed within accounting reference
period
Expired within accounting reference
period
Fair option price on grant date
Potential dilution in the event of exercise of
all options granted3
R$ 20.15
R$ 20.82
R$ 22.20
0.28%
0.21%
0.25%
0.13%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of
redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms
available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of
the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of fiscal year 2013, the total number of shares
was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to 128,057,925.
4. Fair value of R$6.57 per option. Assumptions available in item 13.9 (b).
2012
2013
2014
2015
5.17
4.08
06/30/2012
38,462
38,462
-
06/30/2012
28,847
-
06/30/2012
06/30/2012
25,190
-
8,583
8,583
30/06/2018
30/06/2018
30/06/2018
30/06/2018
9,615
22,210
22,210
R$ 5.74
R$ 5.75
R$ 6.03
R$ 5.82
R$ 5.93
R$ 815,394
0.03%
0.02%
0.02%
0.01%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of
redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms
available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of
the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of fiscal year 2013, the total number of shares
was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to 128,057,925.
4. Fair value of R$ 21.20 per option. Assumptions available in item 13.9 (b).
2012
2013
2014
2015
5.17
4.08
06/30/2012
194,000
194,000
25% by year, from the
06/30/2012
145,500
31,500
25% by year, from
65
06/30/2012
164,000
91,500
25% by year, from the
06/30/2012
48,000
89,000
25% by year, from the
redeemable
Deadline for redeeming options
Grace period for stock transfer
Quantity of options exercised
Pondered average price within
accounting reference period for each of
the following option groups
Outstanding at the beginning of the
accounting reference period
Not redeemed throughout
accounting reference period
Redeemed within accounting
reference period
Expired within accounting reference
period
Fair option price on grant date4
Potential dilution in the event of
exercise of all options granted(3)
17,000
39,000
39,000
R$ 19.57
R$ 20.37
R$ 21.79
R$ 20.60
R$ 21.03
R$ 2,362,920
0.15%
0.14%
0.20%
0.11%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of
redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms
available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of
the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of fiscal year 2013, the total number of shares
was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to 128,057,925.
4. Fair value of R$ 12.18 per option. Assumptions available in item 13.9 (b).
2013
2014
2015
4.08
104,153
25% by year, from the date of
the Grant
04/30/2019
35,072
17,536
25% by year, from the date of
the Grant
04/30/2019
34,717
34,717
R$ 6.72
R$ 7.04
R$ 6.95
0.11%
0.04%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of
redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms
available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of
the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of fiscal year 2013, the total number of shares
was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to 128,057,925.
66
4. Fair value of R$ 24.78 per option. Assumptions available in item 13.9 (b).
2013
2014
2015
5.17
4.08
04/30/2013
105,000
105,000
25% by year, from the date of
the Grant
04/30/2019
157,500
52,500
25% by year, from the date of
the Grant
04/30/2019
90,000
90,000
25% by year, from the date of
the Grant
04/30/2019
R$ 26.78
R$ 28.67
0.16%
0.14%
R$ 1,251,600
0.08%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of
redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms
available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of
the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of fiscal year 2013, the total number of shares
was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to 128,057,925.
4. Fair value of R$ 11.92 per option. Assumptions available in item 13.9 (b).
2014
2015
4.08
04/30/2014
101,852
101,852
04/30/2014
36,489
12,163
25% by year, from the date of
the Grant
04/30/2020
R$ 8.17
67
period
Fair option price on grant date4
Potential dilution in the event of exercise
of all options granted3
R$ 2,299,818
0.08%
0.04%
1. Total amount of redeemable options less the total amount of redeemable options exercised at the end of the period for the fiscal years ended and total amount of
redeemable options at end of period less the total amount of redeemable options exercised in years previous to the current year.
2. 2014 considers the balance of the options granted to the newly elected officers, minus the balance of options of the offices who resigned, as stated on the resigning terms
available on the Company headquarters and on the minutes of the Board of Directors meeting held on December 17, 2013.
3. Dilution of outstanding options based on the total shares of the Company's capital at the end of fiscal year, except for the current year that considers the total shares of
the Company's capital at beginning of year. At the end of fiscal year 2012, the amount of shares were 126,399,430, at the end of fiscal year 2013, the total number of shares
was equal to 127,385,996 and at the end of fiscal year 2014, the total number of shares was equal to 128,057,925.
4. Fair value of R$ 22.58 per option. Assumptions available in item 13.9 (b).
13.7 With respect to outstanding options for the Board of Directors and the Board of
Executive Officers at the closing of the last accounting reference period
Number of members
Program
1/2010
Program
1/2011
Program
1/2012 - Basic
Program
1/2012 Discretionary
Program
1/2013 - Basic
Program
1/2013 Discretionar
y
Program
1/2014
Basic
Total
5.17
5.17
5.2
696,137
Non-Outstanding
options
Number
143,442
25,190
164,000
104,153
157,500
101,852
12,595 opes
se tornam
exercveis a cada
ano at 2016
82,000 opes
se tornam
exercveis a cada
ano at 2016
34,717 opes
se tornam
exercveis a cada
ano at 2017
05/31/2016
143,442 opes
se tornam
exercveis a
cada ano at
2015
04/16/2017
05/31/2018
05/31/2018
04/30/2019
52,500 opes
se tornam
exercveis a
cada ano at
2017
04/30/2019
25,463 opes
se tornam
exercveis a
cada ano at
2018
04/30/2020
R$ 0
R$ 103,531
R$ 16,400
R$ 399,948
R$ 18,900
R$ 378,889
R$ 917,668
325,013
10,628
170,385
91,500
52,500
05/31/2016
04/16/2017
05/31/2018
05/31/2018
04/30/2019
04/30/2019
04/30/2020
R$ 13.44
R$ 22.20
R$ 5.93
R$ 21.03
R$ 6.95
R$ 26.78
R$ 7,865
R$ 0
R$ 9,150
R$ 6,300
R$ 23,315
R$ 7,865
R$ 0
R$ 103,531
R$ 25,550
R$ 399,948
R$ 25,200
R$ 378,889
R$ 940,983
Board of Directors
Board of Directors has no stock-based compensation.
68
13.8 With respect to redeemed and delivered options for the Board of Directors and the
Board of Executive Officers, in the past three accounting reference periods
Number of Members
Redeemable Options
Number of shares
Pondered average price within
accounting reference period
Total value of the difference
between the exercise value and
market value of shares related to
options exercised1
Shares Granted
Number of granted shares
Pondered average price of
acquisition
Total value of the difference
between the exercise value and
market value of shares related to
options exercised 1
Program
1/2010
Program
1/2011
Program
1/2012 Basic
Program
1/2012 Discretionary
Program
1/2013 Basic
Program
1/2013 Discretionary
Total
5.17
5.17
5.06
134,307
38,799
12,595
22,000
34,717
242,418
R$ 13.44
R$ 22.20
R$ 5.93
R$ 21.03
R$ 6.95
R$ 26.78
R$ 5.96
R$ 903,886
-R$ 78,762
R$ 179,353
-R$ 18,920
R$ 458,959
R$ 0.00
R$ 1,444,516
134,307
38,799
12,595
22,000
34,717
242,418
R$ 13.44
R$ 22.20
R$ 5.93
R$ 21.03
R$ 6.95
R$ 26.78
R$ 5.96
R$ 903,886
-R$ 78,762
R$ 179,353
-R$ 18,920
R$ 458,959
R$ 0.00
R$ 1,444,516
1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 20.17 at the end of 2014.
Program
1/2011
Program
1/2012 Basic
Program
1/2012 Discretionary
Total
Number of Members
Redeemable Options
5.17
5.17
5.17
5.17
5.17
Number of shares
149,549
88,815
9,615
17,000
264,979
R$ 12.86
R$ 20.82
R$ 5.82
R$ 20.06
R$ 15.73
R$ 2,703,846
R$ 898,808
R$ 241,529
R$ 184,960
R$ 4,029,143
149,549
R$ 12.86
88,815
R$ 20.82
9,615
R$ 5.82
17,000
R$ 20.06
264,979
R$ 15.73
R$ 2,703,846
R$ 898,808
R$ 241,529
R$ 184,960
R$ 4,029,143
1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 30.94 at the end of 2013.
Number of Members
Redeemable Options
Number of shares
Program
1/2010
5
Program
1/2011
5
199,467
41,466
69
Total
5
240,993
R$ 12.42
R$ 20.15
R$ 13.75
R$ 4,190,802
R$ 550,668
R$ 4,741,470
199,467
R$ 12.42
41,466
R$ 20.15
R$ 13.75
R$ 4,190,802
R$ 550,668
R$ 4,741,470
240,933
1 Average market price, pondered by volume, in the last trading day of the fiscal year, equals R$ 33.43 at the end of 2012.
Board of Directors
Board of Directors has no stock-based compensation.
13.9 Summary of relevant information aiming at a broader understanding of data
presented under items 13.6 through 13.8 above, as well as an explanation of the pricing
method used for stock and option values
a. Pricing model
The programs granted from 2010 onwards were classified as equity instruments, which the weighted
average fair value of options is determined using the Black-Scholes valuation model using as
premises: (a) weighted average share price, (b) exercise price, (c) expected volatility, (d) dividend
yield, (e) expected option life and (f) annual risk-free interest rate. The equity portion is priced only
at the grant date and the fair value is not remeasured on every reporting date. The portions of equity
and debt are appropriated plan by plan, taking into consideration the respective lock up periods
(period in which shares are blocked for trading), based on management's best estimate as to their
end dates.
R$11.50
R$11.95
31%
1,461
1.52%
6.60%
R$3.86
R$11.50
R$14.10
31%
1,461
1.28%
6.37%
R$5.49
R$11.65
R$20.55
34.92%
1,247
R$11.59
R$20.55
34.92%
1,282
Grant Date
Exercise price
Weighted average share price
Expected volatility1
Expected option life (days)
Dividend yield
Risk-free interest rate
Fair value per share
At the end of 2010
Exercise price
Weighted average share price
Expected volatility1
Expected option life (days)
70
Dividend yield
Risk-free interest rate
Fair value per share
At the end of 2011
Exercise price
Weighted average share price
Expected volatility1
Expected option life (days)
Dividend yield
Risk-free interest rate
Fair value per share
At the end of 2012
Exercise price
Weighted average share price
Expected volatility1
Expected option life (days)
Dividend yield
Risk-free interest rate
Fair value per share
At the end of 2013
Exercise price
Weighted average share price
Expected volatility1
Expected option life (days)
Dividend yield
Risk-free interest rate
Fair value per share
At the end of 2014
Exercise price
Weighted average share price
Expected volatility1
Expected option life (days)
Dividend yield
Risk-free interest rate
Fair value per share
1
Based on the Companys historical EBITDA
1.71%
6.08%
R$10.49
1.71%
6.08%
R$10.56
R$12.22
R$17.55
38.68%
882
1.06%
4.81%
R$7.27
R$12.16
R$17.55
38.68%
917
1.06%
4.83%
R$7.37
R$12.63
R$33.43
35.92%
516
0.70%
1.04%
R$20.69
R$12.57
R$33.43
35.92%
551
0.70%
1.08%
R$20.75
R$13.01
R$33.00
33.86%
182
0.64%
3.06%
R$20.08
R$13.01
R$33.00
33.86%
186
0.64%
3.12%
R$20.09
R$13.70
R$9.55
36.00%
548
0.54%
5.47%
R$0.74
R$13.70
R$9.55
36.00%
552
0.54%
5.47%
R$0.75
Grant Date
Exercise price
Weighted average share price
Expected volatility1
Expected option life (days)
Dividend yield
Risk-free interest rate
Fair value per share
At the end of 2011
Exercise price
Weighted average share price
Expected volatility1
Expected option life (days)
Dividend yield
Risk-free interest rate
Fair value per share
At the end of 2012
Exercise price
Weighted average share price
R$19.28
R$21.08
35.79%
1,461
1.73%
6.53%
R$6.57
R$19.77
R$17.55
38.68%
1,202
1.06%
4.94%
R$4.70
R$20.60
R$33.43
71
Expected volatility1
35.92%
Expected option life (days)
836
Dividend yield
0.70%
Risk-free interest rate
1.70%
Fair value per share
R$14.36
At the end of 2013
Exercise price
R$21.50
Weighted average share price
R$33.00
Expected volatility1
33.86%
Expected option life (days)
471
Dividend yield
0.64%
Risk-free interest rate
3.77%
At the end of 2014
Exercise price
R$22.72
Weighted average share price
R$9.55
Expected volatility1
36.00%
Expected option life (days)
106
Dividend yield
0.54%
Risk-free interest rate
2.25%
Fair value per share
R$0.00
1
Measured by the historical behavior of the value of the stock of the Company
1/2012
Basic (06/30/2012)
Grant Date
Exercise price
R$5.86
Weighted average share price
R$27.10
Expected volatility1
37.41%
Expected option life (days)
1,461
Dividend yield
0.87%
Risk-free interest rate
3.92%
Fair value per share
R$21.20
At the end of 2012
Exercise price
R$5.74
Weighted average share price
R$33.43
Expected volatility1
35.92%
Expected option life (days)
1,277
Dividend yield
0.70%
Risk-free interest rate
2.15%
Fair value per share
R$27.30
At the end of 2013
Exercise price
R$5.75
Weighted average share price
R$33.00
Expected volatility1
33.86%
Expected option life (days)
882
Dividend yield
0.64%
Risk-free interest rate
4.84%
At the end of 2014
Exercise price
R$5.95
Weighted average share price
R$9.55
Expected volatility1
36.00%
Expected option life (days)
517
Dividend yield
0.54%
Risk-free interest rate
5.30%
Fair value per share
R$4.11
1
Measured by the historical behavior of the value of the stock of the Company
72
1/2012
Discretionary (06/30/2012)
R$19.22
R$27.10
37.41%
1,461
0.87%
3.92%
R$12.18
R$19.57
R$33.43
35.92%
1,277
0.70%
2.15%
R$16.14
R$20.37
R$33.00
33.86%
882
0.64%
4.84%
R$21.51
R$9.55
36.00%
517
0.54%
5.30%
R$0.10
1/2013
Basic (04/30/2013)
Grant Date
Exercise price
R$6.81
Weighted average share price
R$31.72
Expected volatility1
35.34%
Expected option life (days)
1,461
Dividend yield
0.82%
Risk-free interest rate
3.37%
Fair value per share
R$24.78
At the end of 2013
Exercise price
R$6.72
Weighted average share price
R$33.00
Expected volatility1
33.86%
Expected option life (days)
1,216
Dividend yield
0.64%
Risk-free interest rate
5.48%
At the end of 2014
Exercise price
R$6.95
Weighted average share price
R$9.55
Expected volatility1
36.00%
Expected option life (days)
851
Dividend yield
0.54%
Risk-free interest rate
5.72%
Fair value per share
R$3.84
1
Measured by the historical behavior of the value of the stock of the Company
1/2013
Discretionary (04/30/2013)
R$26.16
R$31.72
35.34%
1,461
0.82%
3.37%
R$11.92
R$26.78
R$33.00
33.86%
1,216
0.64%
5.48%
R$28.31
R$9.55
36.00%
851
0.54%
5.72%
R$0.12
1/2014
Basic (04/30/2013)
Grant Date
Exercise price
R$7.98
Weighted average share price
R$28.12
Expected volatility1
33.45%
Expected option life (days)
1,461
Dividend yield
0.75%
Risk-free interest rate
12.47%
Fair value per share
R$22.58
At the end of 2014
Exercise price
R$8.06
Weighted average share price
R$9.55
Expected volatility1
36.00%
Expected option life (days)
1,216
Dividend yield
0.54%
Risk-free interest rate
6.02%
Fair value per share
R$3.72
1
Measured by the historical behavior of the value of the stock of the Company
1/2014
Discretionary (04/30/2013)
R$30.94
R$28.12
35.34%
1,461
0.75%
12.47%
R$11.16
R$31.83
R$9.55
36.00%
1,216
0.54%
6.02%
R$0.26
c. Method used and assumed premises to incorporate the effects from expected early exercise
There was no early exercise.
73
Expected volatility is determined by the volatility of the share price between April 15, 2010, date of
initial public offering of the Company, and the reference date for calculating the fair value.
2013
2014
7
270,222
190,251
208,057
6.08
334,510
248,544
284,429
6.67
350,098
257,612
280,080
5
2,287,911
822,193
1,419,253
5.17
3,843,450
1,066,639
1,984,738
6
4,027,230
1,147,781
1,796,793
3
74,880
74,880
74,880
3
82,915
82,915
82,915
3
93,184
93,184
93,184
(1)
(2)
_______________________________________________
The Executive Officer occupied the position for the 12 months of the year.
Compensation paid for the Executive Officers who occupied the position for the 12 months of the year.
The Companys Fiscal Council was installed in the Ordinary General Meeting of April 19th, 2011, and
became a permanent body in the Ordinary and Extraordinary General Meeting of April 20th, 2012.
13.12 Contract agreements, insurance policies or other instruments that might underlie
the compensation or indemnity mechanisms applicable to managers in the occurrence of
dismissal or retirement
Not applicable. The Company has no contract agreements, insurance policies or other instruments
that might underlie the compensation or indemnity mechanisms applicable to managers in the
occurrence of dismissal or retirement.
74
13.13 With respect to the last three accounting reference periods, disclose the
percentage of total compensation for each board or committee as acknowledged in the
Company results and which applies to members of the Executive Board, of the Board of
Executive Officers or the Fiscal Board, that are somehow connected to direct or indirect
affiliates, in compliance with the accounting rules that govern this matter.
Year ended on December 31
Board or Committee
2012
2013
2014
Board of Directors
Board of Executive Officers
Fiscal Council
17%
81%
2%
14%
84%
2%
11%
87%
2%
13.14 With respect to the last three accounting reference periods, disclose the amounts
as acknowledged in the Company results for compensation paid to members of the
Executive Board, of the Board of Executive Officers or the Fiscal Board, grouped by board
or committee, for any purpose other than the function they perform, such as
commissions, consulting or advisory services.
Not Applicable. There were no compensation of the Board of Directors, Executive Officers and Fiscal
Council members recognized in the results of the Company in the fiscal years ended in 2012, 2013
and 2014, grouped by board or committee, for any purpose other than the function they perform,
such as commissions, consulting or advisory services.
13.15 In the last 3 fiscal years, indicate the amounts recognized in the result of direct or
indirect companies under common control and subsidiaries of the issuer, related
compensation of Executive Officers and Fiscal Council members of Company members,
grouped by body, specifying why these amounts were assigned to these individuals
Not Applicable. There were no compensation of Executive Officers and Fiscal Council members
recognized in the results of controlling companies, direct or indirect, of companies under common
control of subsidiaries of the Company in the fiscal years ended in 2012, 2013 and 2014.
13.16 Other relevant information
The number of members of the Management Board, Fiscal Council and Board of Executive Officers of
the Company specified in this Section 13 have been calculated in line with the requirements of OfcioCircular/CVM/SEP / No. 002/2015, as detailed in the following spreadsheet for each fiscal year:
Fiscal year 2015 (estimated)
January
February
March
April
May
June
July
Board of Directors
7
7
7
7
7
7
7
75
Number of members of
Board of
Executive Officers
5
4
4
4
4
4
4
Fiscal Council
3
3
3
3
3
3
3
August
September
October
November
December
Total
Number of Members (Total
divided by the number of months)
7
7
7
7
7
84
4
4
4
4
4
49
3
3
3
3
3
36
4.08
Number of members of
Board of
Board of Directors
Executive Officers
6
6
6
6
6
6
6
6
7
6
7
6
7
6
7
6
7
6
7
6
7
6
7
6
80
72
6.67
Number of members of
Board of
Board of Directors
Executive Officers
7
5
6
5
6
5
6
5
6
5
6
5
6
5
6
5
6
5
6
5
6
5
6
7
73
62
6.08
5.17
Number of members of
Board of
Board of Directors
Executive Officers
7
5
7
5
7
5
7
5
7
5
7
5
7
5
76
Fiscal Council
3
3
3
3
3
3
3
3
3
3
3
3
36
3
Fiscal Council
3
3
3
3
3
3
3
3
3
3
3
3
36
3
Fiscal Council
3
3
3
3
3
3
3
August
September
October
November
December
Total
Number of Members (Total
divided by the number of months)
7
7
7
7
7
84
5
5
5
5
5
60
3
3
3
3
3
36
77